I have always believed that most do not want to be educated on retirement planning. Most just want the answer to two questions: ‘Am I saving enough?’ and ‘Is it in the right place?’ There is nothing wrong with educating participants in a Corporate Retirement Plan, however, if the goal is to move the needle on retirement readiness, education is not what produces results.
Most employees leave a group education session with a momentary renewed sense of urgency regarding the review of their account—if the presenter is skilled enough to present the relatively dry material in a manner that piques their interest. The issue I have found with this is that this feeling fades within minutes of leaving the meeting. Once they get back to their work station, they forget most of what they were told and continue doing nothing different than what they have already done with their retirement account in the past. Creating an environment where a participant can easily identify their retirement goal, and quantify the amount they should be saving while also marrying their risk tolerance and retirement goal with a portfolio allocation, is the more effective way to help participants move closer to retirement independence.
I suggest using group participant meetings to generate interest in one-on-one meetings to review their individual situation. An advisor that heads down this path should be able to effectively communicate the process in the group meeting while also conveying a feeling that everyone should have a plan and you will help them start theirs. Participants generally do not want to think they are going to have to learn and then apply what you teach them. An effective group meeting will present the need for the planning, the process, and the desired outcome so when the sign-up sheet is passed around, people do not hesitate to place their name on the sheet to get the process started. This means the advisor had to have presented the need for a review of their situation in a way that pushed them to action. I will suggest this is the sales pitch and the critical first step in heading down a road of retirement readiness.
Once the interest has been generated in group meeting(s) the next step is to deliver in individual meetings. This means the advisor needs to be set up to handle the volume, consistence, and fiduciary responsibility of individual meetings. Keep in mind my initial premise that participants do not want to be educated—individual participant advice should be entered into carefully and properly. If set up correctly, an advisor can change a retirement plan from one that is just another benefit to one employees talk and brag about. I say this because employees do talk and how an advisor implements this phase of the advice process is critical to the success of this type of program and quite possibly their future as the advisor to the plan. It is difficult to describe the time and effort commitment necessary to implement an effective participant advice program since the task is basically taking on a large number of individual clients, analyzing their situation, creating a plan with them, and then implementing and monitoring the plan. Participants need to understand exactly what the advisor’s role is in the process and what each party is responsible to do. A miscommunication here can end in a bad outcome if a participant thought the advisor was going to implement recommended changes and the advisor thought they communicated that the participant needed to implement them. Again, one mishap on this front and it could end the program before it gets off the ground.
The one-on-one meetings should be designed to get the critical information to create a plan and leave the “good to get to” stuff for after the plan is created and implemented. This means that the process of gathering the information needs to be well established, practiced (since the time with each participant is limited), and then consistently communicated to each participant. Each participant needs to leave the initial one-on-one meeting with the same story and the same level of service from the advisor, since they will compare notes. Since each participant will have a unique financial situation, the advisor should have a path for the participant with a relatively simple financial situation and as well as a path for someone with a sophisticated situation. The participant with the easier financial background could have the plan established along with recommendations in two meetings. Being able to do this means the advisor has a repeatable system in place to gather, process, communicate and document the information being discussed.
For the participant with a more sophisticated financial situation, the initial process is a bit longer and requires more work on both the advisor’s and participant’s part. First, the advisor needs to establish a level of trust and competence which gives the participant the confidence to hand over the details of their financial life. I have found this means the initial one-on-one meeting is used to gather the first level of information from the participant. Then there is the information that will need to be provided after the meeting is over since the participant will most likely not bring all of the data they needed for this meeting. Obviously, a system to follow up with the participant is important to keep this process moving forward. I have found this information gathering for the first cut at a plan to put together can take widely different time frames. Some will get the needed information back immediately and others will not meet again for several months or longer. When they revisit the situation they all have to be reminded what is needed to start the planning. Each person is very different on this point and the important part to this working for this type of participant is consistency. A participant of this type will want to gain a feeling that you know what you are talking about, are around on a consistent basis, and will pull them along with gentle tugs. Eventually, the consistent message allows an engaged participant to know where to go when they are ready to move forward with more detailed planning. Being available until they reach this point is the key to success.
Once a plan draft has been crafted, reviewed with the participant and then modified to meet with their approval, recommendations are made to answer the first two questions asked ( ‘How much should I save?’ and ’Is it invested in the correct place?’). Implementing these recommendations will be specific to each retirement plan situation as some plans allow the advisor to make approved changes for participants, some allow for changes to be made by advisors without participant approval (discretion), and some do not let the advisor make changes at all—just recommendations. The important part to this phase is again, consistency of process and documentation by the advisor.
The final step in the participant advice process is to monitor the plans established and update them on a periodic basis. These types of plans have a tendency to get stale unless updated as people’s financial situations continually change as do their goals. Reviewing the plans regularly keeps the participant’s eye on the ball and focused on the goal. Their situations will most certainly change from the first “approved” plan to the final plan that is implemented at retirement. Helping them along the way is the job of the retirement plan advisor that is participant outcome focused and set up to handle this type of practice.
There is nothing wrong with educating participants in a Corporate Retirement Plan, however, if the goal is to move the needle on retirement readiness, education is not what produces results.”