ONE STAT THAT MATTERS

Retirement planning in an instant? Bring it on, say millennial investors.

Because financial services firms are accustomed to talking to financial professionals, they often fall into a familiar trap: overestimating the financial savvy of the average workplace investor. In particular, here’s one stat that matters for firms assisting 401(k) participants…

69% of Gen Z also feels this way. And no wonder. According to JPMorgan’s 2024 Plan Participant Survey, more than half of millennials and Gen Z say they don’t know how to get started with retirement planning.

Apparently it’s not for a lack of materials. More than half state that they’re presented with more detail about their 401(k) than they can absorb. In other words, they’re getting lots of information, just not the right information.

Is a financial advisor the answer?
Interestingly, given participants’ desire to summon a professional in genie-like fashion to take over their finances, the number of people actually engaging advisors is falling. There are many reasons for this, of course, including the cost – and the widespread availability of online content on managing finances.

So with fewer people using advisors, particularly early in their careers, how can firms provide a helping hand (versus a hired hand)?

Better tools and communications are a must
In today’s world, it’s more important than ever for self-service tools to anticipate and address the big questions consumers have, such as: how much should I be saving for retirement in each paycheck, given my unique financial situation? Most tools today fall far short when it comes to supplying relevant, personalized answers to a person’s likely what-if scenarios.

In addition, our research on participants points to another essential: the need to simplify, simplify, simplify. Instead of detail that mainly just overwhelms, participants want easy-to-understand analogies and visual representations, quick comparisons, and stories about how other people used the same product.

Give them the easiest version of your product
While simplifying your communications, also consider the relative simplicity of your product offering. Is it providing push-button, set-it-and-forget-it ease? Or is there more you could do to take the onus off participants?

In our work, we’ve seen strong receptivity to products and features that automate retirement: target date funds, automatic contribution increases, guaranteed lifetime income options. But even with these somewhat simplified options, providing the right amount of context and support is critical.

Making it simpler
Perhaps the best way to simplify your participant experience is to engage an agency that’s extremely well versed in simplifying financial complexity. Consider this link your “easy button”: Let’s talk ›

¹ J.P.Morgan, 2024 Defined Contribution Plan Participant Survey Findings