The Power of Digital Communications in Retirement Planning | Financial Services

4/8/2024 Brian Best

As a financial institution, are you making the most of your digital assets? And, are you effectively communicating the advantages of the digital tools you offer to your clients? Whether your clients prefer to interact with mobile apps, mobile websites, or desktop applications, it's crucial to recognize the importance of digital communication in aiding their retirement planning. 

As J.D. Power reported in their 2023 U.S. Retirement Plan Digital Experience Study: “Consistently, we’re finding that improved digital experiences are critical to strong financial performance. Participants who have a great digital experience vote with their dollars, with roughly double the amount of participants rolling in assets from other plans, and more than triple the amount saying they will keep their money with their current provider if their job situation were to change.” 

However, the report also states that just 38% of surveyed plan participants are highly satisfied with their plans’ digital capabilities.

Enhancing the digital experience

Today, it’s more important than ever that institutions serving the retirement sector examine their digital offerings. As noted earlier, there are significant opportunities to enhance digital experiences by offering user-friendly and efficient digital platforms that meet the growing demands of customers.

One way to enhance your digital platform is by offering clients a range of functional tools. These tools can help them manage their portfolios, optimize investment strategies, and ensure that portfolios are aligned with their long-term objectives. 

Specific digital tools can include: 

• Self-service portals, which allow consumers to access their content, manage communication preferences, and enable the available digital communication channels
• Retirement calculators to help clients determine how much money they’ll have in retirement and whether they’re currently saving enough 
• Budgeting apps to enable clients to track past transactions and plan for future transactions (some can also sync checking, savings, and investing accounts)
• Simulation tools, which allow clients to build and run a retirement-planning simulation, helping them predict retirement success based on projections of future market conditions, investment return rates, and other variables

Adding these types of tools can enhance the digital experience for clients. They help your members become better financial planners — and can lead to a favorable lasting impression of your brand.

Digital satisfaction’s impact on client behavior

Providing a positive digital experience can have a substantial impact on business outcomes in the retirement-planning sector. When clients have a satisfying digital experience, they’re more likely to consolidate their assets with you as their current provider. 

In fact, clients who have a great digital experience are more likely to roll over money from other retirement accounts — 34%, compared to just 20% for those with low digital satisfaction, as reported by J.D. Power. The study also reported that nearly half of participants with high digital satisfaction say they will keep their assets with their current provider in the event of a job change, compared to just 15% for those with low digital satisfaction.

These figures underscore the critical role that optimizing digital experiences can play in enhancing customer loyalty. Efforts in this area can pay off handsomely in many respects. Loyal customers are, for instance: likely to refer their friends and associates to your company; typically willing to provide you with data and insights from surveys and provide reviews; and open to engaging with your company via webinars, podcasts, and even in-person events. Generally, loyal customers are likely to spend more with your business — boosting your company's financial performance. 

Bridging the financial literacy gap

Another aspect to consider when evaluating your company’s digital endeavors is your customers’ financial literacy. How can you best assist them in understanding and applying various financial skills, such as personal financial management, budgeting, and investing?

In a recent Goldman Sachs survey, just 13% of respondents correctly answered five questions designed to assess their basic financial literacy. The survey results reveal a significant gap in basic financial literacy among consumers, emphasizing the need for educational content that’s easy to understand. The results also indicate a need for improvement in how that information is designed and presented to consumers — information that’s crucial for making informed decisions about retirement planning and financial management.

Your digital platform can play a primary role in supplying current and prospective clients with content that can help them bridge that financial literacy gap. Here are just a few actions you can take to assist your clients in boosting their financial acumen:

• Ensure the educational content on your website is easily understood — keep your audience in mind and clearly define financial terms
• Improve upon how your information is designed and presented — will an infographic, for instance, be the best alternative to clearly communicate your message?  
• Keep transactional documents in mind as effective platforms for educational messaging. Educational content can be embedded within statements, account summaries, performance reports, prospectuses, and welcome kits
• Consider adding podcasts and webinars to your content mix

Conclusion

Digital communications can be a critical tool in a consumer’s retirement planning. As you explore ways to aid your clients with information, keep these points in mind:

• Various studies show that there is significant room to enhance digital experiences in the retirement sector
• By investing in and improving digital experiences, financial planning firms are more likely to retain customers
• Consider partnering with a provider to help seamlessly ease your customers' transition to digital
• Financial literacy helps consumers make informed decisions, avoid unnecessary levels of debt, and secure an adequate retirement income. Businesses can help address the financial literacy gap with educational content that’s easy to understand and by improving how the information is designed and presented

For more information on RRD’s engagement solutions for financial services companies, visit https://www.rrd.com/industries/financial-insurance.