Do plan sponsors really know what participants want?
the early 1990s, there was a very popular “self-help” book on
relationships titled “Men Are From Mars, Women Are From Venus.” The
basic premise, of course, was that men and women have different means
and styles of communication – that, in essence, they might as well be
from different planets (hence the title).
It suffers, as most
such works do, from over-generalizing (to say the least – the hidden
points system ostensibly maintained by each gender struck me as truly
bizarre, even in the 1990s) – but it no doubt stimulated some
relationship conversations, and if it opened some of those doors – well,
that’s a good thing.
The relationship between plan sponsors and
participants isn’t generally fraught with the same layers of complexity,
but every so often a survey comes out that makes me think otherwise.
The latest was a report by American Century
which surveyed (separately, but both during Q1 2019) 1,500 respondents
between the ages of 25 and 65, currently working full-time outside the
government and 500 defined contribution plan decision makers.
survey found that only a small minority of plan participants (14% of
those ages 25-54) wanted employers to "leave them alone" when it came to
help with retirement savings – about half the number that plan sponsors
thought felt that way. And, according to the survey, more than 80% of
participants wanted at least a "slight nudge" from their employers
(though, let’s face it, plan fiduciaries might well be reluctant to go
On target-date funds, some 40% of responding employers
felt that investment risk pertaining to market movements was the most
important factor in target-date investments – while a comparable number
of employees were more concerned about longevity risk (in fairness,
investment risk wasn’t far behind).
Speaking of investments,
nearly all – 90% - who either already offered or were considering
offering ESG investments thought their participants would be interested
(and why wouldn’t they), while two-thirds of sponsors say their
retirement plan advisor is currently or should be recommending ESG
However, only 37% of participants actually expressed
some interest in ESG options – and we’ve seen plenty of industry surveys
(including the Plan Sponsor Council of America’s, among others
– and that interest, not surprisingly, was apparently at least somewhat
dependent on performance comparable to the average product. Ultimately,
American Century found that while sponsors believed that 88% of workers
were at least somewhat interested in the option, fewer than 40%
Sometimes the disconnects aren’t even between
different parties; the American Century survey found that 82% of plan
sponsors believe it was at least “very important” to measure how ready
employees are for retirement – and yet only 46% formally did so.
Over the years, we’ve seen similar “disconnects” in the benefit priorities,
availability of retirement income options, and, in fairness, we’ve also
seen disconnects between what individuals say they would do – and what
they seem to actually do given an opportunity. Not to mention those
between plan sponsors and providers – and yes, between plan sponsors and advisors.
are, of course, any number of rational explanations for those apparent
gaps. We can be reasonably sure that these surveyed plan sponsors and
participants aren’t coming from the same place - literally. We also know
that different industries, and different employers, and even different
geographic locations seek to hire and attract different kinds of workers
– who are, in turn, motivated and attracted by different things – which
they may or may not choose to share with their employer.
people are more inclined toward openness with an anonymous survey –
which may present option(s) they hadn’t even considered. And sometimes,
of course, they’re “led” by questions designed to produce a certain
outcome. Plan sponsors glean their sense of their workforce from any
number of sources with a wide range of reliability – everything from
personal experience, to industry surveys to the headlines in the
press…to the inevitable “squeaky wheels” that (too?) often darken the
door of HR with their latest complaint and/or suggestion.
there are different perspectives should come as no real surprise – and,
if the occasional survey highlights some apparent discrepancies in
priorities, well one hopes that should spur some constructive
consideration and engagement.
Because, ultimately, what matters isn’t what “planet” you’re coming from – but that you’re speaking the same language.
- Nevin E. Adams, JD