PANC 2015: Trends in Participant Education

While many industry practitioners will suggest the importance of retirement plan participant education programs have diminished with stronger uptake of automatic enrollment features, adviser Corby Dall, president and managing partner of 401(k) Advisors Intermountain, is happy to argue otherwise.

Speaking at the 2015 PLANADVISER National Conference during a panel discussion on participant education trends, Dall suggested the need for participant education has evolved post-Pension Protection Act, “but education is as important now as ever.”

“Think of the large population that is being swept into retirement plans, with very little prior understanding of what the 401(k) plan is and what it can do for them,” Dall said. “Our duty, as advisers, is to help the participants realize what they are doing in the plan. As we all know, just getting into the plan is not enough for success.”

Michele Casey, corporate retirement director at the Casey Retirement Group at Morgan Stanley, joined Dall on the panel. She agreed that participants auto-enrolled into 401(k) plans both want and need ongoing financial education. Increasingly popular are more holistic approaches to financial wellness, she said, help with budgeting and debt management especially.

Another big reason automatic plan features only boost the demand for education, Casey and Dall suggested, is that the retirement planning process is no longer just theoretical for these new participants. “All of a sudden they actually have some money in the 401(k) plan, because somebody automatically enrolled them,” Dall said. “They open their statement one quarter and see they have several thousand dollars in the plan, and every day it’s becoming more important to them.”

Beyond all this, “financial wellness today is like offering fiduciary services was seven or eight years ago,” Dall said. “You are going to be left behind by clients if you aren’t doing this.”

Looking beyond advisers’ near-term business interests, Casey said there could be a lot to gain from general advocacy for greater amounts of financial education, whether in schools or the workplace.  

“The 401(k) is not the only component of the financial picture for a given individual, but as stewards of retirement it makes a lot of sense to get people to start the real financial planning conversations earlier in life,” she said. “We should be advocating for financial wellness training well before people hit the workplace, in my opinion.”

Wellness should take a broad approach, Dall agreed, and greater engagement in general with financial issues certainly won’t harm advisers’ business prospects moving forward. “It’s about having income exceed debt and liabilities,” he said. “It’s about setting goals and understanding consumption—teaching people to live within their means. In order to make a successful retirement, you also need to know how to stay out of debt, how to afford a car loan and a home loan. Student loans and health care costs, all of these things are important.”

For advisers serious about delivering new forms of financial wellness and education, Dall and Casey said there are a variety of emerging and established providers disrupting the marketplace, capable of delivering most of what an adviser could dream up. There will, of course, be cost and scale issues to consider, they said, but one can wring some impressive efficiency from today’s digital technologies.  

“If we are successful long term in this effort, we will be able to create expectations for our clients along the lines of the health/wellness project we have seen develop in the last 15 or 20 years,” Dall concluded. “Nobody is going to lose 50 pounds by next Tuesday, but we do have an expectation that people pay attention to their health and take some responsibility for that through health insurance. We want to develop a similar culture around financial planning and retirement.”