Empower your PARTICIPANTS with comprehensive financial education

For Advisors: The Power of Participant Education

comprehensive financial education

Ensuring participants are well-prepared for retirement is crucial, yet studies reveal alarming levels of financial illiteracy among Americans. A Clever study found that 1 in 5 couldn't define a 401(k), while Fidelity reports that 55% need to take significant action to keep their retirement on track.

Often, companies will look to advisors to help bridge this knowledge gap, but this can be a significant challenge. Managing participant education as an advisor can cost significant time and resources, distracting you from crucial priorities like wealth management.

Did you know? Outsourcing your financial education can save you time and increase revenue (for a quick look at how this works, click here).

However you choose to educate participants, it is essential to meet employees exactly where they are in their individual financial journey. Here are three key elements that are essential for any effective participant education strategy: 

  1. Appeal to different generations: Young savers (Millennials, Gen Z) need an emphasis on retirement savings and investment growth, while pre-retirees (Boomers) require nuanced guidance on income management, healthcare, and distribution planning in retirement. For education to be effective, it needs to capture young savers at an early age and provide support for those who are approaching retirement.

  2. Use easily digestible vocabulary: A study by Invesco found that straightforward categories like "do it for me, do it with me, or do it myself" resonate more than complex tier systems. To better reach participants, simplify plan terms using clear language. Eliminating jargon ensures that participants understand the available options and can make an informed decision.

  3. Empower with skills for self-assessment: According to one study by PlanSponsor, 61% of Americans don’t know how much savings they need to retire successfully. To contribute at healthy levels throughout their careers, participants will need a basic framework that contextualizes their long-term goals and helps them reassess as they progress in their careers. Educating them on how to use a retirement calculator or utilize Morningstar to evaluate investments is a huge first step to retirement readiness. 

A well-crafted education strategy is key to financial well-being. By considering these three elements, plan advisors can empower participants to save now and secure a healthy retirement in the future.

To read more about how to develop a complete participant education strategy, check out our full article here.