Using Technology to Improve Plan Sponsor, Participant Experiences

Amber Brestowski

Advances in technology have made many areas of life easier, and this is true for retirement plan sponsors and participants as well. The increasing use of data has facilitated better plan design decisions and increased personalization of participant advice. PLANSPONSOR spoke with Amber Brestowski, head of institutional advice and client experience at the Vanguard Institutional Investor Group, about how technology can ease plan administration and, ultimately, lead to better participant outcomes.

PLANSPONSOR: What do plan sponsors say is the most burdensome or difficult part of plan administration?

Amber Brestowski: We constantly hear that the administrative burdens associated with plan oversight revolve around data. The most difficult part of plan administration is often ensuring that plan sponsors have access to high-quality data and that they can draw actionable insights from it. Let’s start with the former. Administration challenges are often compounded by small but consequential inefficiencies associated with finding buried data, updating participant information and project status reporting. The current landscape of talent wars, budget pressure, changing employee expectations and evolving remote/hybrid work models means that human resources managers are stretched more thinly than ever. They need easy access to employee data and streamlined workflows enabled by a more efficient recordkeeping platform. Our upcoming Collaboration Center will address many of these pain points by providing transparency on project plans, documents and status, and by allowing sponsors to collaborate with their Vanguard team in a centralized space, using the data they need to be successful.

PS: What data and insights do plan sponsors need to design the most successful retirement plan for their employees?

Brestowski: Plan sponsors are inundated with data, but organizing the data to deliver meaningful insights to aid decisionmaking for a more effective plan design is the goal across all of Vanguard’s technology enhancements. To evaluate whether a retirement plan will be successful in helping participants reach their income replacement ratio goal, we look at three aspects of the client’s plan:

1. Plan effectiveness: How well are the current plan design, advice and investment lineup enabling participant outcomes?
2. Participant behavior: How are participants engaging today across channels, what’s top of mind for them and what actions are they taking? More and more, we are also focused on how they are feeling about their retirement success.
3. Plan administration: How well are we supporting plans operationally and enabling fiduciary compliance?

Vanguard is constantly evolving our recordkeeping platform tools to meet the challenge of organizing data and providing insights on how the data can be used to better understand what plan participants need.

PS: How is technology helping plan sponsors design effective plans?

Brestowski: Technology’s role in developing an effective plan design is twofold: help consultants better guide plan sponsors and give them a view of plan and participant outcomes. Our analytics systems enable our consultants to deliver meaningful insights on plan effectiveness, participant behavior and operational efficiency, as well as provide them with benchmarks and recommendations unique to plan sponsors. For example, our advice reporting will enable a plan sponsor to see not only how many of their participants are taking advantage of the benefit, but also the value it creates for those participants and the actions being driven by our financial planning interventions (i.e., Social Security optimization, debt management). In addition, our plan sponsor digital experience—My Plan Manager—puts insights at the plan sponsor’s fingertips, providing key plan metrics and benchmarking with similar plans. We continue to enhance these capabilities so sponsors can dig into data on specific participant cohorts, tracking their progress against goals. Ultimately, technology enables us to ensure plan sponsors have the actionable insights they need to make—and have confidence in—critical decisions for their plans. 

PS: Why has “financial wellness” become such a buzz phrase in the retirement plan community?

Brestowski: Plan participants need more than a set of investment vehicles; they need guidance and help to effectively manage competing priorities that hinder saving for retirement. The retirement plan industry should stop lecturing plan participants about the need to save—they know that. We should give them the hands-on tools and advice platforms required to effectively manage a retirement-readiness strategy, including how to manage debt, build emergency savings to prepare for financial shocks and balance retirement across multiple, competing financial goals. Defined contribution retirement plans must work harder than ever and are increasingly seen as an important employee benefit program. For plan sponsors, differentiating their benefits package with options that focus on other financial priorities, such as Vanguard’s student loan assistance program, can be an important tool in the ongoing war for talent. An intelligently designed, technology-driven financial wellness platform, such as Vanguard’s Well on Your Way program, can offer employees much more than a retirement savings vehicle. It can help them generate a highly personalized financial plan to attack the things that get in the way of their retirement readiness—and that cause them financial stress and anxiety.

PS: How does personalization get participants to engage with their employers’ retirement plan and financial wellness offerings?

Brestowski: Achieving financial wellness requires active engagement from plan participants, and personalizing the participant experience can help. We have developed customizable planning tools that draw on more than 35 million Vanguard data points, designed to meet participants where they are in their retirement-readiness journeys. Vanguard’s vast research database allows us to use behavioral finance and predictive analytics to serve up next-best-action nudges that allow a participant to clearly understand the next thing they can do to maximize value across their financial life in a way that resonates specifically with them. Our Meet your Match nudge is a great example. We know how much participants are contributing, and we know their plan’s employer match formula. If participants are leaving money on the table, we send a helpful suggestion encouraging them to contribute more to get the full match and meet their savings goals. We also provide email and print recommendations to reinforce the importance of taking action. In 2022, 88% of participants in Vanguard recordkept plans took a positive action or engaged with their plans. 

PS: What roles do technology and artificial intelligence play in boosting the retirement plan participant experience?

Brestowski: With all the conversations in general about AI and how it will be used, it is important to understand that Vanguard’s use of AI will be deployed only to better personalize and respond to participants’ needs. For example, we’ve implemented an AI-driven chat channel that learns over time how to respond to a participant’s most frequently asked questions and is accessible on demand throughout our web and mobile experience. We see chat and text growing in usage month over month. This technology also assists with completing transactions in real time, such as address changes and the calculation of loan payoff schedules. We also use AI to personalize messages to our participants. For example, AI helps us learn what behavioral messaging most resonates with an individual participant and compels them to act. Our AI engines also study what parts of the web and mobile experience an individual participant might frequent, and we are building technology to surface those components up into the homepage experience. At the end of the day, our goal is to use AI to personalize our entire participant experience at scale so our participants feel that every interaction that they have with Vanguard is tailor-made for them.

More information about how Vanguard uses technology to help plan sponsors and participants with critical decisions is available here.

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