Retirement Plan Provider Technology Investments Show Success

Retirement plan recordkeepers and industry partners that have redesigned online participant experiences and increased their efforts to encourage workers to save for retirement report positive results, new Cerulli Associates data show.

According to the second-quarter 2022 issue of “The Cerulli Edge—U.S. Retirement Edition,” plan providers are increasingly concentrating on proactive ways to urge participants to manage their overall finances and to boost workers’ retirement savings.

Recordkeepers and retirement plan provider partners are using targeted retirement plan communications sent by email blasts with behavioral nudges. Communications can be distributed to specific cohorts or demographic groups using algorithms to determine who would benefit most from the recommended actions.

“Over the past several years, recordkeepers have made significant improvements to their suite of online participant resources,” the issue summary says. “Plan provider websites, financial wellness programs, and employee engagement initiatives increasingly are incorporating education-oriented designs and targeted communications, powered by some of the latest technologies, to improve the online participant experience and encourage action.”

Retirement plan recordkeepers and third-party providers of financial wellness programs have remodeled their online engagement with participants, according to Cerulli. Providers have adopted “journey-based” website designs, which are guided experiences that assist participants with tasks such as enrolling in the retirement plan or determining an initial investment selection.

“Journeys are divided into modules that each focus on a different area of personal finance, such as retirement planning, debt management, or emergency savings,” the issue states. “In addition to reducing short-term financial stress, providers hope that by providing non-retirement-specific modules they can address issues that could be preventing some participants from saving for retirement or that could lead them to liquidate their savings prematurely.”

These efforts are benefitting participants, according to data from the Cerulli 2022 401(k) Participant Survey, which is reported on in “The Cerulli Edge.”

The survey data show that for 86% of respondents, the savings tools and calculators offered by their provider’s 401(k) website are very or somewhat helpful, compared with 77% in 2020. In addition, 72% also said the articles, videos and webinars offered online by their plan provider are helpful, compared with 52% in 2020.

In 2022, 44% of respondents said that the online savings tools and calculators offered by their 401(k) provider were very helpful, compared with 33% in 2020. Retirement plan participants also reported having favorable interactions and receiving helpful answers to questions through remodeled and improved online chat functions, Cerulli data show. In 2022, 26% of survey respondents said the chat function on their 401(k) website was very helpful, compared with 12% in 2020, and 34% said it was somewhat helpful, compared with 27% in 2020.

“Another development in provider website features is the increased adoption of chatbots,” the issue says. “These programs can help users navigate their plan’s website and instantly can provide answers to commonly asked questions by referencing a database of prepared responses.”

The most advanced chatbot programs are now using artificial intelligence and machine learning to automatically generate answers to questions that are not reliant on an entire pre-written library of material, the issue states. And, according to Cerulli data, more 401(k) plan participants are using their plan’s online tools and educational content for help with retirement planning.

Online tools and resources can be particularly helpful for engaging with Generation Z, and plan providers with robust resources can accrue an advantage, David Kennedy, senior analyst at Cerulli Associates, said in a release. 

“Generation Z exhibits a greater preference for digital communications and social media from their provider compared to participants overall,” he said. “Building a positive and encouraging experience with a recordkeeper at this early stage in Gen Z participants’ financial lives may make them more likely to continue an investment relationship in future decades.”