This is the ninth article in a 10-part series on successful open enrollment. Previous segments can be found here.
Picture: A plan sponsor works diligently to create the perfect retirement plan program for their participants. The plan design is matched to fit the needs of the organization and the participants, the right consultants and partners are in place, there’s buy-in from upper management, and it is cost effective. Then the plan in all its glory is presented to the very participants it was designed to benefit. And … nothing. All the planning and effort spent on putting forth a worthwhile benefit is met with palatable disinterest by participants. Enrollment is low and for all intents and purposes, the strategy is a flop.
Sadly, this hypothetical happens more often than one would hope.
Employers who struggle with open enrollment should rethink how they engage participants. When approaching the process, they should first step back and try to understand participant behavior, analyze what motivates them and adjust their approach to match.
Here are five best practices that should lead to enrollment success:
1. Don’t be boring. A cardinal sin that one can commit when trying to enroll participants into a retirement program is to be too dry. Be as excited about the plan as you want participants to be. Positivity is contagious.
2. Focus on today. From a behavioral standpoint, employers must realize that participants suffer from near-term biases. That is, they don’t want to delay gratification. Retirement is a far off, stranger’s world. Bring the focus back to today and how their plan benefits them now, whether it’s taking advantage of a company’s match, tax benefits or other opportunities.
3. Realign to participant concerns. Most participants have near-term financial concerns that — right or wrong — take precedence over a distant retirement. It can be anything from weddings to children to aging parents. Realize that these are tangible and immediate concerns. Or perhaps participants are overwhelmed by investing in general or uneducated on the plan itself. Every group has different needs. Tap into the pulse of the participant population to understand what motivates them and realign the message to fit.
4. Change the narrative. Instead of preaching the doom and gloom of an unprepared retirement, rally participants to empower themselves. Find their concerns and address them. Then, show how participating in the plan can help today. Immediate relevancy allows participants to be excited and resolved to improve.
5. Capitalize on momentum. Don’t be afraid to follow-up with wayward participants to see how the benefits staff can assist them. Inertia bias is the enemy, and you have to fight it at every step of the way. Don’t let it win.
Working to increase enrollment success comes down to a few factors: focusing on what’s actually important to participants, being as energetic and excited about the plan as possible, and persistence. Enrollment can be a thankless job, but when done with participants’ best interests in mind, success is achievable.
John Ludwig, ChFC, AIF, CRPS, is an LPL Financial advisor with LHD Retirement. Reach him at email@example.com.
This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does adviser assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.
Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
Tomorrow: Analyzing and improving open enrollment
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