3 ways your digital strategy can help enhance participant outcomes

In recent years, there’s been a rapid flow of information into the workplace. Employers have a large amount of data that they can use to help their employee base. At the same time, strides in data and intelligent automation have propelled a shift toward the personalization of products and services. In the defined contribution space, this has taken form with Managed Accounts and various hybrid plan designs.

Managed Account providers aggregate data points from the recordkeeper, plan sponsor, and potentially the participant themselves to build a holistic view of a participant’s financial situation and future goals, and provide personalized recommendations.

Not only are no two participants the same, but also the same participant is likely not the same at age 40 as they are at age 65. Priorities and circumstances change as we age. By leveraging the power of data to take a personalized approach, you can create a strategy that evolves over time.

One-size-fits-all solutions make assumptions about how participants’ lives will unfold. It’s a narrow approach to a wide range of possibilities, whereas a more tailored approach can respond as life events and interruptions happen.

Every day we engage with complicated algorithms and automations when we use social media or search engines – and yet, “googling” is universally recognized as a quick and easy way to find information. This is because the experience is easy for end-users, even if the underlying product is highly complex.

When it comes to delivering guaranteed lifetime income (GLI), the same principles can be applied. Due to advancements in technology and product, it is now possible to deliver intricate annuity products seamlessly within a 401(k) plan menu.

However, it’s not as simple as just plugging in the products. The digital experiences surrounding the delivery and servicing of these products must be straightforward for plan participants. Managed Accounts and Target Date Funds (TDFs) offer a viable option for delivering guaranteed lifetime income with a structure that reduces action required on the participants’ part. Embedding GLI in either of these strategies provides an opportunity to meet customer needs without adding additional work for the plan participant.

With the experience streamlined, participants can focus more on the value the product provides instead of the complexity of its design. After all, product simplicity is only one facet of the overall customer experience. Products also need to be able to address key participant pain points, and meet expectations.

A product like a Fixed Index Annuity (FIA) with Guaranteed Lifetime Withdrawal Benefit (GLWB) may offer several customer-centric features, including guaranteed lifetime income, the potential for growth, accessibility, flexibility, and portability, all of which help improve outcomes for a range of participant priorities. A caveat that’s been used with such products in the past has been their complexity. However, by leveraging one of the aforementioned strategies, we can deliver such innovative products seamlessly within an employer-sponsored retirement plan.

Technology has drastically changed how we share and receive information. Whether at work or in our personal lives, our needs, motives, and cognitive capacities are different when consuming information online.

Digestible digital communications are particularly important when it comes to retirement income, where ease of understanding has been a historical barrier. The reputation of annuities and the complexity of income options may limit participant use of such products. However, by taking care to simplify the language around in-plan annuities and deliver messaging that’s channel appropriate, we can help drive understanding and engagement.

For example, when explained in clear terms, people understand what an annuity is and the value it can bring to their retirement plan. This is particularly important on digital channels, where users expect communications in quick soundbites that are easily understood, available, and accessible.

In fact, a 2022 survey from Greenwald Research found that 7 in 10 participants found the following statement compelling: “Annuities are the only investments that can be purchased to provide a guaranteed lifetime income. Annuity solutions developed for your employer’s plan have evolved in many positive ways and are different from annuities you may have heard about in the past.” ¹

The financial services industry has a reputation for long, complex communications. These don’t work on digital channels. Messaging needs to be clear, concise, and consistent.