Many participants often find their DC plans confusing and wish for clearer language to help them understand their options and make more informed decisions. Let's rethink how we communicate with them.
Download Research SummaryOur 2021 study focused on the impact of language on plan participants’ overall understanding of the plan’s investment menu, professionally managed menu options, the potential benefits of staying in the plan post-retirement, and how best to communicate retirement income.
Our 2021 Watch Your Language study took a closer look at the language of defined contribution plans.
Based on more than 10 years of research, we believe a disconnect remains between what plan sponsors say and what participants hear.
Alongside word specialists, Maslansky + Partners we conducted in-depth interviews with 7 plan sponsors and connected with 997 DC plan participants (working for large organizations with 5,000 or more employees) through online surveys and virtual focus groups in the US.
The study focused on the impact language can have on participants’ overall understanding of the plan’s investment menu, professionally managed options, the potential benefits of staying in the plan post-retirement, and how best to communicate retirement income.
We found that the right language can make a big difference in the way participants responded to investment menu options.
Participants gravitated toward clear, descriptive titles and positive framing, along with language that communicated support with the investment process.
Similar to findings from our 2019 Forgotten Participant study, there’s clear interest for more professionally managed options such as target date or target risk funds on the investment menu. Almost 70% of participants preferred target date and target risk funds over single asset class options.
Simple framing, short descriptors, and a goals-based approach can all help differentiate target date and target risk funds on the menu.
Finally, we found that participants were eager for their employers to talk to them about the transition from accumulating wealth at work to generating income.
Only two in 10 survey participants received information from their employer about how to turn their retirement plan savings into retirement income.
To learn more about the findings of our 2021 DC language research study, visit our website or contact your Invesco DC professional.
DISCLOSURES
FOR DEFINED CONTRIBUTION PLAN SPONSOR USE ONLY
NOT A DEPOSIT |NOT FDIC-INSURED I NOT GUARANTEED BY THE BANK | MAY LOSE VALUE| NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
All data as of December 12, 2020, unless otherwise noted.
The opinions expressed are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.
This material is based on Invesco’s work with Maslansky + Partners. Invesco is not affiliated with Maslansky + Partners.
This material is for illustrative, informational and educational purposes only. If the illustrations herein are used outside of the designated audience, it is the respective user’s responsibility to ensure that such material complies with all applicable regulations and is filed with the appropriate regulatory bodies if so required. Words and phrased utilized should always be appropriate, applicable and provable. We make no guarantee that participation in this program or utilization of any of its content will result in increased business or higher participant rates.
All investing involves risk, including the risk of loss. Diversification/Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns and does not assure a profit or protect against loss.
A target risk fund is a type of asset allocation fund that holds a diversified mix of stocks, bonds, and other investments to create a desired risk profile. The fund manager of a target risk fund is responsible for overseeing all the securities owned within the fund to ensure that the level of risk is not greater or less than the fund’s target risk exposure. A target date fund identifies a specific time at which investors are expected to begin making withdrawals, e.g., now, 2025, 2030. The principal value of the fund is not guaranteed at any time, including at the target date.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions. As with all investments, there are associated inherent risks.
Invesco Distributors, Inc., is the US distributor for Invesco’s retail products and private placements. Invesco Advisers, Inc., is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Both are indirect, wholly owned subsidiaries of Invesco Ltd.
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Learn more from our three key insights on how to communicate with participants.
In our latest study, we found some notable differences in how men and women view investing, and similarities among millennials, Gen X and baby boomer plan participants. Here we highlight key research findings reflecting their views on investing and retirement income.
Participants were attracted to the term that implied a diversified approach. Clear language and descriptive titles could help participants more easily understand their investment options.
While male and female survey participants responded equally to single asset class options, our research revealed a difference in their preferences for TDF and TRF options.
Participants are eager for plan sponsors to communicate with them about the transition from accumulating wealth to generating retirement income. Many participants weren’t aware of their DC plan options at retirement.
Watch the panel discuss our 2021 Defined Contribution Language research where we shared insights and guidance into the impact language can have on plan participants.
We connected with over 1,000 defined contribution (DC) plan participants who shared their views through an online survey and focus groups across the US. Our goal was to gain further insight into how language can impact participants’ overall understanding of the plan’s investment menu, professionally managed options within the menu, the potential benefits of staying in the plan post-retirement, and how best to communicate retirement income.
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Source: Source for all data unless indicated: July and August 2020 virtual focus groups, and a November 2020 online survey by Invesco and Maslansky + Partners. Percentages may not add up to 100 due to rounding.
This material is based on Invesco’s work with Maslansky + Partners. Invesco is not affiliated with Maslansky + Partners.
A target risk fund is a type of asset allocation fund that holds a diversified mix of stocks, bonds, and other investments to create a desired risk profile. The fund manager of a target risk fund is responsible for overseeing all the securities owned within the fund to ensure that the level of risk is not greater or less than the fund’s target risk exposure. A target date fund identifies a specific time at which investors are expected to begin making withdrawals, e.g., now, 2025, 2030. The principal value of the fund is not guaranteed at any time, including at the target date.
This material is for illustrative, informational and educational purposes only.
Diversification does not guarantee a profit or eliminate the risk of loss.
Annuities can be purchased within or outside of qualified retirement plans and traditional IRAs. Annuity benefits and features vary, so an investor should carefully consider whether this product is right for them. Some benefits may incur additional costs. Any guarantee associated with an annuity is subject to the claims-paying ability of the issuing life insurance company.
This link takes you to a site not affiliated with Invesco. The site is for informational purposes only. Invesco does not guarantee nor take any responsibility for any of the content.
