Administration May 9, 2023

How Social Media Influences Plan Sponsors’ Participant Communications

The critical mission of educating younger employees about retirement investing requires different engagement tactics than in the past.
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As members of Generation Z start their first jobs and are enrolled into workplace retirement plans, they often turn to social media to understand how retirement investing works.

More information than ever before is available, but sifting through all that content to find reliable and relatable information can be a challenge.

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“Although Gen Z is thought of as kind of the most tech-advanced generation … they’re still very new to the workforce. I think that’s important to remember,” says Julia Stati, a customer engagement specialist at Sentinel Group, a full-service employee benefits firm.

Plan sponsors are uniquely positioned to be that trusted information source for younger investors. Reaching this generation starts by delivering short, concise, easy-to-understand messages, including videos, infographics and blog posts. Young workers are also looking for more than retirement-savings topics and are seeking to learn personal-finance basics, such as dealing with student debt, using credit cards wisely and juggling competing savings goals.

Customization is key to delivering this information, and recordkeepers can work with employers to tailor subject matter important to their participants, using milestone events such as birthdays or hiring dates to nudge good investing behavior.

Social Media for Research

Kirsten Hunter Peterson, vice president of thought leadership at Fidelity, says it is not surprising to see this generation use social media for research, since it is convenient, accessible and what they use in their personal lives to research other information.

Because of that, firms such as Fidelity are reinventing how they deliver financial education, especially for younger investors. Hunter Peterson says Fidelity is seeing engagement grow quickly on platforms such as TikTok and Instagram, especially short videos and one-page infographics. Bite-sized content can open the door for further engagement if users are interested in learning more.

“In both of those cases, or with any shorter media, it’s always really helpful if you can provide kind of a [link] into something that is more robust and more explanatory,” she says.

Single-topic, shorter videos get better educational results than blending multiple topics, says Steve Jenks, chief marketing officer at Empower. He adds that most people’s attention spans are limited and those watching the videos generally aren’t experienced investors, so giving too much information at once can be overwhelming.

Tori Dunlap, founder of Her First $100K and a paid contributor to Empower’s The Currency educational web site, has 2.3 million followers on TikTok and says people who use social media to find financial information are looking for someone trustworthy. They are using platforms such as TikTok or YouTube as search engines, rather than starting with a site such as Google.

Once they find someone to trust, they will follow that person to do deeper research. “That’s where the blog content comes up. That’s where a course, or something that’s more educational beyond a 60-second video,” fits in, she says. “People aren’t turning to financial advisers; they’re turning to the internet.”  

Topics of Interest

For years, plan sponsors have limited financial education to retirement saving, but sources interviewed say plan participants are hungry for more personal finance information. Budgeting, credit-card usage and paying off student debt are popular subjects, along with long-time money questions such as how to juggle multiple savings goals.

Farnaz Maters, vice president and chief marketing officer for retirement and income solutions at Principal, says the industry has not made it easy for new plan participants to understand investing, but that needs to change.

“The more that we can simplify it and make sure that it is consumable and it’s [available] in a way that can be driving engagement, the more impact we’re going to have,” she says.

But sometimes educational offerings try to do too much at once, she adds. New investors seek consumer information to learn at their own pace, often preferring to start in smaller chunks. As plan sponsors think about creating information, they should consider tactics and the specific problem they’re trying to address to make it easier for plan participants to gain knowledge.

Participants “want it more to be self-service, like, ‘I’m at Point 0. Tell me about Step 1. Don’t tell me about Steps 1 through 10 at once,’” says Maters. “It makes our jobs a little bit more difficult, because you’ve got to be really thoughtful about the different cohorts or segments that you’re serving [and] where they are in their journey.”

Empower launched its The Currency site to make money topics more approachable, with the idea of looking at money across life, work and play, Jenks says. Information is updated weekly. The content is very tightly tied to the same things people are reading or seeing on social media, he says, and the site offers a mix of fixed messaging and dynamic content. Dynamic content  personalizes content to the anticipated interests of the user; an example is Amazon’s recommendation engine. Dynamic content is more effective, since it is intended to provide information the user is seeking and that reflects the user’s current situation, Jenks adds.

Every generation has had its money struggles. Successful financial education should empathetically reflect Gen Z’s issues, Dunlap says. She feels older personal finance speakers who have been critical of the savings habits of Millennials and Gen Z do not recognize the systemic issues Gen Z is facing, such as student debt, stagnating minimum wage, spiraling rent prices and home prices out of reach for the average person, she says.

Those are some of the immediate money concerns younger people face, and Dunlap says many also feel anxiety about longer-term issues like climate change. “People I talked to are like, ‘I don’t even know if the Earth will be around by the time I’m retiring,’” Dunlap says.

