High-Tech Meets High-Touch

James Lyday, managing director of Pensionmark Nashville, has what might be called an evolved view of technology. “I look at technology not as a replacement for me, but as a way to make me better as an adviser,” says Lyday, a 2019 PLANSPONSOR Retirement Plan Adviser of the Year finalist. “With all of this new technology and robo-advisers, many plan advisers got worried we were going to get marginalized. But, in the end, technology will never replace people. Yes, there’s a small percentage of participants—maybe 5% or 10%—who will access these tools and the data, themselves. A much larger percentage want someone to interpret the data for them.”

Plenty of recordkeepers tout the innovations made to their participant websites and tools. “But when you start looking at the use of this technology, less than 20% of participants even log on to their website once a year,” Lyday says. It is only amazing technology if people actually use it, and most participants need help to do that, he maintains. “I don’t think technology is really motivating to participants. What’s motivating is the adviser who reaches out to the participant with the data in hand.”

The human element remains essential, and advisers need to blend technology and personal coaching in ways that inspire participants to make good changes, advisers say. “It’s great to zero in on usability and actually get results,” says Jon Meyer, senior director and chief technology officer at CAPTRUST in Raleigh, North Carolina. A relatively small group of mostly self-directed participants “can find a tool on their own to make any calculation online,” he says. “But what works with most people is having a dialogue. That’s hard to scale, in a Silicon Valley way.”

Here are some ideas for how to blend technology and personal coaching, in the form of four key touchpoints, to build participant engagement.

Demystify the Website Calculator

Many employees today feel intimidated by their participant website, says John Ludwig, a partner and the founder of LHD Retirement in Indianapolis and a 2019 Retirement Plan Adviser of the Year Small Team finalist. “I see a lot of money being spent by providers to get employees active,” he says. “Frankly, it takes somebody in front of them to show them how to be active.”

Vendors have done a great job of rolling out information, Ludwig continues, but he adds that this is often overkill. “An employee works eight to 10 hours a day, and then you expect him to go home and look at these things? You need to show him how to access the website and what information is there. Do it in small tidbits, one tool at a time, every time you do a meeting,” Ludwig says.

According to Lyday, everyone thinks participants, especially younger ones, need snazzy features such as gamification to get motivated to engage. But he says those are unnecessary. “They just need reality. A customized retirement income illustration is by far the home run to engage people,” he says. “It’s the starting point for all our conversations. People need a very simplified view of their reality: ‘Here’s where you are, here’s where you need to be, and here’s how you can close that gap.’”

Alicia Malcolm and her colleagues at D’Aiutolo, Malcolm & Associates Investment Consulting Group at UBS Financial Services Inc. in Rochester, New York, often talk with sponsors about what engages employees on participant websites. “There’s so much information, and, without participants really understanding how to navigate their website and what to look for, it’s almost a little overwhelming,” says Malcolm, senior vice president at the practice, another 2019 Retirement Plan Adviser of the Year Small Team finalist.

Malcolm likes participant websites that share the key information very clearly, such as displaying on the home page a participant’s personalized income-replacement projection. This contrasts with websites where the participant has to find the calculator and do the figuring himself. “The best home pages show people not just how to take action but lead them to take action,” she says. These sites offer a streamlined way—e.g., by clicking one button—to take an important step such as making a deferral increase.

For Noel Wolfe and his colleagues at The Beacon Group at Morgan Stanley, in Blue Bell, Pennsylvania, a retirement-income calculator serves as a good jumping-off point for a conversation. “The conversation always defaults to answering the question, ‘How much will I have in retirement income, and how much do I need?’” says Wolfe, first vice president, financial adviser and corporate retirement director at the firm, also a Small Team finalist this year. “Our team focuses a lot on having meetings with participants and using technology to start that conversation,” he says. “We can go into the calculator with them, plug in the data, get the results and discuss them.”

CAPTRUST advisers, meeting with participants in person or on the phone, walk them through how to use a retirement-income calculator, customizing the assumptions for each person’s situation and helping him understand the resulting projection. “If they try to do the calculation on their own, participants often make wildly unrealistic assumptions about, for example, what the annual return on their investments is going to be,” Meyer says. “It’s better to marry the electronic tool set with human coaching that helps people better understand why they should consider making changes. That’s where much of the value is created.”

Narrow the Financial Wellness Focus

A tremendous amount of financial wellness information is now available, on a wide array of topics. Morgan Stanley, for instance, offers participants a financial wellness website, branded with their employer’s name, that helps them pinpoint their specific financial issues. When a participant logs on, the portal starts by asking him 10 assessment questions, using his responses to give him a financial wellness score. At that point, the tool also suggests several specific actions for the person to work on, such as boosting student-debt repayment, to raise his score.

That is when Wolfe or a colleague steps in with one-on-one counseling. The tool’s suggested improvement areas help narrow down the universe of information and tools that the adviser could employ with the participant. But if a participant does not have that personal guidance and has to log on to a website and figure out for himself which financial wellness topics and tools to use, Wolfe says, “he doesn’t know where to start. The amount of head-spin it’s going to generate will cause most people to just walk away.”

