Meeting of the Minds

“Traditional enrollment meetings are going, going, gone,” says Eric Bailey, a Tampa-based Managing Principal at CAPTRUST Financial Advisors. “I would project that it will not be long before there are no “enrollment meetings,” but the replacement will not be the Internet or an 800 number.” 

As automatic enrollment and default investments in target-date funds and the like become the norm, many employees have less need to hear talks about allocation and diversification. “First and foremost, we are talking about what they need to do is to save—why and how much,” Bailey says.  

If the adoption of automatic enrollment seems to negate the need for enrollment meetings, it actually brings an equal, or perhaps even greater, need for advisers and employees to connect, says Janet Ganong, a Milwaukee-based Financial Consultant with The Kieckhefer Group at RBC Dain Rauscher. “However, the meetings will change,” she says. “It takes the emphasis off motivating them to get involved. Now, the emphasis is you are involved, but is your involvement enough?” 

So what do you do to deliver such meetings in the changing environment? Here are 10 best practices that advisers and providers say work in delivering the right messages in this new era. 

1. Pick the sponsor’s brain beforehand. Never go into an enrollment meeting without knowing exactly what message the employer wants attendees to receive. “It is imperative that an adviser have a pre-meeting with the employer to discuss goals,” says Joe Frustaglio, National Sales Manager for Retirement Plans at Nationwide Financial. Find out whether the sponsor has made any plan-design changes since the last round of enrollment meetings, he suggests: “You want to make sure that you do not put the employer in the position where he has to backtrack after the meeting.”  

2. Split into groups. Often a company has a range of employee types and the adviser should draft a different strategy for each type, says Patrick Reisinger, a Pittsburgh-based adviser at National Retirement Partners.  

Look at the history of plan participation, Bailey says, as well as employee demographics such as age, education, and the spread between high-earners and low-earners. A group of attorneys probably does not want to sit through a presentation on the ABCs of 401(k) plans, he says, although other staffers in the law firm might find it useful. 

Think about having separate meetings for different demographic groups, such as younger and older workers, suggests David Hinderstein, an adviser at National Retirement Partners’ Strategic Retirement Group, Inc., in White Plains, New York. “Why not communicate in a manner that is consistent with the people who are receiving it? What I am saying is that what is important to a 58-year-old is not the same thing as what is important to a 25-year-old.” For instance, for employees older than 50, he would talk about things like different methods for distributions and historical changes in spending patterns in your 60s, 70s, and 80s. 

Or, with an increasing number of employees in default investments such as target-date funds, think about breaking employees up according to how involved they want to get in their 401(k), says J. Brian Blalock, a Vice President at Fifth Third Institutional Services in Evansville, Indiana. “It could break down that those who want to do it themselves come at 1:00, those who want someone to look over what they are doing come at 2:00, and the people who want to delegate it come at 3:00,” he says.  

3. Keep it small and short. Most advisers suggest about two dozen people tops at each meeting. Meetings generally run one hour, and employers increasingly lean toward making attendance mandatory. Not only can advisers encourage plan sponsors to make it mandatory, Blalock says, but they should. “If you make them optional, people will forget about them,” he adds. The best time of day to have an enrollment meeting depends on the group and the goal. “A lot of employers like to use late afternoon or early evening, to invite employees with their spouses,” Hinderstein says. “The employees who utilize that tend to be a little older.” 

A midday meeting also can work well—especially to get the attention of employees on a tight budget. “It is better if they are done at lunchtime, and the company buys lunch,” Blalock says. “It gets people there, because everybody likes a free lunch.”  

What about automatically enrolled participants who have taken the passive route and might see the session as unnecessary? “To get them engaged, you must have the support of the plan sponsor. In the past, just posting meeting notices has not worked,” Ganong says. “To get people engaged, they have to see you as someone who can help them. They may not come to the first meeting but, when they have watched us talk with other participants, walk around the plant or office, and become familiar with us, they will attend.” She and her colleagues also offer individual consultations and e-mail education pieces. 

4. Focus on earning trust. “It all begins with your trustworthiness. That is more important than anything you flash on the screen, or any games you play,” Blalock says. So, an adviser somehow has to gain employees’ confidence in the beginning. “The best way to do that is to use words that they understand. People relate to examples and personal experiences. Do not present yourself as an investment guru, and do not use lots of investment words and lots of statistics,” he says. “Really, the message I try to send is, “I am here to help you. Please do not hesitate to ask questions.”” 

Ganong builds trust in part by bringing a spirit of fun to her meetings. She tells jokes and stories about herself, including the first time she joined a 401(k) plan. “I let them know that I have not always been an expert, and that there was a time when I was sitting in an enrollment meeting, just like them,” she says. “I let them know that it is OK to not be an expert.”  

If Ganong and her colleagues have been working with an employer for a while, but want to meet with a new group of participants, they try to gain recognition and trust by touring the facilities, appearing in the company newsletter, attending annual benefits meetings, and “being a regular part of the company,” she says. Whenever she finishes a meeting with a new group, she asks them “to spread the word to the next group of new employees, or others who are not participating, on how easy it was to join the 401(k) plan.”  