Hunter Peterson actually counters the conventional wisdom that Gen Z isn’t saving, pointing to Fidelity’s data showing that Gen Z participation in workplace plans is in line with other generations, with a total savings rate of 10.2% for 401(k)s and 7.4% in 403(b)s.

For those are not yet saving regularly, Jenks says Empower’s research shows that many people don’t save because they are anxious about their overall financial situation. Demystifying personal finance can help new investors figure out how to earmark money to short-term needs while also saving for retirement.

In creating content to connect with younger employees, tone is important: “Don’t patronize them, don’t talk down to them, don’t be condescending. Give them a lot of grace. If they’re coming to you at all, they’ve already overcome this huge emotional feeling of shame,” Dunlap says. “It’s really important, especially for people under 40, to feel safe, to feel heard and to know that they’re going to get quality information in a way will not make them feel terrible.”

How to Customize Communication

Maters says when it comes to customizing topics and communications, recordkeepers should work in partnership with employers to build engagement and savings rates. “Employers know more about the culture of their organization [and] how their employees consume information,” she says.

Personalizing information at milestones and life events is an easy way to reach out to participants, according to Matt Zokai, director of retirement solutions at Avantax, a tax-focused investment planning firm, who has worked on both the recordkeeper and adviser sides. He says employers, plan advisers and recordkeepers have access to participant data, so they can look at age, account balances and proximity to retirement and use that to create a personalized experience.

While there are automated methods to gather information such as account balances, work history or what topics plan participants click on, Stati says plan sponsors should query plan participants directly. “What topics, what life events [do] they see on their horizon?” Stati says. “That’s one way to capture topics, and then also ask, ‘How do they want to learn? What method do they want?’”

Megan Yost, an engagement strategist at Segal Benz, a communications and marketing agency specializing in employee benefits communication, says plan sponsors should consider the demographics of their target audience when communicating to participants: not just age, but the type of work, too. For example, do plan participants sit at a desk in a central location, do they work at home or do they perhaps drive a truck? Are they accessible during the day? All of those factors should be considered for both the content itself and how it is delivered.

While engagement and communication strategy often focus on using recordkeeping platforms, there are other ways plan sponsors can reach participants. Zokai says Avantax has seen success using compliance-approved communications texting tools and reaching out to participants through push notifications on phones. He says the most successful communications forms have been pre-scheduled texts, emails and short videos personalized to a participant’s demographic or pertaining to a topic in which the participant has expressed interest.

Having a robust and easy-to-understand digital component to a workplace plan is important, but Dunlap says one of the best ways to communicate continues to be in-person education.

“Honestly, the best way that I’ve seen is literally, someone who is older at the company sitting down with the 22-year-old and just being like, ‘Hi. So I know saving for retirement doesn’t sound fun, but put 2% or 3% of your paycheck away, because then you get the match,” she says.

Administration May 1, 2023

What Do Plan Sponsors Focus on When Doing an RFP?

Plan sponsors completing a request for proposal want a provider to stand out by addressing the company’s benefit needs through technology and education.
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Art by Janik Soellner

Employers completing requests for proposals want to choose from providers with deep experience in retirement plans and benefits; with robust technology capabilities; and with resources that can enhance employee education and boost retirement readiness.

Employers base the specific areas of focus for an RFP on their objectives, on the benefits of the plan and on the needs of the workforce.

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Fulfilling a successful RFP is a challenge because it demands squeezing the most juice from the effort, plan sponsors explain, but there are aspects that are common across all processes.

Priorities Range, But Tech Is Key

One such focus is providers’ underlying technology, says Thayla Bohn, senior vice president of corporate and human resources at American Fidelity Assurance Co., a life and health insurance products provider.

“There’s an expectation now from customers—from employees and participants—that their experience with … your benefits provider is going to be as easy as it is to buy something on Amazon,” she explains. “[Plan sponsors must] make sure that [they’re] looking at that and ensuring participants or employees are going to have [the best] experience as they can interacting with that [benefits] information ’in a way that is comfortable for them—which now is typically mobile, on their phones. That requires continued investment [in technology] to stay on top of that.”

American Fidelity Assurance changed its retirement plan recordkeeper and investment administrator via a 2020 RFP, eventually choosing new providers about six months after the initial RFP deadline, although the full process from published RFP to transition took about 16 months. The company, based in based in Oklahoma City, planned the RFP after having identified areas for improvement such as enhancements to employee education, Bohn says.

“Everybody’s [supposedly] a technology company now, and so [plan sponsors] have to look at what is the current state of [the provider’s] technology and how much investment are they putting into that for the future?” she asks.

After sorting through the provider entries, American Fidelity selected a provider that was using technology to educate employees on proper use of benefits to the greatest extent possible and that to answer questions from workers who prefer to call customer service, adds Bohn.

