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While there’s rejoicing around the retirement plan industry over the clarity provided by recent Pension Reform legislation, here are a few thoughts on marketing and communication implications.

Move forward with autopilot 401k plan features. Good idea.

Providers and sponsors are moving toward broader use of autopilot features in 401k plans – auto enrollment, contribution acceleration, and investment advice via lifecycle funds, managed accounts, and/or active advisor involvement. Early adopters report significantly increased participant contributions and signs that historically reluctant participants will stick with the program.

Reduce participant communications in autopilot plans. Bad idea.

With autopilot plans, some providers and sponsors think that participant communication and education activity, and costs, can be cut back.

Employees who will want to override the defaults for the wrong reasons, or seek more control and a better shot at a bigger nest egg, will need help. They will continue to look to their employer and plan provider. Some will have part of their pay diverted to the plan just as the investment experience drops. Reduced communication is not a good idea.

Apply an important lesson from DB experience. Communication professionals had difficulty getting DB to “come alive” for participants. There was little reason to engage people in looking at the plan, so sponsors got little recognition for their efforts and expense.

If we get carried away with autopilot provisions and forget to keep the benefits in front of people, the attract/retain/motivate value of the plan will be greatly diminished.

Reassess participant communication programs to focus on plan performance and participant success.

With broader application of autopilot features, we will have more participant data than ever before, providing opportunity to employ the marketing communication techniques refined in the retail marketing world. Personalized, data-driven campaigns can get positive results in plan performance, and a provider’s bottom line.

Use a disciplined process to assess and re-formulate your communication program offerings.

Provider credibility is more important than ever.

A sneaky fact about autopilot 401k plan features: they focus participant attention acutely on the quality and trustworthiness of the employer and the plan provider. We are saying to uninvolved participants, despite all our caveats and footnotes, “Trust us. We’ll take care of this for you.” They will expect their employer to exercise an extraordinary level of due diligence. They will want to know who the provider is, and what their reputation for service is.

Whose plan is it, anyway?

Pension Reform may exacerbate what is already an awkward balance between sponsors and providers. Companies struggle to brand their plans and gain recognition for their sponsorship. At the same time, they are more dependent on outsourcing to providers who would like to have more visibility at the participant level.

Provider service levels, technology and performance will carry the day for 401k. And, there is more and more evidence that people, especially Boomers, are looking for help with long-term transitions, not just transactions. They will turn to providers of financial information, tools and advice for help when the time comes to make a major change.

Providers should reinforce their client communications programs to remind sponsors of all the seemingly “routine” things they do day after day. Then, actively solicit sponsors' approval to approach participants directly with selective additional information and services.

Keep your eye on behavioral finance.

BeFi is an academic discipline gaining traction in the “real” world.

Professionals in participant education knew in the '90s that participant inertia was going to be a continued barrier to 401k success. But it took solid academic research to uncover the nature of inertia and how to put it to work to the advantage of the “uninvolved.”

Would Congressional action on autopilot provisions have come as quickly without a combination of academic and industry research and attention? It could have been seen as a self-serving industry recommendation.

There will be many opportunities for financial services providers to engage this discipline and find applications that work in the marketplace. Stay tuned.