New research from the Defined Contribution Institutional Investment Association (DCIIA) presents new insights on the importance of investor communications and education in the defined contribution marketplace. Starting with rethinking basic assumptions about the definition of retirement, the study by industry veterans Martin Campbell, Warren Cormier and Tim Kohn shines a light on a series of potential misconceptions that plan providers may have about their plan participants.
One third of Plans Sponsors participating in the study indicated that improving participant communication and education is their highest priority following increasing participant savings rates (one might argue that it is difficult to do the latter without the former.) However, many sponsors feel challenged by the need to communicate complex issues with life-long consequences to an audience with broad financial, educational and lifestyle profiles. This challenge is compounded by the potential for drastically different longevity projections among the participant audience and differing views on what retirement actually means.
The study is not terribly long and is worth reading if you are interested in participant communications. The bottom line is that improving communications requires a personalized, modular approach to the full life cycle of touch points with participants. One size does not fit all – it will not even fit most.
What is not covered in the study is the secondary benefit of improving communications: when designed effectively, these programs are far less costly to implement and manage. Less information is required, perhaps even less frequent information – if it is the right information at the right time. Effective can also be efficient – sounds like a great New Year’s resolution for the DC industry.