If a plan sponsor is struggling to motivate participants to contribute to their 401(k) sufficiently to qualify for the entire company match or to utilize the adviser or financial wellness services they offer, investing in personalization and targeted communications are worthwhile strategies, said a panel of speakers at the PLANSPONSOR National Conference in Orlando, Florida. 

Before delving into conversations about a participant’s 401(k) account balance, Lisa Garcia, a retirement plan consultant at SageView Advisory, said she speaks with clients about their financial struggles and goals in order to relate on a personal level. 

“To boost employee engagement, I think we need to boost their financial confidence and help them feel empowered by having conversations with them that are relatable, making them feel comfortable and… meeting them where they are,” Garcia said. “A lot of the conversations I’m having, it’s not about their 401(k) plan. It’s about saving, student loans [and] cash management.” 

Garcia added that it is important for plan sponsors to have a “proactive program” where advisers reach out to participants directly. Certain employees may be too shy or embarrassed to speak about their financial situation to a professional, and Garcia said simply hosting a 401(k) meeting with participants at open enrollment is not going to suffice.   

Michael Kushner, a retirement plan consultant, said participants want a conversation, not a presentation. 

Kushner recommended a strategy that he has used when talking to groups of employees. He suggested conducting three different meetings for three groups within a company. He would hold one meeting with employees who recently started at the company and those who were not participating in the retirement plan, another meeting for people under the age of 50 and a third meeting for people over 50 and nearing retirement. 

“If you come in and talk about Social Security and minimum required distributions and then look at the audience and the average age is 35 years old, [the information] is completely irrelevant,” Kushner said. 

Instead of sending out mass emails with complicated language and conducting long presentations, Karen Witham, vice president of communications and marketing at the Defined Contribution Institutional Investment Association, suggested that plan sponsors conduct surveys, implement focus groups, as well as leverage internal resources like employee resource groups to specifically target different demographic groups within their population of participants. 

“I would strongly urge you, if you have a growing population of under 30-year-olds, to stop relying heavily on email and long-form written communication and tap into things like video,” Witham said.  

Witham noted that many Gen Z participants are used to watching 15-second TikTok videos, so getting creative and making a short video about the power of accumulation could be a good strategy for plan sponsors.  

Garcia added that communications should be equitable, which means providing access to services that are mobile-friendly and include translations, for example. She recommended the Beekeeper app for employers seeking to communicate with a population that is spread out across locations and only has access to their mobile phones when working.   

Automatic Enrollment Is Key 

George Fraser, managing director and financial consultant at Fraser Group, said automatic enrollment has been a “gift” in the retirement industry, as it helps drive more engagement by getting more people into the plan in the first place.  

However, Fraser said that participants often do not understand terms like “auto-enrollment” and “auto-escalation.” To explain these concepts to participants, Fraser uses the example of taking out one penny from every dollar in auto-enrollment and then every year escalating by an additional penny. Over time, saving just this small amount can accumulate, he explained. 

“Change the words you use, and you will get participation,” Fraser said.  

Kushner added that many participants struggle with financial literacy and may not understand the concept of tax deferral. He said it is important to explain to participants that participating will ultimately lower their current taxes. 

“The beauty of the 401(k) retirement plan is that open enrollment is 365 days a year,” Kushner said. “You can increase your contributions at any time.”