The Virtual Reality

The participant digital experience falls into a broad context, says Aaron Pottichen, senior vice president at Alliant Retirement Consulting in Austin, Texas. “The conversation we’re having with plan sponsors is, what can they do to provide a better experience for their employees overall?”

The participant website and mobile app are likely the standard ways many employees connect with their retirement plan, so the quality of the digital experience has become more important. “I view a better experience as one that has less ‘friction,’ when participants decide to engage with their 401(k),” Pottichen says. “How does friction come about? When they try to initiate a loan or hardship withdrawal, or update their beneficiary or just check their balance, and they can’t do it simply. If you’re a recordkeeper, let’s start with those basics, and then build a snazzy website.”

Only 43% of the 5,363 retirement plan participants surveyed for J.D. Power’s “2021 U.S. Retirement Plan Digital Satisfaction Study” said they find it very easy to locate the information they are looking for on their retirement plan website and mobile app. And just 24% strongly agreed that their plan recordkeeper offers proactive guidance and help.

“There are many considerations in choosing a plan provider. One that has started to get more attention is the participant experience, and a significant part of that is the participant digital experience,” says Mike Foy, senior director of wealth management intelligence at J.D. Power, in Troy Michigan. “How providers deliver value to participants through the digital experience varies and is something [plan sponsors] should consider” when evaluating plan providers, he says.

What Surveys Show

The J.D. Power survey, released last September, found wide variation in how well specific providers succeed at filling participants’ digital needs today. “In our participant survey, there was almost a 100-point gap between the top and bottom providers[—there were 26 in total—]on a 1,000-point scale,” Foy says. “The top five providers are significantly above the average in participant satisfaction.” For overall participant satisfaction with the digital experience, these providers ranked highest, in order from fifth to first: Fidelity, T. Rowe Price, AIG Retirement Services, Bank of America and Charles Schwab.

Several key findings from participant surveys such as J.D. Power’s stand out:

• Participants want proactive guidance. Besides only 24% of participants strongly agreeing that their plan’s provider offers them proactive guidance and help, just 39% strongly agreed that their provider helps them track their progress toward their retirement goals, according to the J.D. Power survey. Foy says, the perception many participants have that they get too little guidance and help speaks to how many recordkeepers’ tools are passive instead of proactive—the information and tools probably are there, but participants have to search for them.

“A big part of the issue is discoverability: If people go onto their plan’s website or mobile app and hunt around, in many cases they are likely to find educational content, tools and calculators that will help them with an issue or question they have,” Foy says. But many people neglect to do that, which is why providers proactively offering targeted guidance and tools is so important, he says. “It’s not a case of, ‘If you build it, they will come. Providers have to be able to more effectively weave proactive guidance [such as that concerning a participant’s deferral rate] into the customer experience.”

• Good mobile apps are critical. The mobile-user base of participants is growing faster than the base of participants who utilize their plan’s website to access their retirement account, J.D. Power also found. While the majority of Baby Boomer through Generation Z respondents still opt to use the plan website to access their account, 35% of Gen Yers and 36% of Gen Zers said they prefer using the app or visiting the mobile website by way of a smartphone.

Similarly, survey respondents in Corporate Insight’s “Participant Mobile Experience: Preferences and Engagement” study, released in October 2020, said they log into mobile platforms more often than the desktop site. While 33% of respondents said they check their mobile platform at least weekly, 25% said they check at least weekly via a desktop. That trend is likely to increase.

“We’re seeing, year over year, when we do surveys in the DC [defined contribution] plan participant space, mobile usage is increasing,” says Andrew Way, director of insurance and workplace finance services at Corporate Insight, a user-experience researcher and consultant, in New York City. The convenience for participants of accessing their account via mobile vs. a desktop is a significant factor, he says.

• Participants need help with broader financial stressors. Participants who feel financially unhealthy are not generally as satisfied with their provider’s digital experience, the J.D. Power survey found. That is likely because they get too little information and too few tools targeted to their broader financial challenges, Foy says. “It goes back to, retirement plan participants aren’t thinking about retirement in a silo, but in the context of their overall financial lives,” he says. “I think, for providers, it’s a matter of using data to understand more about specific participants and then tailoring the digital experience to the particular challenges a participant might have. That way, an individual can address his or her retirement savings in the context of other financial issues.”

Key Differentiators

Advisers can help their plan sponsor clients offer a better participant digital experience by looking for these key differentiators when doing a general recordkeeper request for proposals (RFP) or request for information (RFI):

• Easy navigation on the website. “Comparing provider with provider, it comes down to the interface,” says Chris Kulick, a principal in CAPTRUST, in its Doylestown, Pennsylvania offices. “They are all trying to get to the point where it’s intuitive for participants. However, some of them have done a better job than others. Some providers have overcomplicated their website, and that makes it difficult for folks to find the information they’re looking for. But when a site is intuitive, it gives participants the information they really want to see, right upfront. They don’t have to put a lot of thought into how to find the information.”

• An engaging homepage. For a recordkeeper’s website to engage a participant, this needs to start on the homepage. “The homepage is critically important, because anywhere from 60% to 80% of users log in, view the homepage and then log out,” Way says.

