The shift in the benefits industry over the last several decades from pension plans to 401(k) plans and traditional indemnity medical plans to consumer-driven health plans has ushered in an era of “personal responsibility”. In “the old days” employers took responsibility for all of the decision making around benefits for their employees. The traditional pension plan said to the employee: “We’re handling it. Your pension will provide your retirement income, so you don’t have to worry about it. We’re making all the decisions for you and taking all of the risk.” The 401(k) plan, on the other hand, tells the employee (whether they understand it or not): “We’ll give you the vehicle, but you have to make all the decisions and take all the risks. If done right, it will provide for your retirement income; but success depends on the quality of the decisions YOU make. We’re not responsible for those decisions anymore.”

This has been a good shift for employers, resulting in less liability and less responsibility for the outcomes. But too often, I don’t think the employees “got the memo” about their personal responsibility. It’s like raising a child, and when they reach working age, we dump them into the world without the skills needed to succeed. You wouldn’t hire a chemical operator at a chemical plant with no experience, and just point them toward the reactor and say “there it is, now go run it.” You hire experience, or … you train them! You provide training internally on key internal processes that help your business succeed.

In the same way, if we want our employees to be responsible for their own retirement savings, we need to provide appropriate training for our employees to succeed at saving for retirement. This training should go way beyond just handing them an enrollment kit, a pile of fund prospectuses, and instructions for logging onto the plan’s website. But sadly that is often the extent of “training” provided to employees. If we truly want our employees to be responsible for their own retirement savings choices, and we want them to be successful at it, we will need to provide not only information about the plan itself, but also some training on what it all means and what it will take to reach their goals.

Research on 401(k) plans has proven that too many choices creates and perpetuates the inertia that plagues most plans. Especially if the choices to be made are among issues and selections they know nothing about to begin with. Most service providers today offer online tools that provide the information employees need (or at least most of it), but utilization statistics show that employees just don’t use them. Why is that?

We need to consider generational issues, learning methods, and decision-making styles when developing a comprehensive “retirement savings training” program that will have the best chance of teaching our employees how to save adequately for retirement. Employees in the Gen-X and Gen-Y group generally appreciate online tools. They will make the effort to get online, read up on what they need to know, and take their actions there. But Baby Boomers, while generally online savvy, much prefer a more tactile approach. They like to see it, touch it, hold it, have the ability to flip back and forth to review and “connect the dots”, and be able to file it when they’re done with it. They prefer print materials, or at least online materials that can be downloaded and printed. Older workers, the War generations (born before about 1950), prefer face-to-face explanations and assistance with decision-making from perceived experts.

Generational differences aside, and regardless of generations, different people learn and absorb in different ways. Reading, seeing, hearing, and doing are just some of the different learning models. Each preferred learning method needs different delivery methods to reach the individual. When it comes to retirement plan decisions, research has also shown that participants generally fall into three main decision-making categories. I call these decision-making styles “let me do it myself,” “help me do it,” and “do it for me.”

The ideal “retirement savings training” would include enough variety in delivery methods to accommodate all generations, learning styles, and decision-making styles. To reach every type, a comprehensive program would include most, if not all, of the following:

• Print materials about the plan itself
• Print materials to learn basics of investing and retirement savings
• Print worksheets to project retirement needs and paycheck impact
• Online tools for basic projections (calculators) and paycheck impact
• Online learning materials to understand basic and intermediate investing topics
• Online webinars on basic investing concepts and navigating the plan
• Group seminars on basic investing concepts and navigating the plan
• Availability of individual personalized counseling related to the plan
• Access to interactive assistance (help line) to get questions answered
• Access to enrollment and changes via paper (or physical personal assistance), web, or phone

A comprehensive program like this looks expensive, right? Not necessarily. Check with your service provider to see what is available from them under your current fee structure. Also, there are many great benefits communication firms that can help supplement your staff and service provider affordably for these services. Vantage Retirement Services may also be able to assist you with group seminars and other basic investing materials as well as promotion of your plan to your employees.

Personal Responsibility in retirement savings is a good thing … so long as employees are given the tools and information they need to be held responsible for it. And the pendulum is still swinging … increasingly, employers will be held more responsible for making sure their employees have the ability to adequately save for retirement … not just the vehicle. Are you ready?

Let me know if I can help … it’s what I do!