How do you get participants engaged in a subject so complex that they barely understand the phrases, yet, at the same time, one that is so important to their future well-being?

First things first: you define it and make it easy for them to understand.

“People are so confused by [retirement],” said Stacey Hyde, vice president and co-founder of Independent Wealth Management. “They don’t understand the language; they don’t understand the options; and they don’t know what they need to be doing.”

Plan sponsors, partnered with financial advisers, can help combat this inertia and drive engagement by being specific, using real examples that resonate with them and being consistent in their messaging, two experts explained during a session Monday at the annual NAPA 401(k) Summit in Nashville, Tenn.

Attendees register at the 15th Annual NAPA 401(k) Summit. [Photo credit: Don Jackson]
Attendees register at the 15th Annual NAPA 401(k) Summit. [Photo credit: Don Jackson]

“We can’t go right in talking about investment vehicles and strategies; we’re going to lose them if we do that,” she said.

Even words like “vesting” or “match” that plan sponsors or advisers wouldn’t consider complex language needs to be explained to employees. “Don’t call it vesting; explain what is it,” Hyde said.

One audience member in the panel said she no longer uses the word “match” when describing it to employees. She refers to it as “free money” — which, not surprisingly, gets employees a lot more interested.

“We are the people delivering financial and retirement education to people. Just because we know this stuff, doesn’t mean they do,” Hyde said.

Also important, she said, is to break things down into monetary figures instead of percentages when talking to participants.

“Take a percentage and put in into a dollar figure,” Hyde said. For example, “tell them it’s only putting away $25 a week, and that may seem a little more doable to them.”

“Tell them they are turning down an [X percent] raise every year by not contributing to their retirement plan [match],” Hyde said.

“It’s like when you tell a toddler something. You feel like you keep saying it, but it’s important."

“When participants know their figures, they will start to take action on it,” said Vincent Morris, president of financial services at Bukaty Companies. “But when they don’t even know or understand them, we’re in trouble. We really have to have our boots to the ground.”

Resistance — or ignorance — is always going to be a challenge when it comes to engaging participants, but it’s important to get people to envision what their retirement is going to look like, Hyde said.

“People underestimate what they need [in retirement],” she said. “They think ‘my house is paid off’ or ‘I don’t have a lot of day-to-day expenses.’ They overlook healthcare. They don’t think they need to buy a new car again after retirement; they don’t think the hot water heater will ever need to get replaced; they don’t think about property taxes. You need to get them to build a cushion.”

Of course, plan sponsors are an important part of the puzzle in engaging employees in retirement and financial planning.

They need to offer a robust 401(k) plan — and the education to make sure employees understand the benefits. Retirement plans have consistently proven to be an effective method to attract and retain key talent, Morris said.

Plan sponsors have to be willing to think outside the box in their options, Morris said, by being willing to try financial education, gamification and financial wellness programs as well as partnering with advisers on ideas.

“If you don’t have financial wellness in your workplace, you’re going have a lot more stress in your workforce,” Morris said. “We need to really try different methods to really get people on board with their retirement planning.”

Consistency in education and messaging is also vital to success.

“It’s like when you tell a toddler something. You feel like you keep saying it, but it’s important. And eventually they get more comfortable with [what we’re telling them],” Hyde said. “We can’t get discouraged; we have to be consistent with our message. Every day they don’t save, [employees] are going to have to work longer. It’s got to be about action — what they need to do. They are looking for help.”

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