Embracing tech innovation today can help plan sponsors serve the participants of tomorrow. Retirement expert Ben Rizzuto shares how fintech is changing the game.
“It’s time to start thinking about the future.” That’s the message the retirement industry conveys to participants in hundreds of iterations. Tomorrow is closer than we think, a point illustrated nowhere more clearly than the tech world. Financial technology – “fintech” to the initiated – is transforming how banking institutions and insurance companies interact with consumers. As plan sponsors explore how to serve the tech-savvy retirees of the future, a revamped digital experience may be the most impactful upgrade they can make.
The Auto-Enroll Advantage
Ease of use can make or break a mobile platform, and plan sponsors are learning that there are few things easier than making a retirement plan “opt-out” rather than “opt-in.” Auto-enrollment sends the message: “We’re taking care of this for you.” It also adds years or decades to younger participants’ planning timeline, increasing confidence and accountability.
Once individuals start planning and saving, especially when the friction point of whether to participate has been removed, they may become more likely to up their engagement and contribute more over time.
Tech-savvy platforms create a stream of high-quality touchpoints with users, creating opportunities to empower participants with seamless in-app content. Mobile technology can align the interests of participant, plan sponsor and advisor by diversifying communication channels depending on type and amount of information. Although retirement fintech is still in the early stages, industries including insurance and banking are leading the charge, responding to changing consumer expectations with solutions that could be leveraged by retirement plans. Examples include:
- Using artificial intelligence to analyze data gathered from mobile devices, looking for what reminders and resources participants need the most and when to send them.
- Establishing a community among participants. Friendsurance recently pioneered a peer-to-peer insurance model, which is essentially a rewards-driven social network for policyholders.
- Tracking participant satisfaction and engagement to identify opportunities to improve the experience.
As the wealth management industry begins to dip its toe into fintech, the good news is that companies won’t have to look far for options. The pool is getting bigger all the time, and developers are motivated to get their product in front of as many potential adopters as possible. Initiatives like Fintech Sandbox, a Boston-based nonprofit whose mission is to drive innovation and collaboration, are creating an adopter-friendly infrastructure for companies looking for tech-forward solutions.
Make Engagement Simple and Sophisticated
Younger generations have expressed a desire for mobile solutions that mimic the experience provided by reigning tech juggernauts. Many of these millennials and Gen Xers have come to expect an integrated mobile experience from their financial institutions. This is the same innovation driver that has encouraged institutions to spruce up their websites and apps with sophisticated educational and planning tools. One insurance company even put an interactive plan comparison game on their landing page, letting users “play” with their options instead of read or fill out forms on their first visit.
Digital upgrades can also simplify the decision-making process. Search engines and popular retail sites are adept at paring down the results they display for clarity and impact, which is what one retirement company did when it simplified its fund menu from more than 100 down to about 40.
Adapt to Survive – and Thrive
Think about how many emails you read each day, or how many you send to clients and work associates. As a method of communication, emails and texts have settled in alongside face-to-face and voice-to-voice interactions – simply another way of exchanging information. And for some investors, electronically may be the best – or only – way to converse with them. Plans can take advantage of this preference for mobile connectivity with communications such as:
- How much participants have already saved
- Why starting early puts them in a better position to retire on time
- When their next auto-escalation is scheduled to kick in
Ideally, participants who go to their plan’s app for solutions will conclude the interaction with a satisfactory answer or a plan to find one, whether they interact with an automated system or a representative via live chat. The burgeoning tech wave is ushering in opportunities for plan sponsors to adapt and thrive, provided they’re willing to learn, experiment and respond to user feedback. In the end, technology is only helpful if we use it.
What advisors can and should do is make sure plan sponsors and participants know about these developments. There is often so much going on in the lives of both groups that they’re simply unaware of how they can leverage technology (plan sponsors) or which tools are already at their fingertips (participants). Our industry has always revolved around thinking about the future, which is why it’s so important to make next-gen fintech a part of our present.
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