Retirement Readiness Tools: Are Employees Engaged? by Shaun D. Cox, AIF®

When I became a part of our advisory team, I was excited and motivated to push the needle and expedite participant outcomes. Why else are we in this business?

I quickly learned that many of our record-keeping partners had available several different retirement readiness tools, calculators and education initiatives. These programs often assign the participant a score or color placement, dictated by advanced algorithms, which take in to account the employees’ savings rate, employer matching, outside assets and social security estimates. These apparatuses are available to all plan participants, via their web account. Of course, each record-keeper has their own touch and feel, so to speak, to their proprietary products. However, the industry is becoming commoditized within the retirement readiness tool space.

When speaking with our plan sponsors regarding participant engagement, the utilization of these tools always seems to materialize in conversation. We constantly field questions, such as: Are our employees using the online tools? How successful are these tools in preparing our employees for retirement? With plan reporting, these questions are rather easy to answer. Statistically. Unfortunately, what we see in many cases is that many of these tools are not being taken advantage of by the majority of employees.

After reviewing participant utilization statistics, I found that on average, 48% of employees are registering for online retirement readiness tools but only 14% are taking action or actively employing the various tools to personalize their financial path towards retirement.

Without proper encouragement, well designed tools can become a moot point. Fortunately, with our robust service model, we deploy a comprehensive wealth management solution that not only educates our participants in various topics but works with the different record-keepers to promote their retirement readiness tools. Teaming up with our partners allows us a high touch approach, resulting in a higher application of their retirement readiness tools.

Studies show that when these tools are being used, savings rates usually increase. We typically see between 8.7% to 9.3% employee deferrals rates when participants are utilizing the retirement readiness tools or participating in a financial wellness program, or some combination of both. When participants are engaged, savings rates usually increase and employees become better prepared financially for retirement.




This information is not intended as authoritative guidance or legal advice.

1 Published by Digital Solutions. Data above is based on participant activity for the time period specified in above title