Upon my return from holidays, I had—amongst a few others—two voice mails from clients. One plan sponsor was asking for guidance to draft a memo to its employees who were asking all sorts of questions regarding what to do about the recent market correction. The other was calling to see if it was normal that so few employees seemed concerned about the market volatility and was wondering if they had simply not heard about it. How can this be?
Well, the big difference between the two sponsors above is that the latter is actively working with its consulting firm and CAP provider to ensure regular communication and education meetings—notably on how to invest—to its plan members. The former has been rather passive on that front since the plan was transferred over from another provider some four years ago.
Isn’t this my CAP provider’s responsibility?
No, it isn’t: as a plan sponsor, it is yours. It is also in your best interest to ensure plan members get the information they need so they can make the right decisions for themselves.
Your provider likely did an excellent job meeting employees and providing them with valuable—but somewhat limited because of time constraints—information when you implemented or transferred the plan. After all, the presentation was mostly geared at having members get familiar with the new provider, complete the necessary paperwork and choose their investments.
But this is hardly sufficient. For instance, plan members should be reminded once in a while of basic investment principles. Or they should know how to determine if they’re going likely to meet their retirement goals, and how to use the various tools made available to them. Oh, and those who joined your organization since the implementation rollout, did they get enrollment meetings as well?
Then what should I do?
Remember how you were swept away by the member communication and education program your CAP provider enchanted you with during the last RFP process? If you haven’t done so yet, you should take the time to plan how you’re going to use your provider’s resources to proactively empower your plan members in their decisions. After all, your plan members are paying for these services through the provider fees (IMFs)!
Ideally, member communication and education should be seen as an ongoing process, to be planned regularly—say, on an annual basis. Here are some examples of things you should be looking for (triggers) that can help you determine what educational needs should be tackled (most of this information you can get from the reports available from your provider):
Trigger | Educational opportunity |
| Large number of new employees or members | Enrollment sessions |
| Low membership rate (where enrollment is optional) | Benefits of enrolling early |
| Low contribution rates | Importance of saving enough to meet retirement goals |
| Poor individual rates of returns | Investment basics; advantages of balanced funds or portfolios |
| Poor overall asset allocation (e.g., high use of GICs, money market funds) | Benefits of diversification; long-term benefits of investing in equities |
| Limited use of online tools | Tool demos; benefits of using the tools available |
| High trading frequency | Benefits of sticking to long-term asset allocation |
Sitting down with experts and drawing on their experience may be the best way to help you prioritize your members’ needs and adequately set your communication and education strategy. The strategy should include various modes of communication, including live presentations—still the very best way to learn for many people.
You may also consider bringing in independent presenters (i.e., not from your CAP provider), for better perceived objectivity and deeper knowledge than what a generalist can offer.
Got it. So when is it best to provide member education?
Well, this is a bit like asking when is best to enter the stock market: at any time, as long as you are in for the long term! Ongoing is the best way to go, as sending one-off communications once in a while when there is market turbulence—for instance—may just be counterproductive: such message may create some panic by itself(“Oh no! This must be really bad if the company’s writing to me!”), or could be interpreted as having the sponsor on watch to let them know if anything important is happening. Two things you do not want to create.
Now, if you’re like me, you’re gently preparing your kids to return to school. So if you also happen to be a CAP sponsor, you may consider sending your plan members back to class as well—nothing like market hiccups to remind you how important this is.