5. Find the ringleader. Blalock likes to identify the “ringleader,’ who influences the investment decisions of others in an office, before holding meetings there. “There is always one person who thinks he knows more than everybody else, and who helps other employees. I like to know who is providing that investment counseling,” he says. “Usually, the company knows, or this participant already has called us to ask several questions.” If it is not apparent who the ringleader is, he suggests asking several participants who seem to know a lot about the plan and the investments. 

That “key employee advocate” can help a lot in building word-of-mouth before a meeting, Reisinger suggests. Frustaglio takes it a step further, and likes to ask these people to speak at meetings. “If there is somebody in the crowd who has participated for a while, who got in early and is very happy with it, try to engage him in the meeting,” he says. “If people like that speak up, it is very powerful.”  

 6. Be interactive and available. Interact a lot. Advisers need to spend time talking through the basics, but do not devote the whole meeting to a lengthy presentation aimed at wowing them. “I am not a big fan of PowerPoints,” Frustaglio says. “I like to engage people in conversation.” 

Do a presentation that draws out questions and comments from attendees, Reisinger says. “If you are trying to show the benefit of saving at a greater rate, you can ask if anybody in the audience has ever saved for anything—a house, a car,” he says. That allows attendees to talk about the plans for saving they made in those cases. “You want to drive home that, in this process, what is it that they ultimately have control over—how much they save,” he says. 

Keep the interaction going after the meeting. Bailey recommends scheduling an hour between enrollment meetings to allow for answering questions one-on-one. Some participants want an adviser to validate their investment choices. In that case, he says, advisers must always keep in mind whether their agreement with the employer calls for giving investment advice, or simply providing education. “It can be tricky, and you have to know what you are and what you are not,” he says. 

Other participants may have questions they do not want to ask in front of their work peers, such as the ramifications on their retirement account if their marriage ends. Ganong and her colleagues hand out business cards to all attendees, and get follow-up calls a day later, or even a month later.  

7. Show, don’t just tell. Graphics and examples help most people understand concepts better than jargon-heavy speeches. This is one area where the presentation format can be helpful. “I am very visual: I show lots of pie charts and lots of pretty colors, to make it as easy to understand as possible,” Ganong says. “That is the key to getting people involved: Make it easy.” If Frustaglio wants to demonstrate the benefits of diversification, he may ask an attendee to break a pencil. Then, he asks that person to break nine pencils, a much tougher task. That gives him a chance to talk about the protective strength of adding more pencils—similar to participants having a range of funds in their portfolios. 

Ganong likes to draw simple analogies that relate to her audiences. Many of the Midwestern participants she works with grew up on a farm or have a garden. So, when explaining how the taxation timing on a Roth 401(k) works, for instance, “I ask them, “When do you want to pay the taxes: on the seed, or on the harvest?””  

8. Stress increasing deferrals. Most employers doing automatic enrollment have set default deferrals far below what people need to save—which puts automatically enrolled employees in the same boat as most people who enrolled the old-fashioned way. “In a lot of cases, for employees, the minimum automatic-enrollment percentage just will not cut it,” says Robb Hill, AUL Retirement Services Vice President, Northern Sales. “Advisers will need to work hard to try to show them the necessary savings level for them to have a comfortable retirement.” 

Give employees tools that allow them to see exactly how much they will end up with if they save at the default deferral rate. Reisinger suggests showing them a specific example in graphic form that clarifies the difference even a little boost makes. “You can illustrate that, if you take 1% of an employee’s salary and break that out over 26 pay periods, how little is being taken from their paychecks—but also show them the difference of saving 1% more annually in a lifetime of work.” 

9. Have an employee action plan. “Make certain that attendees know exactly what they need to do,” Blalock says. “Then, they do not go home and say, “What do I do now?” Or worse, “How do I fill out this form?” Clearly communicate the opportunity and the timeline.’ In addition to enrolling, that might mean increasing the contribution for those automatically enrolled at the default rate, looking into the newly offered target-maturity funds in a plan, or checking out the financial-planning tools available online. 

In addition, create the opportunity for action right after a meeting ends, Ganong recommends. She likes to make sure that an employer has an office with a computer—or, better yet, a room with multiple computers—available for her to use so that she can help employees make changes immediately. Maybe they want someone to hold their hand while they fill out the electronic paperwork to enroll or boost their deferral, or maybe an adviser can show the techno-wary how to utilize online tools. 

10. Measure your success. Always put metrics around the success of these meetings to pinpoint if employees took action. Think about measuring whether any employees who initially had opted out of automatic enrollment decide to participate after attending a meeting, for example. Look at the results 30 days or 90 days out, Hinderstein advises. 

Success also has a more human element to judge. Frustaglio likes to pass out surveys right after a meeting with seven to 10 questions about employees’ reactions, such as whether they had any questions that went unanswered. “Then, you can work with HR on how you can make the meeting better next time,” he says.