Question:
We are revamping our communications for the new year. Retirement plans and investing are complex. What’s the latest thinking on how to communicate these concepts to our varied employees in a way they will understand?
Answer:
Two principles come to mind: keep it simple, and keep it positive. Invesco studied the topic of clear participant communication recently and found that the language we use to communicate with employees about their plans really does make a difference. For example, participants respond much more favorably to “free money” than “matching contribution.” While “free money” certainly clarifies the definition of matching contribution, it also resonates as a positive. Overall, 39% of employees responded favorably to the term; in contrast, 23% responded favorably when the concept was expressed as the more negative aspect of “leaving money on the table.” Understanding and proper use of target date funds also improves when clear language is used to describe them. Participants of all ages understand target date funds best when the term “managed for you” is used. The frequently used term “glide path” seems distasteful to them, with just 4% preferring it when the topic is discussed. Compare that to the phrase “risk-reduction path,” which was preferred by 40%. For more on this topic, visit I
