Products July 8, 2015

Participant Behavior Informs Empower’s New Website

Based on an analysis of participant behaviors, Empower Retirement has built a new website for participants.
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An analysis of participant behavior after using features of Empower Retirement’s participant website reveals factors that drive participants to improve retirement savings behaviors.

Participants who were shown data about the potential monthly cost of health care in retirement increased deferrals by 25%, from an average of 8.02% to 10.06%. Action rates were highest among those closer to retirement, with participants older than 50 taking more action than younger participants. The average age of a participant in the sample group was 41.5.

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Personal data showing a participant how he or she is faring versus others in the same age, gender, and income cohort also spurred action. Participants in the sample who were, on average, deferring 7.27% of their pay toward retirement were found to be inspired to keep up with top peers, by increasing savings to 9.07% (25%). However, peer comparison usage proved especially effective to a slightly younger audience, with the average user taking action younger than 40.

On average, participants increased their deferrals by more than 18% when introduced to specific, personalized information about their retirement preparedness. “I think what has been most motivating is to translate savings into … what income individuals are on track to have in retirement and what can they do to improve that,” Steve Jenks, head of marketing at Empower Retirement in Denver tells PLANSPONSOR.

“Then, different individuals are more motivated by different things,” he adds. “For example, health care expenses in retirement are more motivating to participants older than 45, and Millennials are more motivated by peer comparison.”   

Empower announced it will launch an enhanced responsive design website that uses the analysis for all 7.5 million Empower plan participants.

NEXT: Website design based on behavioral science.

According to Jenks, all the basic elements on its current website for participants have been redesigned and updated based on what the company learned about the drivers of participant behavior. The site also matches the most up-to-date Web conventions, so participants don’t feel they are logging on to a financial services site, but to a consumer website such as for shopping or travel.

The site offers a personalized view of a participant’s financial picture, including factors impacting their ability to save, and provides recommended tasks on which participants can take action.

The site is designed to make use of data from Empower’s recordkeeping system and uses a fully responsive mobile design to accommodate any device a participant chooses to use including a laptop, tablet or smart phone. “We’ve added some functionality for employees to be able to enroll more quickly and added a next-best-steps engine that makes personalized recommendations,” Jenks says.           

Features of the new website include: 

  • Health care cost estimator: Shows data relating to the potential cost of future health care;
  • ‘How Do I Compare?”: Demonstrates how  a participant’s retirement preparedness compares to peers in their age, gender or income cohort;
  • Personalized retirement income goal-setting: Allows participants to customize retirement income goals; and
  • Plan-specific, personalized ‘next steps’: Provides expanded, customized action items on which participants can act.

The site can take into account assets held outside the plan and makes Social Security assumptions in its retirement income calculations. Jenks notes participants can input data about personal savings and other retirement accounts, or, if they are in another retirement plan serviced by Empower, that data will be included.

Jenks says a phased rollout of the new website across Empower’s book of business and new clients starts shortly, and will go through the majority of next year.

Jenks emphasizes the mobile aspect of the new website. “Back in 2010 when the original site was developed, we were definitely in a personal-computer world, but now the dominant way to interact is with tablets and phones, so all functionality is built to be compatible with any device,” he says. “We’ve seen that in enrollment meetings or one-on-one advice sessions, the ability to take action immediately with whatever device participants have in their hand is better than waiting until they get to a computer and log on to the website.”

Products July 7, 2015

New Advisory Firm Focuses on Outcomes

Too much time is spent on fees, funds and fiduciary, and not enough on the point of a retirement plan: how successfully participants retire, says RPA’s Todd Timmerman.
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Todd Timmerman was managing director of Principal Financial Group for almost 27 years, but he has founded a new firm, Retirement Plan Analytics (RPA), where he is managing director.

Using the metaphor of theatrical play acts, he tells PLANSPONSOR, “In my first act, I got a chance to do a lot of fun things and high-quality work with a great company. I was at a point where I could retire or have a really big second act—and I wanted to have an impactful second act.”

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Timmerman describes those years as having a front row seat, watching consultants, often LPL Financial, help his clients. RPA has chosen LPL Financial for support in providing clients with fee-based investment advisory services. In addition, Timmerman has entered into an agreement with Ronald Blue & Co. to transition client retirement plan assets to LPL’s platform while allowing Ronald Blue & Co. advisers to continue to act as the relationship managers for those clients.

RPA, a newly formed retirement plan advisory and consulting firm based in Charlotte, North Carolina, serves nonprofits, such as ministries and faith-based organizations; professional groups, including organizations for doctors, lawyers and dentists; and businesses in a range of industries.

RPA’s goal is to help organizations and their employees with the processes and solutions for working toward better retirement outcomes, Timmerman said in a statement.

NEXT: A focus on participant outcomes.

RPA is solely focused on retirement plan consulting, providing fee-based services to a wide range of organizations across the United States. RPA works with retirement plan committees to help mitigate their risks and improve decision-making as they carry out fiduciary duties. The firm also assists human resources and finance departments in implementing their organizations’ retirement plans, and helps employees and other plan participants engage in the retirement planning process in an effort to optimize their retirement outcomes.

RPA has plans ranging from $1 million to more than $100 million. What RPA and LPL have in common is that they are all companies that care greatly about outcomes for participants, Timmerman says: “It’s our No. 1 item. Our whole value proposition is around helping companies make the decisions for their employees to make successful decisions for retirement.”

RPA has built solutions to work with plans of all sizes, from small to million-plus. RPA’s value proposition is a three-tiered approach to helping people in the organization make decisions: the retirement plan committee, HR and finance, and the plan participants.

Timmerman deliberately places the participants last, not because they are least important, but because they have a difficult time succeeding if the committee and other departments in front of them don’t make good decisions.

The three levels have different areas of focus, he notes. “At the committee level, they’re focused on design to get better outcomes, expense benchmarking and collecting, investment menu creation, selection and monitoring, fiduciary governance and risk mitigation,” he says. “HR and finance work to leverage those across the organization, and the participants need to know how to save, how to invest, and, at retirement, the best income strategy.”

The biggest item on Timmerman’s list is helping the plan sponsor client compete against yesterday by making the right decisions, he says. “It’s not measured to a ratio, but by seeing a plan continue to have year-over-year progress. That’s what we want to measure and get the committee focused on.” Fees, funds and fiduciary are key ingredients, he admits, but at the end of the day it’s the outcomes that matter.

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