Investment insights from Capital Group
Every company – and every retirement plan – is unique, but there are always lessons to be found in others. To that end, Capital Group partnered with a major employer in the health care industry to uncover ways retirement plan sponsors can effectively communicate to employees. Our focus was to help workers understand and participate in their employer’s plan.
While some findings were unique to this particular organization, several learnings broadly apply to retirement plans and employers of any plan size. These learnings may serve as a blueprint for plan sponsors to better communicate, engage and motivate their employees to save for retirement.
First, a little about the company and plan:
In 2019, Capital Group partnered with a large health care provider to help understand employees’ retirement savings behavior. The study involved more than 20 employee interviews and data analysis. Particular attention was given to the employer’s priority demographic groups, such as lower income earners (earning less than $55,000/year), over-55-year-olds and certain job roles, such as nurses. Based on insights from that work, we segmented employees into three groups:
Next, we came up with tailored messages for each group, addressing specific barriers to retirement savings. We found that customizing messages helped ensure that employees get relevant and relatable content.
What types of savers are in your plan?
In partnership with a major health care firm, we segmented participants into three behavioral types. We used participant data and insights from interviews to target communications based on each type's interests and needs.
Of course, these personas may not apply to every employer. Plan sponsors should consider doing their own interviews and data analysis to see how to best segment their participants. However, based on our work with this company, there are three key lessons that we believe broadly apply to DC plans.
Employees’ time and attention are pulled in many directions. Finding the right moment to communicate with employees can be a complex task.
At this organization, many employees were nurses, whose jobs were not tied to mobile-phone or computer screens. Often, they would review emails just before their shift, at lunch and in the evening. Communication that was not directly tied to their job or patient care, such as information about retirement plans, was mostly deleted or ignored. In addition, many employees did not use their employer-provided email account. In order to be noticed, emails needed to be directed to personal accounts.
Reach employees at the right times
The health care firm discovered that its messages weren't being delivered at the ideal times. Most messages were being sent during working hours, even though research showed workers were more receptive during off-hours
We found that resistance to retirement planning often had less to do with logistics and more to do with emotions. For example, many people expressed shame around their lack of knowledge or savings, or feared that they’re too far behind in savings to catch up. They also felt overwhelmed by competing needs, which included everyday expenses, debt and family demands.
Communication that ignored these factors alienated employees. We had much better luck with messaging that sought to speak to emotional realities, taking care not to exacerbate shame or fear. This included plain language – what we call “kitchen-table English” – and a reassuring, helpful tone. That said, we believe messaging tone is key to illustrate empathy. To prove this point, we tested participant messages using different tones to match employees’ moods. Specifically, we tested different tones of messages before and after the COVID-19 pandemic hit and found very different results.
Match the tone to the employee mood
Unfortunately, many employees’ trust in financial services and even in their employer is low. This is a trend recorded across industries and institutions, with trust waning as a sense of inequity and unfairness rises. As the voice of an institution, it can be challenging to convince these individuals you’re on their side. This is a significant hurdle to overcome in helping employees seek better retirement outcomes.
To increase trust, you might want to look to sources employees do trust. You’ll also be more likely to earn trust with authentic communication that tonally matches the subject matter than with overly formal or disingenuous messaging.
Our biggest learning from this study was that employees all differ in needs, preferences and priorities. A plan sponsor should listen to employees to find out what matters to them. We believe messages that aren’t accessible and relevant to an individual in the moment they receive it will not be effective – even if the content is helpful or important to their long-term goals. As stewards of retirement savings, plan sponsors can empower individuals. They can do this by meeting employees where they are, cutting through barriers and showing trustworthiness.
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