“My wife and I had dinner with friends, Richard and Charlene,” Ed Dressel said in a heartbreaking anecdote all too familiar to retirement plan advisors. “Richard is a 60-year-old, hardworking, blue-collar guy.”
The topic of retirement was raised partway through the meal. Dressel expected the standard, “I’m planning on traveling and spending time with my family.”
Richard instead turned to him and said, “I should probably start saving, shouldn’t I?”
https://www.finlocity.com/Beginning to save for retirement at age 60 is not a pretty picture, something Dressel illustrated in a pitch for simple, software-driven participant engagement strategies while speaking at the Finlocity 401k & Retirement Online Summit.
“In 2017, plan sponsors began hiring advisors for the primary purpose of getting help with fiduciary,” Dressel, President of Oregon-based RetireReady Solutions, explained. “Whether you saw the DOL’s rule as egregious or beneficial, advisors were brought in by plan sponsors for help with compliance.”
That changed in 2018, he noted, and stayed the same since—they want help with people like Richard.
“They don’t want to see their employees at 60 and say, ‘You haven’t saved.’ That is disengagement at its worst.
Dressel describes his business as poverty alleviation and assisting advisors in helping people retire well.
A major, and all too obvious issue, is that employees are simply not engaged in client meetings, and Richard was probably someone who sat in a meeting when he was younger, not realizing he should save.
“One of the advisors we work with got a new client-sponsor. He went to the worksite and said, ‘Who wants to meet with me?’” Dressel related. “Not one person signed up. Why? Because they met with the prior plan advisor and they bored.”
Scary stats
The ramifications are real:
- One in five Americans has no retirement savings.
- Half of Americans are going to work past the age of 65, and the primary reason is that they haven’t saved enough.
“We’ve all heard the line that a single death is a tragedy; a million deaths is a statistic. We too often gloss over these numbers. But when we look at our friends like Richard, it becomes all too real. These are real people, not statistics. When you’re sitting at a dinner table and you realize they’re 60 with no savings, that hurts.”
A change in the paradigm is needed, he argued, especially in the way participants are engaged.
“We put a lot of information on the chalkboard because it’s how we’ve been trained. I have a nice house, and if you came over one night and all I talked about the foundation of my house—it’s strength and design and footprint—it would be a really boring conversation, and one you would not enjoy.”
The fees, funds, fiduciary—the foundation—are what advisors are taught to address, but what workers want to know is whether or not they can retire.
It’s essential to stay away from the foundational issues an advisor thinks they need to talk about and focus on what’s important to employees.
“That is the only reason they’re deferring money. They want to retire one day. What does that mean now, and how can it be communicated in a way they understand?”
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.
