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 fourth 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.
(4) Once you’ve built it, make them come.
I spent most of my career working for companies that, once a year, put a hard push behind the support of a certain charitable campaign. That hard push included times when we were required to turn in pledge cards and, while the amount wasn’t mandatory, let’s just say it was pretty clear what the “right” amount was. However, adding insult to injury, either to reinforce our sense of charity or to create it, we also had to go to a meeting where we would have to watch a video and listen to a testimonial about the good work that has been, and now would be, done -- thanks to our contributions and support.
Now, I always hated having to go to those meetings – it was time I couldn’t spare on a subject I didn’t need to be educated on (there was one glorious year where, so long as you had pledged the “proper” amount, you didn’t have to go to the meeting). But aside from the fact that they took attendance, it was common knowledge that the company president was not only committed to the cause – he was inclined to meet/greet folks at the door. Needless to say, I grumbled, but I went.
My experience notwithstanding, one of the most obvious remedies to anemic plan participation is – mandatory employee meetings. Not that the concept is controversial with advisors – I have yet to meet one who didn’t advocate the practice. The problem, of course, is plan sponsors – or more accurately, managers reluctant to shut down production long enough to accommodate that 401(k) meeting.
I’ll concede it’s a challenge – aside from the production concerns of management, many workers don’t want, or don’t feel that they can afford to take the time off (and yes, some don’t think they require education on the subject) – and that reluctance all-too-frequently manifests itself as non-meetings, since your contact in HR may have little sway over the activities of the production line. Stuck between that rock and a hard place, many advisors try to do the best they can with the hand they are dealt, ultimately resigned to a “if you build it, you hope they will come” strategy. To their credit, many advisors have achieved success with some remarkable “workaround” approaches, but all too often at the sacrifice of their time and a lesser result for the plan. At best it is, after all, trying to do your job with one arm tied behind your back. After all, how are you supposed to help people become capable retirement plan saver-investors if they won’t even come to hear what you have to say?
The consequences go far beyond merely being unable to get your message to every eligible worker. If employees don’t have to come, then clearly the topic, the message, and perhaps the messenger, aren’t all that important. At that point, you’re probably left either preaching to the choir, or those who simply don’t have anything better to do. More insidious is the potential for a culture of “too cool to participate” -- where those who don’t attend the meetings because “they’re a waste of time” actually reinforce their position by ridiculing those who take the time to do so.
Confronted with these realities, what can an advisor do? The best time is on the front end, of course. Everyone talks about fund menus and fees – but the best advisors are now talking about things like participation and deferral rates. An integral part of your strategy to curing that 55% participation rate should be an insistence on mandatory enrollment meetings, for instance, and perhaps some kind of annual review, timed around the delivery of participant statements.
If you can’t get support for mandatory employee meetings, there are alternatives. Employers reluctant to shut down production can pay workers to show up a half hour early for their shift (I would not recommend an after-shift session when everyone is tired), or maybe the mandatory sessions could be set at various times for different units (or parts of different units). Still can’t get folks to come? Seek out what I call “missionaries” – or convert a few to your cause. These are the folks that everyone listens to on the shop floor. Get them involved in not only spreading the word about the importance of savings – but of the importance of attending the meetings. Their words – and example – can have a great impact (they can also help overcome language and cultural barriers for you) – and they can continue to deliver the message(s) well after you leave.
Employers unwilling to impose a “mandatory” meeting on workers may have at their disposal a tool that can be just as effective – maybe more. If you can get the company president to make the commitment to attend the sessions – well, trust me – not only will it support your efforts, not only will it provide the firm with some nice PR with the workforce – but workers generally won’t want – or won’t feel they can afford – to miss those meetings, even if they are “voluntary”.
- Nevin Adams