People are inundated with information, whether through text, email or video, skimming over what might be important or even essential. These issues are especially relevant for defined contribution plan sponsors who juggle up to 10 jobs and have little to no training, and are even more concerning for their employees, who struggle to save for retirement. So how can advisors communicate more effectively and tailor their messaging?
A quote sometimes attributed to Mark Twain and Winston Churchill, which was started by French mathematician and philosopher Blaise Pascal, sums up the problem: “If I had more time, I would have written a shorter letter.”
Advisors are also busy and are often not mindful about the communications they send, not spending the time to make it easy and relevant for recipients to read and respond. Artificial intelligence is not an easy fix.
In a recent podcast sponsored , UCLA professor Hal Hershfeld explored the issue with Harvard professor Todd Rogers, who co-wrote the book, Writing for Busy Readers: Communicate More Effectively for the Real World.
Advisors and providers who support 401(k) and 403(b) plans still frequently use industry acronyms and code sections. They either innocently expect people to understand, plagued by what is known as the curse of knowledge, or they hope that others will be intimidated and accept what the advisor or provider recommends. One group is thoughtless—the other is evil.
Communication starts and ends with putting ourselves in the shoes of others, using analogies they understand, rather than trying to get them to learn our language. It’s a dilemma for ERISA plans where non-compliance can result in fines, liability and lost time. Trust is created by explaining things in simple terms, then allowing the experts to handle the rest.
So how should we communicate?
Rogers said in his podcast with Hershfeld that shorter is not always better. We need to value the reader’s time, be respectful and be nice or even kind. He said that reading rates increase, for example, if we eliminate one of four sentences. A problem can be that some think that shorter means the writer has not put in the time, which can be overcome if we signal what is being done.
When Ph.D. physicists at the Department of Energy communicate with members of Congress, they keep it short and simple, understanding that the readers may not have doctorates, with greater explanations below and the opportunity to discuss further. Rogers recommended that we start with the most important message up front, with more detailed information about the author and the subject below, rather than a long-winded introduction.
Formatting is another way of communicating more effectively, noted Rogers. For scanners, headings work best, while highlighting is more effective for skimmers; however, highlighting too many ideas can mitigate their effectiveness, leaving the reader to wonder which ideas are important. Few of us are close readers.
Rogers also recommended that responses should be made easy by limiting the number of steps, reducing friction and providing pre-populating forms. Create and send a numbered checklist after a meeting so the reader understands what is next and takes responsibility for follow-up.
There are no easy fixes, warned Rogers, so texting or even videos are not silver bullets. This is also true for AI, which, though effective in creating a message, requires an additional round of editing, which is good advice for all communications.
While administrators are overwhelmed and are not experts, it’s worse for participants. High earners have personal advisors who, through services like Pontera, can manage their DC accounts. Delivering advice at scale to the masses is a challenge that starts and ends with thoughtful communication and education.
If participants feel like they are being sold something, they shut down and move on. Morgan Stanley provides advisors with access to participants and data for education only, which may lead to sales. Prime Capital hires junior coaches trained to help employees get in the plan and calibrate the right risk tolerance using managed accounts.
The financial services industry is beginning to realize the enormous potential to reach people at the workplace with $13 trillion in DC assets, almost 100 million active participants and almost $1 trillion rolling out annually, along with the explosion of new plans due to state mandates.
To acquire new DC clients and service them efficiently, as well as reach and help employees, advisors and providers, need to communicate more effectively, which means understanding their audience, how they want to receive the messages and not use industry jargon, all of which will build trust, something AI cannot do.
