Engaging Participants

Nudging Participants Toward Retirement Success

Nudging Participants Toward Retirement Success
  • Print

Promoting positive actions in the digital age

For plan sponsors and participants, retirement success is often defined as having enough ongoing income to sustain and protect a desired retirement lifestyle, and potentially pass a portion on to heirs, in a world of increasing life expectancy. For many, this means having the financial security and ability in retirement to:

  • Meet Day-to-Day Living Expenses
  • Make Personal Lifestyle Choices About Where And How To Live, Hobbies And Personal Pursuits
  • Maintain Quality Of Life, Personal Health and Independance 
  • Leave Residual Assets For Heirs And Achieve Philanthropic Goals

A large part of retirement planning includes helping – or nudging – participants to spend quality time thinking about their future by answering the following questions:

  • What is my idea of retirement?
  • At what age do I want retirement to begin?
  • Do I want to stop working altogether after I retire?
  • Do I want to work less or less hard?
  • Where do I want to live?
  • What part will my family members play?
  • Do I want or need to be close to brothers/sisters/children/parents?
  • Will I be alone or with a significant other?
  • What role will my health play in the quality of my retirement?
  • Do I have philanthropic goals?
  • Do I want to leave a legacy or pass assets to my children?

Only with a target in mind can participants of all ages properly plan and sequence the steps necessary to assure they won’t outlive their income in retirement. However, most individuals have only a vague idea of how they want to live during retirement, and less than half of employees (48%) have even bothered trying to figure out how much they will need to retire comfortably.1

Keeping that in mind, financial wellness programs — in conjunction with the DC plan’s retirement plan advisor or consultants — strive to sharpen that picture for participants by setting clear and definable goals according to their unique needs, financial situation and time horizon. Through these programs, participants gain access to professional guidance and customized education to manage competing financial issues, such as paying down debt, saving for their children’s education, helping an aging parent, covering day-to-day living expenses, paying taxes and insurance premiums, and saving for retirement.

Today, only 37% of Americans report they can  live comfortably and save an adequate amount  for retirement or other needs, and a significant number even dip into their retirement savings, or reduce retirement plan contributions, to cover other expenses:2

  • Nearly half (46%) of Americans say they  can get by every month, but find it difficult  to save and invest, whether for retirement or other purposes.
  • 15% find it hard to make ends meet every month.
  • Almost one-third (32%) report that in the past 12 months, they have withdrawn money from savings or pension funds to make ends meet.
  • 30% reduced contributions to a 401(k) or other pension or retirement fund.

The industry is moving from a “what’s my number” conversation to a dialogue about the income needed in retirement and the amount of income that savings can buy. This, in turn, has resulted in a shift in thinking from a “point in time” conversation to a lifelong experience and affiliation.3 Financial wellness programs can also help  participants prepare for and adjust to unexpected life events, such as a divorce, a long-term illness or a spouse’s death. Financial Finesse reports in its 2015 Year in Review of its Fortune 1000 clients that employees who have repeatedly engaged in their workplace financial wellness programs are making progress.

Of these repeat users:4

  • 66% are comfortable with their debt, up from 63% in 2014
  • 39% are confident they are on track for retirement, up from 34% in 2014
  • 5% are confident that their investments are allocated appropriately, up from 52% in 2014
  • 31% report having taken a retirement plan loan or hardship, down from 33% in 2014

But more can be done. In this age of technological opportunity, incorporating “digital nudging” (connecting relevant, actionable financial insight at the exact point when a participant is about to make a decision) in DC plan design, financial wellness program efforts and overall communications is paramount to tackle the longevity challenge head on.

Financial wellness in the digital age

The insightful book Nudge: Improving Decisions About Health, Wealth and Happiness, by behavioral economists Richard H. Thaler and Cass R. Sunstein, establishes a new point-of-view in both overall plan design and participant education/communications. It offers perspective on preventing the countless mistakes Americans make, and shows how sensible “choice architecture” can successfully nudge people toward the best decisions.

As a complement to existing plan education, financial wellness programs are helping to provide the nudge many participants need towards driving positive savings behavior in the right direction in all aspects of financial life. By leveraging financial behavior research, targeted demographic communications and digital approaches to education, the combination of plan design advances and financial wellness efforts is making inroads in changing how participants think about the money they earn, the money they spend and the money they invest for retirement. In fact, EBRI’s 2016 Retirement Confidence Survey cites that the percentage of workers who are very confident about having enough money for a comfortable retirement, which was at record lows between 2009 and 2013, increased from 13% in 2013 to 22% in 2015, and in 2016, has leveled off at 21%.5

Automated plan design (enrollment, escalation, diversification and reinstatement) and re-enrollment campaigns are succeeding in helping employees save with proper allocations for retirement. And, in a recent study, in-person meetings with a financial professional are by far the most effective communication vehicle for motivating plan participants to make positive changes to their retirement savings.6

However, leading experts agree that ongoing active engagement across multiple platforms is needed to help participants stay on track. Shlomo Benartzi, professor and co-chair of the behavioral decision-making group at the UCLA Anderson School of Management, recommends that plan sponsors leverage advances in technology and digital access — including laptops, iPads, smartphones or smartwatches — to practice “just-in-time financial education” linking financial education and communication to the point at which participants are ready to act.7

Participants could see a pop-up email or chat with customized content that asks a question, or makes a recommendation (such as showing the impact of a higher contribution rate on their total portfolio), when they engage with their smartphone. From there, if they choose to engage, they are driven to an online experience to change assumptions and see consequences, including interactive calculators and tools that allow them to personalize projections.

