October 24, 2017 / 5:08 PM / a year ago

Old-fashioned retirement advice still works

NEW YORK (Reuters) - What is the best way to boost savings in workplace retirement plans?

Retirement plan brochures are seen in a rack in Sacramento, California October 21, 2009. REUTERS/Max Whittaker

In addition to “robo” tactics such as auto-enrollment and auto-escalation, there is an old-fashioned solution that seems to work: talking to employees.

For one 401(k) consultant whose team of 18 fans out across the country talking to workers about their retirement plan options and savings targets, participation jumped from 45 percent to 78 percent after in-person meetings. Contribution rates more than doubled, to 9 percent of salary from 4 percent.

“These sessions can be like therapy. The stories you hear about from people, it’s amazing,” said Nathan Fisher, managing director of Fisher Investments 401(k) Solutions, which compiled this data for Reuters from more than 4,500 meetings over two years.

Fisher decided to focus on in-person meetings after a session with a receptionist at a medical practice in Michigan. It was the dead of winter and snowing, and she came in on her day off with her 2-year-old.

At the end of the session, she said that nobody had ever talked to her about her retirement before. “That was my aha moment,” said Fisher. “So many American people feel that way. This is what people need.”


Getting people to engage on retirement topics is not always easy. For Sylvia Francis, the total rewards manager for the Regional Transportation District in Denver, trying to boost the participation of the 3,000 employees in her domain is a constant battle.

Francis uses myriad strategies, including home mailings and visits 12 times a year by an investment adviser to employee locations. Much of the time, though, it comes down to her answering her phone. Whenever she speaks about retirement planning at a company event, the attendees always have additional questions.

“Every year, I’m reaching people. I honestly get passionate about it,” said Francis.

For Tyler Tiemann, a project manager in Houston, who met with Fisher Investments earlier this year, the personal touch definitely worked. The 27-year-old had no access to a retirement plan at previous employers, and he did not know much about the process.

“I always had it in the back of my mind, like, I should get on that, but I didn’t know how to start, honestly,” Tiemann said.

After meeting Fisher, Tiemann signed up for a Roth 401(k) plan and now does not miss the dollars he contributes from his paycheck.

Human resources departments focus on new hires, but there are other effective times to reach people. Ronnie Charcalla, vice president of workplace individual solutions at Prudential Retirement, said that some companies reach out to people on their birthdays, work anniversary or when they receive an annual raise.


Most retirement plans offer savings rates of 3 percent to 6 percent of annual salaries, but that is not enough to build a proper nest egg. Retirement experts say 10 percent is closer to ideal.

Sam Otting, a 27-year-old branch manager for a cleaning company in Ohio was convinced to go for 8 percent after meeting with Fisher, jumping from 6 percent. His company matches up to 7 percent of contributions.

“We talked about it, because I wanted to do a little more than the match. They made recommendations, but they were not telling us what to do,” say Otting.

A recent study from Voya Financial found that companies can push the envelope on suggested employee contributions through 10 percent, and participation does not go down, according to Rick Mason, head of the Behavioral Finance Institute at Voya.

This is also what Robyn Credico, a senior consultant for Willis Towers Watson, which specializes in benefit design, finds with her clients, and even her own company’s employees.

Her strategy is to bump up the options - so instead of 3 percent, 5 percent or 7 percent, one would offer 5, 7 or 9. In a workplace filled with actuaries, most went for the middle option, not the lowest number, she found.

“The most important thing is to save enough, and then figure out how to invest,” said Credico. “You can have most magnificent fund line-up, but if you don’t put any money in, what does it matter?”

Editing by Lauren Young and Steve Orlofsky

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