Targeted 401k communication beats traditional communication, according to a new report.
The 401(k) Listening Post, which bills itself as a venue for advisors and sponsors of defined contribution retirement plans to voice ideas, found that, historically, plan sponsors have relied on a calendar of communication campaigns and education meetings directed to all participants regardless of need to fulfill their fiduciary responsibility.
During the COVID-19 pandemic, retirement plan service providers discovered that electronic communications delivered to participants when they need it are more effective than the traditional methods.
To demonstrate fiduciary responsibility in 2021 and beyond, the report says, plan sponsors need to modulate the experience of participants according to the needs of each” just-in-time,” with communications triggered by specified events. Replacing periodic blanket participant education and communication campaigns with on-demand communications delivered to targeted recipients as soon as or whenever required can help deliver superior retirement outcomes.
The report titled “Now means NOW!” is posted here.
“Just-in-time communication is the way of the future,” Eric Henon, Executive Director of The 401(k) Listening Post, said in a statement. “Who wants to be left behind in an age when participants equipped with handheld devices increasingly rely on in-app notifications to run all aspects of their lives? Plan sponsors who include employee email addresses and cell phone numbers in the periodic data feed at every pay period find themselves with a competitive advantage in a tight labor market.”
The report illustrates the efficacy of just-in-time communications with four case studies contributed by participating firms.
In one situation, the firm learned that virtual education is more effective than on-site education at changing participant behavior. Not only were participants who attended virtual sessions satisfied with the meeting (82%) and the educator (87%), they were more likely to act after a virtual meeting than after an in-person session, and 79% reported they better understand the resources to take action.
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.