Of course, segmentation strategies are critical as plan demographics and associated comfort levels and preferences with emerging technologies vary greatly. Baby Boomers (ages 51-69) may prefer paper statements whereas Millennials (ages 18- 34) may desire a reminder pop-up on their smart watch. Understanding and evaluating the plan’s demographics, and developing a segmented strategy aligned with a diverse audience is an important part of plan design. This takes into consideration targeted messaging, preferred touch-points and the best driver(s) to promote a positive action.

By partnering with their plan providers and retirement advisors/consultants, plan sponsors have an unprecedented opportunity to provide personalized participant experiences with an impact. ASPPA Net News summarizes a Broadridge report, “The Customer Experience Revolution,” highlighting the following list of best practices of leading plan service  providers, which help nudge participants towards positive decision-making across the financial wellness spectrum.8

  • A multi-channel participant experience  designed with a balance of one-to-one and digital interactions. Leading providers are creating linked channels through which participants are conveniently reached via phone, social media, chat or scheduled appointment.
  • A personalized “next best step” messaging approach to communications. Leading providers are using all known information, as well as predictive personal information, to offer personalized guidance at every interaction.
  • Personalized retirement income projections for each participant. Leading providers are creating personalized retirement income projections, taking into account all known information from the employer’s plans, from the participants themselves and from other purchased information.
  • Personalized and targeted campaigns (digital and print) supplemented with life-stage and life-event content and messaging. Leading providers are using predictive analytics and trigger points to offer personalized in-the-moment messages that are appropriate for  the participant’s situation at the time, as well  as including next best step guidance.
  • Access to financial wellness and investment advice programs that offer truly integrated experiences across select partners by sharing data, offering integrated access and presenting unified guidance and perspectives.
  • Dashboards and digitally delivered analytics for the plan sponsor. Leading providers are  ensuring that sponsors understand how the plan is performing against these new participant experience metrics, providing data and analytics in easy-to-use formats with drill-down capabilities about the participant activities, engagement, enjoyment and outcomes.
  • "People like me” benchmarks and comparisons that create the capability to present peer group comparisons and benchmarks within plans or across plans to help participants know where they stand relative to peers in similar situations.
  • Tracking of participant engagement across channels by harnessing the power of data from their platforms to more accurately and completely measure channel usage at a participant level across channels and by type of interaction.



Retirement providers spend approximately one-third of their total costs on participant communication-related activities. Accordingly, every interaction must count: As plan education has moved beyond just meetings and phone calls, today there are multiple person-to-person, digital and external channels, all of which have to work together seamlessly to create a connected experience. By leveraging 21st century advancements in technology, understanding behavioral finance principles, embracing the impact of financial wellness programs and appreciating the differences among plan demographics (Millennials, Generation Xers and Baby Boomers) in communication and interaction choices, plan sponsors can help nudge participants towards increasing their retirement confidence to meet the challenges ahead.


This article is from the Planet DC Summer 2016 edition.

1Employee Benefit Research Institute (EBRI) Retirement Confidence Survey, 2015. 2Planadviser, “A Rising Tide Benefits Advisers,” January 27, 2016. 3ASPPA Net News, “8 Factors Behind the Investment in Education Innovation,” March 18, 2016. 4Financial Finesse, 2015 Year in Review. 5Employee Benefit Research Institute (EBRI) Retirement Confidence Survey, 2016. 6Planadviser, “In-Person Meetings Best Retirement Plan Participant Motivator,” March 15, 2016, and Lincoln Retirement Power Participant Engagement Study, 2015. 7Pensions & Investments, “Style and Substance Key in DC Plan Communications,” March 10, 2016. 8ASPPA Net News,  “8 Factors Behind the Investment in Education Innovation,” March 18, 2016.

BNY Mellon Retirement personnel act as licensed representatives of MBSC Securities Corporation (a registered broker-dealer) to offer securities, and act as officers of The Bank of New York Mellon (a New York chartered bank) to offer bank-maintained collective investment funds as well as to offer separate accounts managed by BNY Mellon Investment Management firms. This material is not intended as an offer to sell or a solicitation of an offer to buy any security, and it is not provided as a sales or advertising communication and does not constitute investment advice. MBSC Securities Corporation, a registered broker-dealer, FINRA member and wholly-owned subsidiary of The Bank of New York Mellon Corporation, has entered into agreements to offer securities in the U.S. on behalf of certain BNY Mellon Investment Management firms.

NY Mellon Investment Management is one of the world’s leading investment management organizations, and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management service and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation.

The material contained is for general information and reference purposes only and is not intended to provide or construed as legal, tax, accounting, investment, financial or other professional advice on any matter, and is not to be used as such.

Plan sponsors should work with their ERISA attorneys, advisors and/or consultants with respect to their plan.