Schwab incorporates on its homepage its My Retirement Progress tool, which makes it easy for people to see an estimate of what different deferral rates could mean for their retirement-savings outcome, says Nathan Voris, director, investments, insights and consultant services at Schwab Retirement Plan Services in Richfield, Ohio. “The science of it is: Where is that tool on the homepage?” he says. “A high percentage of participants come to the website just to check their balance. But if the person looks at the My Retirement Progress tool while getting his balance, he’s much more likely to interact with the tool.”

Schwab also uses demographic and behavioral data it has acquired for the participants as individuals to tailor additional information on their homepage, Voris says. “Let’s say someone came to the portal, and we know that person recently attended a webinar on college savings. So there may be a link to an article on next steps to take with that,” he says. “It’s about using the data the recordkeeper has in an intelligent way to make it easy for a participant to get to where he wants to go.”

• Individualized information. What engages individual participants on a website or mobile app can vary by demographic factors such as age, Way says. When Corporate Insight asked DC plan participants what financial topics are most relevant to them, 49% of Millennials, vs. 13% of Baby Boomers, said they would like information on college costs and student debt. And 57% of Millennials expressed strong interest in getting information on budgeting, vs. 48% of Gen Xers and 32% of Boomers.

One of the most important aspects of the digital experience now is whether a recordkeeper can customize it down to the individual participant level, says John Quinn, managing director and head of product and platforms for Bank of America’s institutional retirement business in Pennington, New Jersey.

“The idea of an individualized platform is very important. We think your digital experience can’t be the same as another participant’s, because each of the individuals is in a very different place,” he says. “To [get there], we use the data we have in our system, data provided by the individual, and observed behaviors when an individual interacts with our digital platform.”

Quinn gives an example of how Bank of America’s platform does that. “If we know someone is carrying credit card debt or struggling to meet his monthly budget, when he goes to the website or mobile app, we’re not going to prompt him to increase his contribution,” Quinn says. “Instead, the participant may see a message that refers him to resources that will help him focus on setting a budget or review his spending patterns.”

• Mobile app functionality. This has become a key piece of the puzzle when CAPTRUST evaluates providers, Kulick says. “When we do an RFP, we request demo links, because we want to see the functionality of the mobile apps, particularly the transaction capabilities,” he says. Can participants do all the transactions—e.g., investment or deferral changes—with a mobile app that they can on the website, or does the mobile app redirect a participant to the website for a transaction?

A seamless platform experience between the desktop computer and mobile app has become a chief differentiator, according to Quinn. “We’ve built our system so that anything you can do on our traditional website, you can do on our mobile app, too,” he says. “That’s important, because mobile is becoming the dominant channel for many people. That functionality does differ now among recordkeepers, for sure.”

Help From Advisers

Advisers can play a more direct role in enhancing participants’ digital experience. As the people most often meeting directly with participants, they can offer one-on-one expertise about how to sort through and act on guidance a participant received digitally.

“I talk a lot about ‘high tech and high touch,’” Quinn says. “Yes, we need to have great digital platforms, but there will be phases in just about anyone’s financial life when they want to speak to someone. They want to be able to say, ‘The digital tool told me to consider X, Y and Z. Can you help me think through that?’”

When meeting with participants, advisers also can help increase understanding about helpful resources on a recordkeeper’s website or mobile app.

“Many times, the participants don’t know what’s available to them, so it’s creating the awareness that’s important,” Kulick says. “In group sessions, for example, we show them how to download the mobile app. We’ve seen that, once they have that mobile app on their phone, the probability that they’ll go in and check their balance goes up dramatically. So we help hold their hand through the initial process.”

For instance, many companies in the plan advisory business now have their own financial wellness site. “Advisers are starting their own participant sites, and some are encouraging people to go to that site before they go to the recordkeeper’s site,” Pottichen says. “The workplace is the next battleground for [winning] financial advisory clients.”

Advisers increasingly will offer guidance and resources that help participants not just utilize their retirement benefit better, but all their benefits at an employer, he says. “Putting in a high-quality investment menu, educating a sponsor on its fiduciary responsibilities and putting in fiduciary governance processes, and monitoring fees to ensure their reasonableness have become the minimum things an adviser should do, to be competitive,” he says.

“The next phase we’re moving into is, how do we help employees better understand their overall benefits package?” he continues. “It’s one of the most expensive financial decisions employees have to make every year, and most people do that without talking to a financial adviser first.”

CAPTRUST already has a broad platform for personal financial and retirement plan advice for individuals, as well as a whole curriculum of financial wellness tools, Kulick says. Individual employer clients decide how much they want to emphasize a recordkeeper’s digital resources for participants, vs. using CAPTRUST’s digital resources, he says. “We’re not there necessarily to replace the recordkeeper; we’re there to allow for choice. We’re an independent and objective alternative. It’s up to each employer how it wants to position that.”

Plan advisers should keep in mind that some recordkeepers will integrate an advisory practice’s digital resources with their own platform, while others will not, Voris says. “Many advisers have wealth management practices or financial wellness tools that can benefit a plan’s participants. So the issue is, how can a recordkeeper create a partnership with the adviser, plan sponsor and the recordkeeper?” he says.

“Some recordkeepers are more interested in integrating a plan adviser’s digital resources than are others. Different recordkeepers approach the partnership with plan advisers in different ways.”

Art by Mar Hernández