The opinions of 1,396 active participants in 401(k), 403(b) and stock purchase plans were the basis for the report, “Helping participants make better financial decisions.”

The good news: 70% of survey respondents say they want to “thrive” in retirement, not merely eke out a humble existence. That sets the stage for survey findings indicating that participants are eager for certain information -- and frustrated by some plan sponsor practices that slow them down. 

For example, only 40% of younger participants (age 25 and below) found enrolling in the plan easy. Participants in all age brackets expressed a desire for simpler enrollment materials. 

Although auto-enrollment is now used by a slight majority (56%, by one survey) of plan sponsors to overcome employee inertia, it needs to be accompanied by a solid new participant education program. One surveyed participant complained, “My employer automatically enrolled me, but I opted out because I needed more time to become familiar with my employer’s plan before I made a decision.” 

Participants are particularly challenged by deciding how to invest their contributions. Only 26% report it was an easy decision. While the use of target date funds as the QDIA addresses this challenge for many, that does not preclude the need for educating employees about how the funds operate, their limitations as well as their advantages. 

Asked how to improve the enrollment process, many participants recommended a worksheet. “Outlining a series of steps indicating the time it will take to complete them and providing a deadline to help overcome inertia and confusion” is the recommended approach. 

The survey found “opportunities for considerable improvement” with how participants -- particularly the 25-and-under set -- are dealt with when they exit the plan due to a job change or retirement. Nearly one-third (27%) of them cashed out of the plan, and not always because they sense an urgent need to use the cash for immediate gratification. Often, “they don’t understand how powerful their small current balances could be if left invested in a tax-advantaged plan,” the report states based on research by the Employee Benefit Research Institute. 

But participants close to retirement also need -- and want -- guidance. A majority of survey respondents in that demographic said their employer (or presumably also an adviser) “should engage with them with more frequency.” 

Three-fourths of respondents asked to be shown “clear examples of how what I save today will pay off in the future.” 

A fundamental conclusion of the report: “Participants do not want to be left to their own devices.” That includes a receptivity to automatic deferral increases, and being shown ways to manage their personal budgets so that they can increase retirement savings.

Most of these information needs can be met by advisers, particularly when plan sponsors have a clear understanding that the need is there. 


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