“You know those ducks in that lagoon right near Central Park South? That little lake? By any chance, do you happen to know where they go, the ducks, when it gets all frozen over?” – The Catcher in the Rye
For those of us involved in 401(k) employee education, specifically group meetings, we ask ourselves a similar question.
“You know those employees who attended our meetings last week? Those retirement plan education meetings? By any chance, do you know whether they were engaged, the employees, to learn more?”
A quick review of statistics from the retirement plan industry tells us the financial literacy of our audiences is quite low. Much of industry marketing, graphics, and stories rely on an engaged and self-directed learner who understands why he or she should save. Easy-to-use, simple step processes may allow an employee to enroll in a plan, but it usually does not result in life-long learning or engagement. Before determining a message for your educational content, it is imperative you ponder your overall philosophy regarding the purpose and objective of an education meeting.
The primary question is whether you desire immediate action or life-long engagement. Both are acceptable strategies and an effective communicator can address both in a session. An advisor focused on immediate action focuses on specific objectives, such as getting an employee enrolled in the plan, signed up for any auto escalation or rebalancing features, and invested in an age-appropriate asset allocation (potentially in a managed account or risk-based portfolio). The goal is to increase utilization or participation in the plan.
Many of us have access to a myriad of metrics and data measuring this enrollment strategy. A commonly accepted data point is new 401(k) participants. These numbers can be gauged during a plan transition or re-enrollment period. Much of the philosophy behind automatic 401(k) plan features (enrollment, escalation, rebalancing, etc) involves assisting the employee in making a positive initial step toward retirement and then allowing the automatic process to continue over a working career and hopefully lead to income goals being met.
I can appreciate that getting an employee enrolled in the plan is of utmost importance. Without this step, there is no further action. However, if we hold ourselves out as educators then we should also approach each meeting with the intention of creating an environment to foster life-long learning and a knowledgeable self-directed retirement saver.
A strategy based on this life-long engagement creates employees who are responsible for their own decisions. They are motivated to learn because they understand the new material will help them deal with a problem or task. In our retirement world, engaged adults take an interest in their financial plan. They ask questions, research their investments, determine whether they are on track, and most likely meet with a financial advisor. A self-directed learner understands the role the retirement plan plays in their dreams for retirement and will actively engage available resources to ensure the maximum benefit.
Take a moment and think about a favorite teacher you had in your schooling. Most likely, you remain interested in the content taught in that classroom because you were engaged and motivated by the teacher. In my case, I had an outstanding history teacher my senior year of high school. Whenever my family travels, I look for ways to understand the history of the area we visit. I love to read books on historical figures and situations. Mr. Noel lit a fire and a passion in me that continues to this day. He created an environment that fostered enthusiasm for learning that has stretched for decades.
It is no doubt easier to focus on an immediate action strategy alone. Serving employee needs by demonstrating a retirement calculator is a nice benefit and can be effective. However, if we hold ourselves out as educators, then should we not also focus on teaching strategies that drive enthusiasm for learning? We should be training our retirement plan educators to light these fires in addition to initiating new enrollments and plan participation.
Just as the Central Park ducks have no place to go in the winter, an education strategy focused only on immediate action may freeze out any employee desire for self-direction. Before you schedule your education meetings and coach your team, be sure to discuss what outcomes you desire.
Brian Kallback, CFP, CLU, QKA is the Participant Services Manager for Heartland Retirement Plan Services (“HRPS”). HRPS is a division of Dubuque Bank & Trust, a subsidiary of Heartland Financial USA, Inc.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
