How do you provide financial education that leads to real action?

Many financial literacy education programs delivered to 401(k) or 403(b) plan participants have arguably prompted little to no change in behavior. The jury is still out on financial wellness programs. So what can retirement plan advisers do to reach employees at the plans they manage?

There is a “secret” method proven to teach adults, but before revealing what it is, let’s consider some practical essentials, in particular ideas you should focus on in engaging employees:

  • Who: The age and profile of both the audience and the meeting leader
  • What: The message you want to deliver
  • How: The media you use

For example, older workers who are closer to retirement may be interested in retirement income products, rollover options and annuities. You might consider delivering different messages to highly paid executives and blue collar workers. Although all age groups leverage (mostly mobile) technology, older workers may be more inclined to meet one-on-one than younger workers. Also, it may make sense to have a senior adviser deliver the education or advice; will baby boomers really relate to a twentysomething telling them what to do about retirement?

Millennial investors, on the other hand, tend to need simpler messages focused on saving. They are likely dealing with debt, especially student loans, and may feel that they do not make enough money to save. This group prefers to receive more messaging via mobile technology and is less likely to want to meet in person. In this case, younger advisers may be the right choice as educators, as senior advisers might seem like preaching parents. On the other hand, it may be effective to include older employees, who may not have saved enough, as advocates for early, regular investment.

Words matter. For millennials, “retirement” is far away and hard to relate to; “financial security” may resonate more. It’s also important to show how actions taken today may have a dramatic impact on their lives in the future.

Gen X and Gen Y employees, often referred to as the sandwich generation, may have to support kids preparing for college as well as aging parents; they may be far away from gathering sufficient assets for retirement. If they lead an educational meeting on topics like saving for college with a 529 plan, their message may be better received.

The Secret Sauce

So what’s the “secret sauce”? We have learned at TRAU, through our collaboration with UCLA Anderson, that adults typically do not learn by listening—they learn through interaction. In addition, adults frequently do not trust experts no matter how knowledgeable they seem. Why? Because adults do not think experts know what it is to “stand in their shoes.”

Peer-to-peer training, in contrast, appears to be the most effective means of educating adults. Leveraging the current employee base, especially those that have been able to successfully save for retirement, to teach their peers can be convincing. Some plan sponsors call these employees “401(k) sales champions.” With guidance and structure provided by the plan adviser, leveraging and highlighting current employees to educate 401(k) and 403(b) participants is likely to move the needle on participant savings.