Keeping up with the digital revolution isn’t easy. Internet usage in the United States has increased by about 70 percent since 2000, according to a 2017 Pew Research study. Smartphones have become ubiquitous among younger Americans. Last year, there was a 16-point increase in smartphone ownership among 50 to 64 year-olds and a 12-point jump among those 65 and older, according to Pew.
And don’t forget wearables—smart watches, smart glasses, and smart jewelry.
The proliferation of digital devices, in tandem with advances in artificial intelligence (AI), natural language processing, and robotic process automation are affecting the ways in which retirement plan services are delivered to plan sponsors and participants, and more change is likely to be ahead.
“Mobile accessibility has become a crucial component of the overall DC plan participant digital experience, and our survey data show that engagement with the plan via mobile channels is on the rise,” Corporate Insight recently reported. “The increased reliance on mobile over desktop computing places a significant emphasis on a highly usable mobile platform.”
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In its November 2016 blog, CI discussed trends within its Retirement Plan Monitor survey group, which includes 20 top defined contribution plan providers. The trends included:
- Responsive design
- Comprehensive mobile and tablet apps
- Participants’ retirement readiness and financial wellness
- A more personalized approach to retirement planning
1) Responsive design
Just five years ago, responsive retirement plan web sites did not exist, according to an August 2016 RPM report. “…Today, however, 55 percent feature some level of responsive design, and 50 percent provide a public or private DC participant site that incorporates responsive design throughout the majority of the key areas.”
Responsive websites adjust to match the size of the browser. In other words, when plan sponsors or participants log on to their plan websites, they will see the same thing whether they’re using a smartphone, tablet, or computer. Responsive design can be challenging since the website displayed on a desktop or laptop often includes more content than can be easily displayed on a mobile screen.
2) Comprehensive mobile, tablet, and wearables apps
While responsive design lets viewers see the same website on different devices, mobile apps offer different versions of websites, and that can make it easier to interact with the content. Some plan providers have developed mobile websites and applications that allow participants to manage account functions.
Deloitte’s 2015 Defined Contribution Benchmarking Survey reported, “…providers are offering increased mobile and online capabilities for participants to manage their defined contribution accounts. In the past few years, the survey has shown a steady increase in the number of providers who allow participants to process transactions on a smartphone.
Over half of survey respondents indicated that their provider supports mobile transaction processing, up from about one-fourth of respondents in 2012.
The 2015 survey also revealed several year-over-year increases in the types of paperless transactions employees can complete online, with fund transfers (86 percent), enrollment (82 percent), and deferral percentage changes (81 percent) being the most common.”
In July of 2016, Empower Retirement unveiled a first-of-its-kind mobile app that gives plan participants the ability to monitor their retirement plans via the Apple Watch.
“At Empower we are seeking to bring our value proposition alive through every single interaction that we have with our client base…By offering innovative, new ways of doing things…we hope to capture their attention and engage them more fully in planning for retirement,” Empower President Ed Murphy said.
3) Encouraging retirement readiness and financial wellness
Capturing employees’ and participants’ attention is critical to retirement readiness, which may be the most popular topic in the industry (with the exception of the Department of Labor’s Fiduciary Rule, of course).
CI’s RPM has found that record keepers favor using retirement income projections to communicate retirement readiness to plan participants.
Plan providers offer a variety of tools. For instance, MassMutual has developed digital tools that help plan sponsors and participants better understand and improve potential outcomes.
“RetireSMART Ready leverages our understanding of behavioral finance and applies engagement strategies to successfully educate and influence participants,” Sean Jordan of MassMutual said. “We can quantify plan participants’ ability to replace pre-retirement income and roll it up for the sponsor and plan advisor. This allows us to measure and improve outcomes for participants over time and show ‘plan health’ improvement.”
4) Personalized approach to retirement planning
When it comes to planning, context is important. Digital tools have the potential to help participants better understand what it will take to become prepared for retirement.
A few cutting edge tools offered by plan providers digitally synchronize retirement and non-retirement accounts, and employ personal information provided by participants to provide a more robust estimate of retirement readiness.
“There is considerable appetite among employees for enhancing digital touchpoints to provide more holistic, guided, and personalized experiences and advice,” according to a 2016 Forrester Consulting Thought Leadership Paper commissioned by Betterment. “…Sixty-eight percent of employees said they would be more likely to review and manage their 401(k) plans if they had access to tools that would aggregate all of their financial information in one place, and the same number said that tools that made it easier to understand and navigate financial decisions would drive more personal 401(k) management activities.”
The retirement platforms of the future are likely to be as good as the data collected.
“Retirement Communications: Emerging and Future Trends,” a 2014 report from Broadridge, suggested that having the “ability to source, store, manage, analyze, and use accurate participant and plan data” has the potential to help the retirement plan industry improve participant outcomes.
If some of these processes are standardized, they also could simplify plan management and rollovers, making it far easier for Americans to keep track of their retirement savings.
The retirement industry is a late adopter when it comes to technology, in part, because of perceived and real regulatory hurdles. That’s beginning to change. During the next few years, we may see expanded mobile alternatives, as well as improved efforts to collect data and deliver cost-effective and highly-targeted communications that improve plan outcomes.
Before retirement, Terry Dunne was the senior vice president and managing director of Retirement Services at Millennium Trust Company, LLC. Mr. Dunne has over 40 years of consulting experience in the financial services industry. He has written extensively on retirement planning, industry trends, technology, and legislation. Millennium Trust performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.
