Technology helps 401(k) plan participants by improving retirement plan results. Retirement plan participant engagement has increased thanks to the investments retirement plan providers have made in technology. This is evidenced by improvements seen in email, digital savings tools, and online content such as videos, webinars, and articles. That’s according to Cerulli Associates researchrecently quoted in InvestmentsNews. A quarter of plan participants now prefer to receive 401(k) account information via email, up from 9% in 2020. And 86% said digital savings tools and calculators offered on the site provider’s website are very or somewhat useful, up from 77%, according to the report. About three-quarters of the participants said that digital content such as articles, videos, and webinars posted on the website were very or somewhat useful. That is 20% more than in 2020.
In an effort to engage workers under the age of 30, the technology is helping registrars and third-party vendors focus on improving digital experiences for retirement plans. This demographic is more likely to rely on digital platforms such as a provider’s website, mobile apps, and text messages for 401(k) plan information. More retirement plan providers are also expanding their social media presence.
Algorithms are another tool plan providers rely on as they can show which participants may benefit from specific types of recommendations. The technology helps vendors by using that information to target those groups with email blasts or behavioral nudges. This might look like providers sending information about saving early to younger participants and educating older participants about the transition from saving to spending in retirement.
More plan providers are using chatbots on their websites to answer common questions and help participants navigate the plan. Some providers are even implementing advanced chatbots that use machine learning to answer questions without relying on libraries of pre-written content.
One drawback to all of this technology is that it still requires participants to share personal information. This is a constant challenge for the industry. The Cerulli report showed that participants are generally comfortable sharing personal information. However, they are less comfortable connecting non-retirement savings balances. In fact, 31% said they feel uncomfortable making this information available. It is important that these accounts are included to help participants get a sense of their overall financial picture and the technology helps to reap the full benefits of financial wellness apps and initiatives.
Plan sponsors should check with their retirement plan providers to see if they offer digital tools and information that keep up with current trends. Making this technology available increases participant engagement and gives them the opportunity to better understand and take advantage of plan benefits. Offering digital tools, calculators, videos and other educational information can help move the needle on the results in a positive direction for plan sponsors and participants.
Steff C. Chalk is executive director of The Retirement Advisor University, a collaboration with the UCLA Anderson School of Executive Education Management. Steff also serves as Executive Director of The Plan Sponsor University and is a current professor at The Retirement Adviser University.