Part of an adviser’s role in financial wellness involves offering “just-in-time education” that gives people the relevant information they need at key points in their life, says Matt Gulseth, a partner in Channel Financial, a 2019 Small Team finalist, in Golden Valley, Minnesota. “I think most financial education misses the mark in changing behaviors,” he says. “If the goal is to change behaviors, it isn’t through just giving people a bunch of online content or classes. We’ve learned that wellness programs are ineffective unless they specifically address that person’s desires and wants. What works is providing guidance and coaching to a person just before he makes a financial decision.”

The adviser has another key role in financial wellness, Gulseth says: increasing participants’ decisionmaking confidence. “We go overboard in providing too much information, at the expense of people feeling less confident about their ability to make that decision,” he says. “Think of your brain as having limited cognitive energy. To presume that people are going to make good financial decisions if we just provide them with a bunch of information is not realistic. Help them set a goal, something they are willing to go after—not something we’re imposing on them. And once they’ve set the goal, people need coaching to help them get there.”

The financial wellness program that Channel Financial uses—titled “Financial Elements” and produced by a partnership of independent financial advisers, Resources Investment Advisors Inc.—combines the human element and technology, Gulseth says.

The participant answers 10 to 15 questions in an online financial wellness quiz, and, based on that, the tool suggests three things he could work on to improve his outlook. “Then everyone gets assigned a coach to help him address those issues,” Gulseth says. “Ultimately, most people need an accountability coach: someone to help them with their goals and not just a robot pushing out educational texts.”

Create a Blueprint, One on One

Technology can help an adviser meeting with a participant make it simple to devise a plan to improve his retirement outlook and start taking action on it. “Whenever we go on-site for one-on-one meetings, we always bring our computers,” Malcolm says. “We can log on to a participant’s account with the participant, or the participant can log in on their smartphone. Then we can walk him through how to make changes.”

CAPTRUST retirement counselors do 30-minute, one-on-one phone calls that utilize the firm’s proprietary Retirement Blueprint™ tablet app to create a customized plan for a participant’s retirement. Using information the person provides, the blueprint will project when he can retire with adequate savings, how much he needs to defer to reach his savings goal, and how he should invest in his account, accordingly.

The counselor adjusts the calculator’s assumptions based on what the person is describing of his goals and plans, which helps the app more accurately model projections. “It’s done entirely online with screen sharing and the adviser and participant talking on the phone,” Meyer says. “The [two] agree on a plan and then, hopefully, execute on any suggestions, such as increasing the participant’s deferral.”

Most participants need help from a trusted person to translate their retirement-outlook data into an action plan to improve their scenario, Lyday says. “People want someone to help them—if they knew what to do, they would have just done it on their own already,” he says.

“The reality is that I’m part adviser, part psychologist and part teacher,” Lyday continues. “I’ve realized that I’m a psychologist first, because I’m trying to get into your head as a participant. If I can sit down and get to know you, then I can teach you, and then I can wrap that into being an adviser and talking about the plan and its features. But if you don’t get that first part down, you’re just a generic adviser.”

Capitalize on Smartphone Apps

Whether participants use smartphone apps still varies much by their age, Ludwig says. “It’s too early to say that mobile apps are a cure-all for everything. Participants under 40 use them to manage their financial lives. For participants 40 and up, it’s much less likely.”

Smartphone apps encourage participants to see how much wealth they have accumulated, which gives them a sense of accomplishment, Wolfe says. Some providers also have figured out clever ways to engage participants with these apps. “People like to compete with their peers, and some apps will tell you, ‘Here’s where you’re at, and here’s where your peers are at,’” he says. “Some providers even give out [digital] trophies. If you take an action such as increasing your deferral, you get a badge.” The double-edged sword of smartphone apps comes when participants start checking their balance too often, he notes.

As a participant motivator, the ever-present smartphone presents benefits and challenges, Malcolm agrees. “Cellphones are a great way to be able to have access to your account information at all times, which is both a blessing and a curse.” On the plus side, participants can always find out exactly where they stand with their retirement savings. On the minus side, those who frequently check their balance may get nervous when they see it fluctuate as the market shifts and have the impulse to change their investment allocation.

To help discourage that, Malcolm and her UBS colleagues offer participants guidance on how often to check their balance. “‘Never’ is probably not the right answer, but ‘daily’ probably isn’t, either,” she says. “We suggest to participants that they check in on their balance every three to six months. And once a year, they should log in and make sure they know their current contribution rate and current asset allocation and use the retirement-income calculator.”

Malcolm also reminds participants to think of their 401(k) account as a long-term investment, not a way to try market timing. “We emphasize that participants shouldn’t make changes to their allocation on a daily basis, that this is not supposed to be a brokerage trading account,” she says.

CAPTRUST has a smartphone app extension of its Retirement Blueprint tool in the works and may introduce it as soon as early 2020. The app likely will include brief video messages for participants, blending topics such as market commentary with success stories of participants who have saved consistently and stuck with an appropriate asset allocation through different market conditions.

“We will be hewing to the message that the less you touch your allocation, the better off you do statistically in the long term if you have the right allocation,” Meyer says of the app. “We encourage participants to get to the right asset allocation and then to be comfortable with the ups and downs in the market.”

Art by Alex Kiesling