Digital Tools are poised to deliver better outcomes to both plan participants and plan sponsors. ‘Going digital’ through the use of digital tools may also begin to close the savings gap.
That can be observed within a new study from JD Power. The study shows that retirement plan sponsors, committees, and their service provider partners fall short when it comes to engaging participants digitally. Cited in a recent SmartAsset article, the JD Power survey found that savers enrolled in workplace retirement plans are lacking when it comes to access to digital tools to help them plan and save for retirement. Just 24% of retirement plan investors surveyed in September 2021 said they strongly agree that their retirement plan provider offers proactive guidance. Another 43% reported that they found it very easy to get the information they need to make informed investment choices via a retirement plan website or mobile app.
The digital tools exist, however, many retirement plan participants either aren’t using them or aren’t aware of them. Arguably, retirement plan service providers have invested significant amounts of money in recent years in building out more robust digital planning tools. However, if participants aren’t able to find them, or don’t know they exist, they’re frankly useless.
So, how can retirement plan sponsors, committees, and service providers help participants make better use of digital tools to increase savings? How can the retirement gap be bridged? First, one should look for opportunities to provide proactive guidance. JD Power found retirement plan satisfaction scores rose 51 points when a retirement plan provided prospective guidance using digital channels. In addition, participants who receive this type of guidance are 25 percentage points more likely to keep their assets with their current plan sponsor. Despite this, only 24% of the retirement plan participants JD Power surveyed said their plan offered this guidance.
Retirement plan participants also value the mobile app experience, JD Power found. In general, participants said they were happier with their retirement plan’s mobile app experience than the website. Nonetheless, just 35% of participants had downloaded their retirement plan mobile app – low compared to 52% of energy provider customers who did so. Plan sponsors, committees, and providers may do well to encourage participants to download their retirement plan app if one is available. Asking during an in-person or virtual information session could potentially increase participant satisfaction and improve savings rates.
If participants ask for better digital tools or service, listen and consider introducing changes when appropriate. Talk to your plan service providers and see if they have suggestions on how to help your participants better use the tools available to them. It’s already well known that Americans aren’t saving enough for retirement. A simple change like adding or implementing digital tools and mobile apps that can boost engagement and savings rates could make all the difference in helping participants reach their retirement goals.
Steff C. Chalk is Executive Director of The Retirement Advisor University, a collaboration with UCLA Anderson School of Management Executive Education. Steff also serves as Executive Director of The Plan Sponsor University and is current faculty of The Retirement Adviser University.