When it comes to saving for retirement, surveys tend to indicate that most Americans are still ignoring comprehensive retirement planning. Some simply cannot afford to put anything aside — stagnant wages and the recent COVID-19 pandemic have created many empty wallets – but even those with disposable income seem to prefer sitting in traffic or enduring a painful dental procedure to thinking about their lives 20 or 30 years into the future. In fact, before the pandemic, surveys found 66 percent of millennials had no retirement savings and the upheavals of last year have even forced some to dip into their 401k accounts.
Why is this happening? For one, most retirement systems today are often hard to understand and take too long to set up, making the onboarding process for both users and sponsors daunting. Today’s end users may also lack trust in many primary financial institutions, leading them to deprioritize retirement planning until it’s too late.
This is compounded by the lack of digital technology at the legacy provider level, leading to delays and errors that result in more time spent on changes and reconciliation than on servicing customer accounts.
These prohibitive pricing pressures aren’t the fault of the service provider, instead they’re a signal that change is needed in today’s retirement services ecosystem.
To help cut through the complex jumble of retirement options and variables, here are several ways to provide a more humanizing touch to the process, help plan sponsors make the experience more accessible to modern customers, and drive long-term trust in retirement service providers.
Make it accessible: An early-20s professional will have different motivations for retirement than a 45-year old. To make sure retirement services are accessible to a wider range of employees, the industry should focus on simplifying plans, reducing administrative burden and costs while ensuring transparency throughout the retirement planning process and encourage employers to adopt open MEPs.
Further, investing in digital services such as mobile technologies, digital assistants or chatbots also improves access to key account details by offering 24-hour customer service coverage and providing self-service troubleshooting support for common questions.
Increasing the variety of products that promote interaction between retirement services, end-users, and plan sponsors helps prioritize a human-centered approach to retirement services, fostering trust in the plan provider and motivating other parts of the retirement ecosystem to prioritize accessibility through use of technology.
Make it easy: With so many variables and forms to sift through, onboarding is a particularly difficult process for retirement providers, with an average onboarding time of 90 days. That timeline can affect long-term financial decisions for both businesses and customers, lowering the opportunities to engage and educate plan beneficiaries.
Using digital automation alongside data analytics streamlines manual tasks and creates opportunities to shift to exception-based processes that can improve productivity without sacrificing quality of service.
Digitization also allows billing, withdrawals and disbursements processes to be easily modifiable to meet new regulatory requirements such as the SECURE or CAREs Acts. In the long run, these improvements at the business level can turn into improvements for participants, such as introducing greater plan portability for employees that want to better manage retirement savings as they move from one job to another. Further technology can play a crucial role in encouraging automatic enrollment and automatic escalation.
Make it personal: For many younger Americans, retirement may seem like something made for other people — their parents, grandparents, or older co-workers. To attract a more diverse cross section of customers, retirement sponsors should take advantage of modern data and analytical capabilities for holistic customer profiling and micro-segmentation.
Most of today’s businesses collect large quantities of internal and external customer data, which can be used to better understand clients’ financial, social, and behavioral tendencies and activities. Use analytics to deeply micro-segment customers and derive meaningful insights to make the retirement services experience more personal.
Offering personalized advice to individual plan participants can also account for plan affordability to drive better results in retirement preparation. As the next generation enters its peak saving years, personalization will become increasingly important because it will help new customers see retirement as a seamless part of their existing lives.
Make it fun: Overall, the experience of planning and saving for retirement should be enjoyable for both end-users and plan sponsors. While some users may respond positively to gamification features as part of their onboarding experience, others will instead react better to a streamlined interface and clear, easy-to-understand instructions and goals. Above all, users want to feel as though the experience of saving for retirement fits seamlessly into their current lives – plan sponsors and providers should prioritize these motivations to stimulate enrollment.
Understanding retirement is critical for anyone hoping to be comfortable in their golden years and should be started as early as possible. While every worker will eventually think about retirement, helping people understand its value earlier in life will guarantee that they will not scramble to make up for lost time later.
For plan sponsors that want to improve enrollment rates, digital technologies create an opportunity to drive process efficiency while also providing better experiences that lead to customer retention.
Today’s customers expect a level of transparency, accessibility, and interactivity that mirrors their other consumer-grade experiences.
To build the right digital experience for a more diverse audience, retirement service providers need to understand them at a deeply human level and their design decisions must reflect that. Human-centered design thinking helps make user motivations clearer, makes people feel more understood, and provides plan sponsors with a way to support their employees as they age. Making this change can happen gradually, but must be a priority for anyone looking to increase their customer base, their savings rates, and their assets under management.
Mahesh Natarajan is Head of Strategy, Insurance Solutions Group and Ventures, at Cognizant. A 20-year veteran at Cognizant, he is an experienced business leader with a demonstrated history of enabling client success, scaling businesses and simplifying complex problems. Mahesh has proven experience advising clients on strategic business initiatives such as digital transformation, operational excellence, managed technology services, organizational change management, Lean ADM and technology transformation. He is passionate about continuous learning, empowering teams and STEM education.