Technology helps 401(k) plan participants by improving retirement plan outcomes. Retirement plan participant engagement is up, thanks to 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 research from Cerulli Associates, cited recently in InvestmentNews. 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 provider’s website are very or somewhat helpful, up from 77%, according to the report. Around three-quarters of participants said digital content like articles, videos, and webinars posted on the website were very or somewhat helpful. That is up 20% from 2020.
In an effort to engage workers under 30, technology helps recordkeepers and third-party providers by focusing 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 to get 401(k) plan information. More retirement plan providers are expanding their social media presences as well.
Algorithms are another tool plan providers are relying on, as they can show which participants can benefit from specific types of recommendations. Technology helps providers by using that information to target those groups with email blasts or behavioral nudges. This might look like providers sending information on saving early to younger participants, and educating older participants on transitioning from saving to spending in retirement.
More plan providers are using chatbots on their websites to answer common questions and help participants navigate through the plan. Some providers are even rolling out advanced chatbots that use machine learning to answer questions without relying on libraries of pre-written content.
One drawback of all this technology, is that it still requires participants to share personal information. This is an ongoing challenge for the industry. The Cerulli report showed that participants are generally comfortable with sharing personal information. However, they are less comfortable connecting non-retirement savings balances. In fact, 31% said they are uncomfortable making this information available. It is important for these accounts to be included to help participants get a sense for their overall financial picture and technology helps to realize the full benefits of financial wellness apps and initiatives.
Plan sponsors should check in with their retirement plan providers to see if they are offering digital tools and information that is keeping up with current trends. Making this technology available increases participant engagement and provides an opportunity for them to better understand and take advantage of plan benefits. Offering digital tools, calculators, videos, and other educational information can help move the needle on outcomes in a positive direction for plan sponsors and participants.
Steff C. Chalk is Executive Director of The Retirement Advisor University, a collaboration with UCLA Anderson School of Management Executive Education. Steff also serves as Executive Director of The Plan Sponsor University and is current faculty of The Retirement Adviser University.