“One of the things we were really looking at closely in our RFP was, ‘What is the technology you’re using today?’” she says. “‘What’s the [look and feel of the] participant experience?’ and then also, ‘What are you investing in to ensure that this is staying up to date for the future as things change?’”

The company also focused on finding a provider with employer education resources on compliance, legislative and regulatory changes to limit plan sponsor risks, Bohn says.

“We recognize the pace [and] the speed of change [are] accelerating,” Bohn explains. “There’s a lot of compliance issues as a plan sponsor, there’s a lot of changes that happen with legislation, and therefore the company focused on finding providers with the bandwidth to ensure the retirement plan remains compliant,” Bohn explains. “A big issue is to partner with someone who has the ability and to scale and make those changes.”

Similarly, technology was a focus area for providers at Hines—a global real estate, investment, development and management firm based in Houston. the company’s selected provider must be able to deliver a mobile app that allows participants to access every aspect of the employee-benefits experience as comfortably as they would on a desktop.

“The [provider’s] mobile platform is really important, because that’s where the plan sponsor get[s] the most engagement,” says Junaid Karimi, vice president of total rewards and human resources information systems at Hines.

Karimi agrees that compliance support for benefits, broadly, and the retirement plan, specifically, are critical to success in fulfilling an RFP.

The ability to bring resources for plan “compliance with the ever-changing legal regulatory landscape [is important in the RFP], because there seems to be 401(k)-related legislation once a year in the last four or five years,” he says.

It is also important for providers to meet current compliance, data and security standards and work in a support role for the fiduciary duty of Hines’ 401(k) investment committee.

“There’s a compliance aspect to it too, so the [provider’s] got to come with the appropriate audit controls,” Karimi says.

RFP Table Stakes

Employers will, of course, differ in their specific needs, but there are definite table stakes plan sponsors need in their initial RFP responses to earn consideration.

Employers will want the RFP to adhere to specific areas of focus that will vary by company, but common aspects like size and scale will be considered by all. Additional aspects are understanding of the plan sponsor’s business and an ability to accommodate company growth and business expansion, employers say.

At American Fidelity the search must-have was education for participants that could take part of that burden away from Bohn’s team, which is small, she says.  

“Education of our colleagues was a big point for us,” she explains. “We don’t have a lot of resources in order to internally provide a lot of education.”   

Among the table stakes for Hines are a minimum size, scale and sophistication of the selected company, Karimi says, although he believes newer companies might take a different approach.

’“A lot of the Bay Area-based fintech, Gen Z companies are great for micro savings or for 22-year-old’s who save the change that they get back from the Starbucks barista and [that] goes directly to their savings, but that’s not something that’s going to work for a company like Hines,” he says.

At Salas O’Brien, an Irvine, California-based engineering firm, the must-haves for providers include ease of use for the benefit platform and the providers’ depth of experience in the space, says Lucas Hellmer, associate vice president for compensation and benefits.

“Is the team member experience going to be good for individuals who are going to be using that particular product?” he asks. “[If] they don’t have some of those things, I would not move further with that particular vendor.”

For the Southwest Airlines Pilots Association, a provider must be able to allow for separate source investing, accommodate a range of investment choices that workers have become accustomed to using, and ensure the choices remain available to participants.

“You can’t take away a benefit that [workers] already have, so that would be a must-have,” says Mike Haynes, director of retirement at the Southwest Airlines Pilots Association.

“[A provider must] have the capabilities, [because] it’s okay to have the bells and whistles and to have the marketing and to talk, but you need the nuts and bolts behind it in order to execute,” Haynes says. “The technology, in order to implement the specific plan provisions, [is critical].”

Benefits decisionmakers at the Southwest Airlines Pilots Association—with an estimated asset total of more than $8 billion—must also see the provider is able to implement their specific plan provisions, including Roth investment options, he adds.

“Whatever entity that would recordkeep our plan needs [to have] a sophisticated enough brokerage account in order to accommodate that flexibility, that choice that we allow our pilots,” Haynes says.

Plan Sponsors’ Challenge to Providers

Many providers will compete for retirement plan and workplace benefits business, and the selection can be time-consuming and complex, according to a variety of plan sponsors with different businesses. It also must be forward-looking.

“What I look for in vendors is [a provider] who is able to keep up with the [company’s] growth, knowing that our strategy is going to continue to get bigger and bigger,” says Hellmer, of Salas O’Brien. “What additional resources can the vendor add to support the growth trajectory for our organization?”

To win selection, a provider must have a service team that will be responsive to the company’s growth needs, to plan sponsor and employee requests and one that is strategic-focused, Hellmer continues.

“Knowing that the provider will have perspective on what the industry is doing, [what’s coming] next and how [the company is] adapting is key to making sure that we also have a strategic partner,” he says.

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