Making the Most of Your Retirement Plan: Communications and Planning Tools

A well-constructed retirement plan will only go so far if it isn’t properly communicated to employees. Plan providers and other resources such as advisors and recordkeepers can help you navigate what you can and can’t say and keep you from crossing regulatory lines.

The following sections outline the best practices for engaging employees via regular communications and financial planning options. We also highlight dos and don’ts to help you evaluate providers and avoid missteps.¹

Communications, Tools, and Plan Engagement

Retirement plan engagement includes required communications about retirement plan offerings, options, and optional tools for your employees’ financial planning.

To meet transparency requirements, employers must provide materials regarding plan features and benefits when introducing the plan to employees. They must also provide information about enrollment periods, updates about plan changes or amendments, and individual participant statements. Typically, employers rely on third-party providers for these communications.

Other communications, such as responses to participant inquiries or concerns, can be more subjective. These responses can be informational but can also include or imply guidance on specific investment choices. Anything, including in-person meetings, digital platforms, emails, printed materials, social media, internal discussion boards, and text messages, could be considered plan communications.

Dos and Don’ts to Consider for Plan Engagement

Do: Make strategic choices about communications and tools.

The market is full of communication plans built with varying features and options, from self-service plan selection tools to full-service platforms that offer access to planning tools, financial advisors, and additional investment or savings products.

Digital options and service levels typically affect provider costs. Low-cost providers offer fewer ways to communicate, while providers with more services, including individualized financial advisory and planning services, tend to be more costly. Looking at benchmark data about features, costs, and performance helps navigate the options.

All things being equal, plan sponsors should choose the best service levels from recordkeepers and advisors within their desired participant outcomes, plan design, and overall budget. Doing so improves employees’ satisfaction and ability to make financial planning decisions.

Don’t: Cross the line between offering access and advice.

Plan sponsors must tread a fine line between informing employees and providing personal financial advice. The simple answer—never give financial advice. Even when you have financially savvy leaders and staff, they should never act as financial advisors. In theory, even an informal conversation between a plan participant and their manager or benefits coordinator could be considered financial advice.

Instead, if you want your plan participant to have access to advice, you should engage the services of licensed advisors who can offer a comprehensive and objective approach.

Do: Monitor and evaluate your providers and participant engagement.

Sponsors often use plan participation and deferral rates to measure plan effectiveness. However, engagement has an enormous impact on plan success and satisfaction. You should work with recordkeepers and advisors to monitor communications such as the frequency of logging into digital platforms, calls to call centers, email open and click-through rates, and similar activities at communication touchpoints, in order to help understand the level of engagement.

Measuring communications helps ensure you get the full value out of your investment. If you are paying high service fees for options that employees tend not to use, it is a clear indicator to reevaluate what you are offering and at what cost.

Do: Use these four factors to evaluate providers and options.

There are four elements to consider when reviewing plan providers’ communication capabilities:

1. Depth of advice. A qualified provider is well-versed in a broad spectrum of investment vehicles and is able to explain these options simply and clearly for the participant.  The expertise may include an in-house investment strategy team or equivalent specialists.

2. Reasonable fees. Cost considerations may limit the participant communication and planning tools you can provide. In designing a plan and selecting providers, your goal should be to strike the right balance between employee engagement and overall costs, not just for communications.

3. Objective financial planning. Plan sponsors have a regulatory responsibility to ensure that planning tools and investment advisory services are fair, accessible, and objective. As a result, you must take steps to avoid conflicts of interest. These issues can occur when plan providers offer proprietary funds, share revenue with third-party fund managers, or offer other financial products and services at additional cost to the participant.

4. Demographic fit. Demographic fit refers to the ability of plan communications and tools to meet the needs of your participants. The mix of printed material, call center access, websites, apps, chatbots, and in-person services should correspond to the types of employees you have. For example, your workforce may include older individuals, non-native English speakers, workers with disabilities, or other populations. If your recordkeeper only offers a desktop version of a website in English without accessibility features, you could end up discriminating against segments of your employee base.

These four factors of provider selection should be an essential part of how you short-list and ultimately choose providers to support your plan.

Don’t: Forget about cybersecurity.

Digital plan engagement requires employees to create online accounts and share sensitive personal data. Department of Labor guidelines call for paying close attention to providers’ cybersecurity approach.

At a minimum, digital platforms should support best practices around user management, passwords and password expiration, suspicious activity, and similar protections to help minimize misuse or exploits. In addition, you should explore providers’ guarantees and compensation. For example, if a participant’s account is hacked and they lose funds, does the provider restore the stolen funds, and under what conditions? You should include these considerations in any provider evaluation.

Conclusion

Remember, as a plan sponsor, offering retirement plans is only part of your decision-making process. You must also consider effective communication, the right service providers, and how to measure plan success. Communication is powerful. It helps to ensure that employees are getting the most value and the best experience possible so they can focus on meeting their long-term financial goals.

An experienced retirement plan advisor can help you navigate ERISA regulatory requirements and create a plan design to improve the participant experience. Our comprehensive approach can help you satisfy fiduciary duties and reduce your administrative burden. Connect with Wilmington Trust today to learn more.