Getting Dirty in the DC Plan
NestEgg U was born in the late 1990s from the philosophy that we all are at different places on the retirement planning spectrum.
To create success, participants had to learn something to be able to move forward, and then there needed to be an easy way to take that next step.
Our education model follows a freshman, sophomore, junior and senior track, only we focus on a particular theme each year, and they instead matriculate from spender to saver to investor to planner.
We were fortunate enough to be involved with an organization that knew participant education was important and the education department needed to be a dedicated business unit.
This has allowed our staff to stay focused on participant outcomes and not worry about sales or managing retirement plans on a day-to-day basis.
We take a somewhat low-key approach to our education. While retirement planning by nature is complex, we understand the clear majority of participants do not have the time or inclination to “get into the weeds.”
This has allowed us to be successful in different industries and with various demographics.
One particular success story is a large coal mining operation. We knew that engaging this group and getting them to trust us would be a challenge. We also knew the message needed to be simple but effective.
“Know your customer” is a tried and true philosophy, but it is also important that you have “been there, done that.” Before conducting any meetings, we had to be underground. We needed to understand their hardships and they had to see us watching them work.
If you are grinding it out 60 or more hours per week in a very difficult work environment, making long-term financial goals may rank low on the list of priorities.
It’s very easy for us to say, “You need to save more.” But what might they be giving up to do so, and how does it affect their lives in other areas? In this case, we had to know.
Getting this involved meant that, eventually, they began to trust that what we were saying was in their best interest. We knew what it is they do, and that it’s hard to save another $20 per week, but it will be worth it when they can retire at 62.
When the plan began to implement auto features in 2008, we repeatedly said, “Let it work for you.”
They did, and participation has increased in that time from roughly 70 percent to over 90 percent. Deferral rates have gone from 3.5 percent to 8.7 percent.
Fully 70 percent are enrolled in an annual deferral increase. Average participant balances have tripled for long-term employees, from $100,000 to $380,000 on average. By our success measurements, over 75 percent will have sufficient replacement income from this plan.
Today, our best spokespeople for the plan are the guys and gals underground. The plan is working for them because they let it happen.
Participants in this plan now have an opportunity to create success because we met them on their turf, understood what they did, created trust, and communicated with them in an effective fashion.
Scott White is senior manager for retirement and NestEgg U with INTRUST.