The challenge of being remote for plan sponsors and participants

next issue no. 8: Participant engagement

The pandemic has been a stressful period for plan participants and plan sponsors alike. Particularly jarring was the sudden end to the traditional office environment, with many of us moving to a work-from-home environment incredibly quickly sometime in March 2020. This has resulted in a more challenging workplace environment from an efficiency angle, as meetings, workflows and productivity has shifted to remote offices, Zoom calls with wandering cats and spouses and unmuted mics. There is growing awareness that employees have been under a particular period of stress lately.

A recent study from TIAA highlighted some of the difficulties people faced during the pandemic, and the overall encroachment of digital into our lives. The study found that half of Americans spend less than one hour a week on their finances, while spending more than four hours on social media. The study also found that the pandemic has significantly impacted Americans’ financial wellness and financial habits, with one in three stating that their household finances have been negatively affected and over 40% feeling as though they need to manage their finances more closely.

Corporate culture has been one area that has suffered. There have also been struggles to onboard new employees, and engage current employees from a benefits and retirement planning perspective. Broad engagement had to shift from in-person meetings to remote and digital, without much time given to manage the transition. In fact, 2/3 of employees report having one foot out of the door, stating they are likely to job hunt in 2022. Further, 72% of employees would be attracted to another firm if they saw that it cared more about their financial well-being.

Plan sponsors have begun thinking about their retirement benefits as a strategic way to help attract, retain and engage their employees in an effort to improve their overall culture. Helping participants meet their financial goals in a time efficient manner should be a priority.

There is also an emotional and mental wellbeing element that cannot be ignored. There is an extent to which we need to start utilizing new messaging and language that includes a nod to mental resiliency, while tying that back to retirement planning and financial management. Providing encompassing messaging on emotional and mental wellbeing will help to let employees know that what they are experiencing is human and normal. Everyone’s life has been in a period of extreme flux and stress since March 2020. Keeping one eye on shortages at the grocery store has become a point of emotional stress, let alone planning decades into the future to keep an eye on retirement planning

That stress has led to an upheaval of the conversations around financial planning, access and knowledge of benefits and overall mental and financial health. The impact of the pandemic on how employees interact with their firms has been profound, and there are more questions than ever from employees on what their firms can do to help, both longer-term and in the very immediate term.

What can plan sponsors do?

Plan sponsors know their employees have had a lot to deal with and focusing on the long term has been a challenge for the last couple of years. Below is a list of actions plan sponsors can take to help employees refocus on retirement.

Many are well known, but worth restating:

• Increase participation in the plan through auto enrollment and automatic contribution increases. If this isn’t feasible, promote plan participation during new employee onboarding and as a part of your annual benefits renewal.
• Simplify your investment menu to potentially lower costs and reduce confusion for employees who choose their own funds by eliminating redundant asset classes.
• Set up your match to encourage greater saving without affecting your budget (e.g., offer a 50% match up to 12% of salary vs. 100% match up to 6% of salary).
• Add the flexibility of after-tax saving through Roth contributions.
• Provide easy online access to retirement plan accounts that includes performance and projected income.

These steps help alleviate the stress of engaging with retirement planning from employees at a time when they are already focused on multiple other aspects of their lives.

One way to focus the engagement with employees in this new era is to absolutely maximize the use of technology. Digital tools have come to the forefront of engagement over the last couple of years, to the detriment of in-person events.

There are a range of ways to engage with participants that have been utilized over recent months that make use of digital engagement technology. Webinars examining the link between the pandemic and market volatility, and reassuring investors that focusing on the long-term and managing through volatility is one way to engage and educate. Virtual financial counseling and benefits fairs should also be encouraged, which allows for either broader-reaching or more personal attention to financial matters. These methods again encourage participants to engage on matters of financial planning, while not adding to already elevated burdens.

However, we do know that some participants are checking their balances, adding to contributions and using available tools to help visualize their income in retirement. These participants are using available tools, such as income calculators, to try to figure out what they’ll have in retirement.

While there is definitely a drive to get back to being in-person, many offerings should be shifted to a digital delivery to allow for greater participation and replayability. Since the pandemic began the use of videos has exponentially grown as a way to engage employees. Studies indicate that video conversations with advisors can be very effective since employees engage more when there is a visual component to interactions. Webinars are also another educational and interactive tool that are available. Long-term there is a pattern that will drive many in-person meetings again, once that is possible. In the meantime we find ourselves in a hybrid state of in-person and digital, but our focus has to be on providing the best tools to plan participants.