Simplify Menus to Encourage Participant Engagement
- September 18, 2019
- Posted by: Jeff Atwell
- Category: Financial Plan, Resources
A key element of Defining a Retirement Plan Standard of Excellence is inspiring participants to save for a dignified retirement.
Many times in my career I have witnessed participants becoming confused and overwhelmed because of the many decisions they have to make in regard to their retirement plan. For example, how much should I save, how should I set up my beneficiary designation, and how should my retirement assets be invested? Often, rather than making a decision, participants decide not to participate in the plan. As a result they fall further behind in saving for their retirement and miss out on receiving the employer matching contribution.
The article linked below by American Funds explains how complex fund menus lead to participant confusion, disengagement and poor investment decisions. So the traditional DC investment menu spread across asset classes and styles is evolving toward a smaller set of choices. Some examples are simplifying the plan menu with fewer, broader menu choices, and re-labelling those choices to correspond with the way participants understand their retirement objectives. In addition, implementing auto features such as automatic enrollment and default investments have proven to improve plan participation.