Empower Institute: Lose the Jargon
January 23, 2019
Employees want retirement plan communications to be brief, direct
and sent to their personal email accounts
GREENWOOD VILLAGE, Colo.–(BUSINESS WIRE)–lt;a href=”https://twitter.com/hashtag/401k?src=hash” target=”_blank”gt;#401klt;/agt;–When it comes to financial words and terms, some employees are saying,
lose the jargon.
Research from the Empower Institute shows that many employees find
frequently used terms in retirement plan communications confusing or
vague. Key top line findings include:
-
66 percent of survey respondents don’t understand what “rebalancing
investments” means - 69 percent said they are unclear on the meaning of “asset allocation”
-
88 percent of millennials say they are unclear of the meaning of
“defined contribution retirement plan” compared to 76 percent of all
survey respondents -
83 percent of millennials say it is unclear what “social security
optimization” means compared to 77 percent of all survey respondents
The research also revealed some good news: even small tweaks can help
break down complex ideas and make important financial information
understandable to plan participants. The research is laid out in a new
white paper from Empower titled “Boosting
the Effectiveness of Retirement Plan Communications.”
“As we strive to encourage more Americans to save for retirement, our
research shows that many employees find common finance language
confusing,” said Empower President Edmund F. Murphy III. “Clarifying the
language we use when describing important retirement plan concepts could
go a long way to improving employee understanding of retirement.”
Empower conducted three surveys1 spanning 12 months to find
out what individuals understand and what they don’t when it comes to
financial and retirement-industry jargon.
The paper keys in on jargon. Sometimes industry insiders don’t realize
when they are using it. However, jargon contributes to the perception
that retirement plan communications are verbose or overwhelming,
according to the survey results.
Survey respondents said they want communications to be brief, relatable
and personalized.
They also said they prefer communications about their retirement plans
in a personal email. Fifty-one percent of survey respondents said
personal email is their preferred method of receiving communications.
“Effective communication considers not only how you say something, but
where and when the message is received. If you deliver a message to a
place where employees aren’t looking, the message won’t matter, no
matter how well it’s constructed,” the research concludes.
About Empower Institute
Utilizing resources from within Empower Retirement and the academic and
policymaking communities, Empower Institute critically examines
investment theories, retirement strategies and assumptions, and suggests
changes that can help achieve better outcomes for companies,
institutions, retirement plan sponsors, investment advisors and
individual investors. Research from Empower
Institute is available at www.empower-institute.org.
About Empower
Headquartered in metro Denver, Empower Retirement administers $570
billion2 in assets for more than 8.7 million participants.3
It is the nation’s second-largest retirement plan record keeper by
total participants (Pensions & Investments, April
2018). Empower serves all segments of the employer-sponsored retirement
plan market: government 457 plans, small, midsize, and large corporate
401(k) clients, non-profit 403(b) entities, private-label recordkeeping
clients and Individual Retirement Account customers. For more
information, please visit www.Empower-retirement.com.
______________________
1 In 2017, Empower Retirement
conducted an online survey of 2,000 Americans who are 21 years and older
and participating in their employers’ defined contribution plans. In
2018 a qualitative online focus group was conducted of 30 workers
participating in their workplace retirement plans and representing
millennials, Generation Xers, and baby boomer asking for feedback on
terms. In 2018, a quantitative online survey was conducted of 1,000
Americans who are 21 years and older and participating in their
employers’ defined contribution plans.
2 As of Sept. 30, 2018. Information refers to the business of
Great-West Life & Annuity Insurance Company and its subsidiaries,
including Great-West Life & Annuity Insurance Company of New York. Of
the total assets under administration (AUA), $570B represents the
AUA of GWL&A of NY. AUA do not reflect the financial stability or
strength of a company. GWL&A assets total $60.9B and
liabilities total $58.9B. GWL&A of NY assets total $58.9B and
liabilities total $2.2B.
3 As of Sept. 30, 2018. Information refers to all retirement
business of Great-West Life & Annuity Insurance Company and its
subsidiaries and affiliates, including Great-West Life & Annuity
Insurance Company of New York, marketed under the Empower Retirement
brand.
Contacts
Empower Retirement
Stephen Gawlik – 303.737.0899 (office),
617.417.4408 (cell)
Monica Mendoza – 303.737.2626 (office),
719.373.2460 (cell)