Younger participants enrolled in employer-sponsored retirement plans share a greater desire for personalization, finds new research from Cerulli Associates.
According to the findings, Generation Z was the most willing out of all other generations to share personal information, such as retirement savings/account balances (51%), nonretirement savings/account balances (37%), and expected retirement age (66%). Forty-five percent of Gen Z respondents added that they are “very comfortable” sharing their current and/or projected spending with 401(k) providers.
Additionally, Gen Z participants in the study were more inclined to share data on their health, including smoking status (73%).
“Including more layers of personal data such as health status, life expectancy, growth objectives, and future withdrawal needs should aid in the development of a robust model that produces more desirable allocations for participants,” says Idin Eftekhari, senior analyst at Cerulli. “As life events transpire, updating personal data allows for timely shifts in asset allocation that can better prepare participants for retirement.”
The findings relay sentiments from advisors in past years, who argue that in order to reach younger workers, tailoring benefits to meet individual needs is key. This can mean including a range of investment choices or offering different learning and advice options, writes Brian Bender, head of Schwab Retirement Plan Services, in a past op-ed for 401(k) Specialist.
As a result, more employers and retirement plan advisors are adding personalized features to their retirement benefits. For example, Cerulli reports that 10% of managers currently offer customization to 401(k) participants and another 40% could begin including customization within the next year, as 30% say it is “somewhat likely” while 10% say it is “highly likely” they’ll add personalization features to their plan.
“Overall, the collection of granular personal data allows recordkeepers to learn more about plan participants and will be valuable when coordinating with asset managers about future product offerings,” adds Eftekhari. “Ultimately, recordkeepers benefit from increased product offerings, which enable them to be more attractive to plan sponsors when showcasing their capabilities.”
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