Growth of Digital Tools Leads to Increased Retirement Personalization

Digital tools must be customizable to the personal retirement journeys of plan participants to be useful for retirement plan sponsors.

Richard Tatum, president of retirement services at Vestwell, attests to the demand among plan sponsors for such personalization.

“We’re seeing them focus a lot on tools that have the ability to be customized and personalized for their plan and participants,” he says. “Plan design is something else that sponsors are looking for, and understanding how things such as automatic enrollment, automatic increases and employer contributions factor into this journey.”

For retirement plan sponsors and participants, digital engagement continues to grow—through smartphone investing applications and budgeting tools that track spending, for example. Faced with myriad choices, plan sponsors must determine how to limit tools available to those that are the most effective for participants to bolster their retirement preparedness, in addition to ensuring that their time, energy and budget is spent wisely, industry experts say.

Employers should carefully consider how an addition to a plan’s offerings will be used by participants, says Tom Matarazzo, managing director, institutional retirement advisory programs, at Bank of America.

Plan sponsors must ensure that tools are relevant, that participants are interested in using any addition and that tools are “accessible in an omni-channel way: where, when and how the individuals want it,” he says. “Interacting with participants where, when and how they want it—that’s number one.”

Employers are also using digital tools to facilitate greater engagement with participants, particularly workers who are hard to reach and don’t engage with the plan often or ever. Plan sponsors should use targeted messaging for individuals to engage with them, says Matarazzo. 

“[For] plan sponsors’ employee base, what we’re seeing is that engagement is significantly higher when you’re engaging with folks in an individualized way—meaning messages, interactions that [target] their specific goals and priorities [and] what their concerns are,” he says. “Interactions have to be individualized for them to matter and for clients to engage. There are significant increases in engagement and taking action when it’s an individualized and personalized way that’s actually relevant and timely to that individual.”

Customization for plan participants’ savings journey to retirement is becoming a standard. Robust technology behind the digital tools and an intuitive and user-friendly experience have emerged for plan sponsors as the nice-to-haves, according to Tatum.

“What the plan sponsors are really asking for is to have a single digital experience where the participants can see their retirement savings accounts and those other savings vehicles too, even though they may not be part of the actual retirement plan,” he says.

Bank of America has invested in digital tools through a digital Investment Advisory Program that was launched last year. It also recently debuted Erica—a suite of enhancements to the recordkeeper’s Benefits OnLine digital retirement and benefit services app for retirement planning that uses artificial intelligence. Erica is voice activated and uses a natural language processing approach that can recognize “an array of requests, commands, casual phrasing—and it’s built to learn and adjust and constantly evolve over time,” Matarazzo adds.  

Benefits OnLine offers Spanish translation as a part of its recent digital enhancements. 

Additionally, plan sponsors want customized tools that can educate workers on investments; they also want participants to have access to additional savings vehicles—such as emergency savings accounts and college savings 529 plans—that are targeted to participants’ investment goals, Tatum explains.

“They’re starting to ask for more comprehensive planning tools and expanded savings vehicles … to try to create a more holistic financial process that, typically, only higher-net-worth individuals have had access to through a financial adviser,” he explains.