As they court the defined contribution version of the youth vote, plan executives are seeking ways to convince their youngest workers to save more and save earlier.
They have found through research, focus groups and trial and error that the younger workers — the millennials, who are between 18 and 34 — respond to different strategies for education and communication than older workers. They do so not only because they are more tech savvy, but also because they have financial challenges that are more immediate than thinking about retirement decades in the future.
“Millennials already understand that they need to save, but they weren't saving enough,” said William Gheres, director of retirement planning and administration for Erie Insurance, Erie, Pa., which has a $556 million 401(k) plan and a $563 million defined benefit plan. “They saw that their grandparents and parents worked longer than they wanted to.”
Research by Fidelity Investments, Boston, shows millennials respond best to education campaigns that encourage them to talk with people who can help in a “more personalized way,” said Nancy Emerson, managing director of customer experience.
Thanks to a special project conducted in late 2013 and 2014 with several clients — including Erie Insurance — and Fidelity executives, Fidelity compiled a list of millennial myths to share with clients. One of those myths: Social media is the preferred or trusted source for financial information.
“We had been listening to clients about their pain points,” and reaching millennials was one of them, said Ms. Emerson, the lead educator of the “design thinking project.” The goal was to find ways to improve problem-solving, and it led to the millennial-myth document.
Interviews with younger workers both inside and outside Erie Insurance led Mr. Gheres to a greater understanding of their attitudes and approaches to educating them about retirement.
Younger workers — about 10% of Erie's 4,800 employees are under 30 — valued collaboration and had a “high level of distrust” of financial professionals pitching products. “Millennials say technology is a tool — not a solution,” he said.
His company's financial-wellness education emphasizes taking immediate steps rather than thinking 30 or 40 years into the future. “We want them to concentrate on short-term actions to get them to their goals,” he said. “Short-term actions on a repeatable, long-term basis.”
For example, employees are encouraged to prepare a budget that incorporates investing in the 401(k) plan. In that way, he added, participants focus on what they can do today and tomorrow, rather than think about far-off retirement.