Getting Beyond Retirement Buzz

It’s getting so that a plan participant has almost too much information these days. In an information-driven society, they’re hit from all sides with advice and retirement planning strategies – not all of which are useful. It’s a world that promotes do-it-yourself planning, and that type of planning could have your plan participants going in the wrong financial direction.

Yet often, investors are overconfident in their actions, and they convince themselves that their research is solid. A study on the effects of opinions broadcast by overconfident senders, conducted by professors at Stanford University, shows that audiences are receptive reviews by strangers if the reviews and information shared is done so in a highly confident manner. According to study authors, an overconfident sender will often exaggerate the message.

Just one internet search on retirement investment advice reveals that overconfidence is just as rampant in the retirement world. Everything from expert advice to personal opinion populates the results, including reviews of plans and personal planning advice that comes with no real qualifying data.

And your plan participants are using that information to make key retirement decisions.

With all the noise regarding retirement, how do you help plan participants sort through it all? Actually, it may be surprisingly simple – by being first with the right information your plan participants need to make sound decisions.

Retirement advisors and plan sponsors can:

Offer tools and guidance. In other words, today’s advisor has to outperform the robo-advisor. It’s no secret that today’s workforce – millennials in particular – is drawn to the convenience of 24/7 access to retirement advice. If you want your plan participants to have the best information, provide it.

That includes tools that help your clients prioritize both retirement and life goals – online articles, retirement calculators and Q&A information that give investors a clearer direction for their retirement planning.

Regularly review plan with participants. More than the once-yearly meeting, advisors should be meeting with plan participants to review plan performance, answer questions, and share updates or economic/legislative changes that could impact their retirement portfolios. A quarterly meeting can help increase participation by sending the message that the advisor is looking out for participants’ interests.

Explain the ‘why’ behind plan asset allocation. It’s one thing to stand in front of plan participants and spout the latest fund performance figures. It’s wholly another to explain the numbers in relation to the goals of the individual. Just a simple shift in delivery, including explaining how each investment class can align with intended outcomes, can vastly improve the confidence and understanding plan participants have of their retirement investments.

Provide ongoing education. An email series dispelling retirement investment myths can keep the conversation going in the right direction. By inviting plan participants to submit content for discussion, advisors and plan sponsors can actively engage them in learning to discern between questionable advice and sound advice.

Advisors have all the tools necessary to compete with today’s information overload. It takes a bit of diligence, innovation, and willingness to nurture the relationship with plan participants through the channels they prefer and with the information they want most.

Clients want these things from their advisor: that their goals and retirement needs are understood, and that their advisor is a partner in the process. The advisor who can create a more comprehensive experience for the investor and who leads the conversation will see better participation and more retirement-ready plan participants.