Bridging the Gap: Exposing a Disconnect between Plan Providers and Plan Sponsors

The defined contribution (DC) plan market is increasingly dynamic, with a wide array of industry forces, priorities and innovations in play. In the wake of on-and-off industry reform and legislation, along with a continual stream of fee-related litigation, DC plan sponsors are being courted with the latest solutions designed to propel participant engagement, foster financial wellness, and ultimately, increase participant retirement readiness.

There are several factors at play. Let’s get the boring stuff out of the way so we can talk about the fun stuff–marketing to stand out.

Fee Sensitivities

Many plan sponsors are still struggling with the challenges of managing plan costs and navigating the myriad of fees associated with offering their employees a competitive 401(k) plan. As the DC industry modernizes and becomes more efficient, the struggle with plan fees continues to hover over many organizations, exposing a disconnect between plan providers and plan sponsors. While micro plans remain the most fee-sensitive segment, small-mid plan sponsors appear to be experiencing the most angst and are poised to take more definitive action this year, reporting an increase in likelihood of launching a formal 401(k) plan review or switching DC plan providers. Take note, and prepare accordingly! Below we will talk about ways to start planning for plan reviews and positioning yourself to win. In contrast, large-mega plans, which command higher rates of negotiating power, enjoy the freedom to think more holistically about participant needs, and are better-positioned to harness the latest innovations.

Brand Differentiation is Key

Price sensitivities aside, DC plan providers and DC investment managers must become better-adept at identifying the most effective ways to engage and educate each segment of the market on their unique brand differentiators. This is why we have worked with several DC plan providers, some of the largest in the industry in fact, to really hone-in on their unique differentiators, and define a value proposition for each audience. We also regularly perform a competitive review or sweep of the major players so we know the messages they are presenting and in what mediums. We are well-versed in the defined-contribution space and we also very keenly understand what plan sponsors are looking for, their sensitivities and concerns, when they seek out a provider. Likewise, we have studied participant behavior to laser focus in on their pain points; what is stopping them from investing, or, investing more. And also, we benchmark how happy they are with their current provider. Using this information, we have crafted unique participant-directed campaigns based on life stage, investment concerns and the like. They can be as specific as trying to capture rollover dollars, educating around investment choices or speaking to competing investment concerns, like college savings. But they can also be as involved as really pinpointing that individual’s specific concerns through modeling of personas and placing them on a communication track to educate and create action. Ways to reach them starts with the right messaging but of equal importance is the mediums to reach them.

bridgeNo Longer Optional: Using Social Media to Reach Ready-to-act Investors

When thinking through outreach campaigns, we also determine which media to use. Crafting effective social media campaigns is increasingly important. It really is the best way to disseminate thought-leadership information; and can be achieved by partnering with DC advisors and consultants; a win-win. It is these advisors who are subject matter experts, and are trusted to serve as influential educators. As a provider, providing this valuable audience with at-the-ready content also strengthens your partnership with these critical decision-making facilitators.

While social media use is the norm among affluent investors overall, recent findings reveal that ready-to-act (RTA) investors are using social media at higher levels than the average person. These investors report using at least 2.4 social media sites each month on average, compared with an average of only 1.8 social sites for investors who do not plan to make an investment decision in the near-term. A social media presence is no longer optional, it is quickly becoming a mandatory component of a distributors or product providers successful marketing plan and media strategy. RTA investors are substantially more likely to use social media for investing and financial purposes, making them an even more attractive social media audience for distributors and providers.

The question for financial services marketers is now what combination of sites should be considered as part of a holistic marketing communications strategy. Critical first steps include examining requirements for fit with each site’s core strengths—attracting fans on Facebook, viewing thought leadership and investor education videos on YouTube, creating groups of peers on LinkedIn, and influencing hashtags on Twitter.

Instagram TV just launched this week and it’s one to watch out for too. Influencers on Instagram are becoming increasingly more topic-specific. Align with the right subject matter experts in this space and you could be the first-to-market in this exclusive new channel.

Ultimately, providers who advance their social-media strategies now will realize the greatest return on their marketing dollars with this key segment of important investors who are ready-to-act.

Financial Wellness Adding Value and Not Going Away

Faced with increased pressure to demonstrate added value, DC advisors are offering financial wellness programs more frequently. Financial wellness programs, which are designed to educate employees about how to manage their personal-finance challenges such as debt reduction, asset management, unexpected expenses, as well as saving for retirement, are soaring.

Nearly four in ten (38%) DC advisors incorporate financial wellness into their offerings, a significant increase from the 29% who reported doing so in 2016. Independent producers are driving the overall increase in financial-wellness program availability.

Perhaps even more striking, the way advisors are designing financial-wellness programs appears to be shifting, with a higher proportion of DC producers using their firm’s proprietary model in lieu of a plan-provider program. In fact, nearly two-thirds (64%) of DC advisors offering financial wellness programs rely on their advisory firm’s proprietary model, a significant increase from 44% reported in 2016. This trend not only signals a desire for firms to differentiate themselves, but also a potential missed opportunity on behalf of DC plan providers to create programs that meet the expectations of DC advisors, and ultimately, plan participants.

Customer Service Still Reigns Supreme

DC plan providers and DC investment managers must also be ready to back up their brand differentiation, though leadership and sold plans with superior client service. At the end of the day, it is the most important metric.

Contact The Lift Factor to discuss our expertise in this market in more detail, and for a complimentary overview of your current defined contribution marketing plans or campaign.


With insights and reporting by Sonia Sharigian, Cogent Reports.


By |2018-06-21T14:39:05+00:00June 21st, 2018|Direct Response Marketing, Financial Services|0 Comments