Call me old-fashioned, but at a time when it seems like everyone is advocating “automatic” solutions to get participants to do the right thing(s) about saving for retirement, I can’t help but wonder at the irony of participation solutions that don’t require a “participant” to participate.
In the fifth in this series, IMHO offers another non-automatic alternative to help involve and engage participants. As always, I would appreciate your reactions, comments, and suggestions.
(5) Set up regular checkups
When it comes to going to the doctor, I’ve always adhered to a very simple standard – if it ain’t broke, don’t. Of course, as one gets older, gains a family, and has greater responsibilities, one can – with the prodding of a caring wife, anyway – make exceptions to the strictest of rules. It was during one of those not-so-regular “regular” checkups years ago that I discovered that age, heredity, a bad diet, a busy/stressful occupation, and a relatively sedentary lifestyle can contribute to high blood pressure. Mine is a relatively mild case – I now exercise modestly and take a single pill daily – but that simple finding has transformed the mere inconvenience of going to a physician into a new area of stress. See, every time I go to the doctor, I am worried that my blood pressure will be high enough to warrant a more severe regimen – and that worry, in turn, engenders an increase in blood pressure. No matter how much I try to calm myself, I appear to have a severe case of what they call “white coat syndrome.” Fortunately, my doctor has learned to take a reading at the end of my visit, as well as at the beginning.
Back when the markets were consistently surging higher, participants seemed to look forward to opening that retirement plan statement, or booting up that account balance screen with the enthusiasm of a child on Christmas morning. Now that we’re back to the uncertainty of a more “normal” market cycle, many participants seem reluctant to pay attention to such matters. It’s more than that they don’t have the time or the expertise for such things – though those are certainly considerations. Like my occasional trips to the doctor, they are also “afraid” of what they’ll find reflected on that retirement plan statement – and what they’ll be told they have to do.
Those concerns notwithstanding, pretending the problem doesn’t exist won’t keep one’s retirement plan healthy, any more than my simply refusing to go to the doctor will keep my blood pressure under control. IMHO, a sold retirement plan checkup requires a commitment to the following:
Set ANNUAL savings goals – For too long we have pushed the long-term nature of retirement plan saving. Yes, we have time, but that time isn’t indefinite – and time works for you, but not if you don’t start. Participants need shorter-term goals – ones that fit within a mere mortal’s budget mindset. Ask them how much they can afford to save for the rest of their life (and that’s what most enrollment processes suggest), and you’ll get hesitation. But set a goal for the next year – and you might be surprised just how “aggressive” a goal people are willing to set.
Get quarterly, HARDCOPY participant statements – Ok, some people prefer online, and paper may cost more – but there’s nothing like the tactile experience of touching a retirement plan statement for conveying a sense of substance. More importantly, whether it’s once a year, or once a quarter, the arrival of that statement provides a built-in reminder/opportunity to keep an eye on what’s going on.
Set a time annually to evaluate, and if necessary, adjust goals -- Let’s be honest: Every financial advisor worth his/her salt would love to do this with participants – but even the most engaged participants may struggle with that kind of commitment. Ironically, the more often you do it, the less time – and the less pain – it seems to require.
Interestingly enough, just knowing that that regular semi-annual appointment is coming has kept me more aware of diet and exercise, and that has not only made those appointments less painful - ultimately I am healthier, and happier that I am healthier (and no doubt healthier because I am happier) -- even if I still hate going to the doctor. What might a similar approach mean for the retirement health of plan participants?
- Nevin Adams firstname.lastname@example.org