New research finds that retirement plan participants have clear preferences when it comes to communications, but employers and the retirement planning industry are not always listening.
In setting out to discover what language and formats work for savers, the Empower Institute explains in “Less jargon, more clarity” that plan participants want communications that are simple and brief, and that use everyday words in a financial context. According to the research, nearly half of Americans—including a majority of Gen Z and Gen Y—say commonly used financial terms make them hesitant to talk about money. “Words have the potential to inform, encourage and empower. But the wrong words can be powerful in negative ways, leaving people uncomfortable, overwhelmed or confused,” the paper observes.
As part of its efforts to understand which terms best convey the intended meaning, Empower showed respondents a sentence that described a financial term and asked them to select the term that they could best understand.
The research shows that many common industry terms don’t match saver preferences. For example, just 18% of survey respondents preferred the term asset allocation, only 10% preferred the term account aggregation, and a mere 5% of people preferred the term robo-advice. The term “employer match” was also far more popular than “match,” while “retirement income” performed better than “retirement paycheck.”
“Certified financial advisor” was also preferred over the term “fiduciary,” when participants were asked what their preferred term is to describe “a person or organization that acts on your behalf to manage your finances, putting your interest ahead of their own, with a duty to preserve good faith and trust.”
In addition, Empower notes that there are important generational and cultural differences in some of the results. For example, when it came to professionally managed accounts, black respondents were particularly likely to prefer professional account management (34%), while Hispanic respondents preferred retirement account management through digital and human support (26%).
Overall, savers want most account information delivered by email, but they have different preferences related to educational materials that includes a mix of live one-on-one meetings, digital content and text. But the research also showed that important preferences for communication vary by age. For instance, younger savers were much more interested in virtual meetings and text messages, while older savers preferred in-person contact.
Empower suggests that using the right words and methods are critical, as employees need to understand their retirement plan options and feel confident in them so they will take steps to improve their financial future. To that end, the paper suggests:
- Focusing on simplicity by using clear, direct language when creating communications for savers. If technical terms are needed, explain them in simple terms, the paper notes. Also, be consistent with chosen terminology across communications, as using different terms interchangeably can lead to confusion.
- Knowing your audiences, as no single strategy works universally. Whenever possible, tailor communications towards employees’ ages, cultural backgrounds and other common traits. Employee surveys can also help you better understand your workforce and fine-tune your engagement approach.
- Choosing the right channel. Here, the paper reiterates that younger audiences want more digital education, but older savers prefer conversation. Using the platform participants prefer is a key step in helping them act on the information they need, and if possible, let employees choose how they prefer to engage. Alternatively, use different channels to see how employees respond and identify more effective channels.
In addition to using earlier research conducted by the organization, the findings in the white paper were developed from a 2021 online survey of more than 2,000 U.S. adults aged 21 or older, including more than 600 who participate in their employer’s DC plans.
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