Financial ownership: Helping participants move from engagement to action

Catherine Golladay

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Financial ownership: Helping participants move from engagement to action

2019 PLANSPONSOR National Conference

My name is Catherine Golladay. And today, I really want us to dig into a conversation around what I think is a very important component of retirement plan servicing.

When I think about engagement—and I think it's a definition that most of us, you know, tend to gravitate around—it is when we've got our participants in the plan. They're increasing their savings rate over time. They're rebalancing their portfolio. All of those things are so important. And we tend to think that that is all we can do, that we've done it, that we've nailed it. But I think there is so much more that we can do than that.

Engagement does not always equal action, right?

44% of individuals choose their contribution rate either by their employer match or where they were set up at automatic enrollment. And then they can tend to take a set-it-and-forget-it type of approach, which means if we're building to the lower default rate and leaving it there, we risk participants thinking that they're saving what they should, not doing anything about it, and then actually having an outcome that is not what they were looking for or what they need.

I think we should always be asking ourselves, How prepared are your participants, are your employees, for a financial misstep, big or small? What can we do to help them?

And so I would advocate for a definition of engagement that goes further than that. And really considers not only those things that they're doing within the plan, but how they're looking at their full financial picture and taking action.

I think that can sound a little daunting: How do we move beyond engagement?

At Schwab, we really look at someone's financial journey as this series of phases—earner, saver, investor, owner. And we believe that if you help someone within each of these phases, that can have a meaningful and lasting impact.

If someone is making money, they're really focused maybe on their month-to-month expenses and managing their budget, I would think of them as an earner.

If someone is in the plan, they have some goals that they're working towards, I would typically look at them as a saver. Investor, this third phase, we tend to give a definition that might be a little bit more broad than you're thinking. If someone is invested in their plan, they have goals they're working towards, likely saving within their workplace plan and outside of their workplace plan, that's someone who would be an investor.

And then, finally, an owner, that is someone who's owning it, right? That's the best way to describe it. But really, it is someone who has their financial plan, they are reacting to it, they're adjusting to it as those life circumstances happen.

But give a little bit of thought as to where you think engagement happens within this framework.

We tend to see it happening or think of it happening really, in those later three phases—saver, investor, owner. However, if I'm thinking about someone who is in that earner—earlier, we talked about it being someone who is making money but they're largely focused on meeting their expenses—think about where that person might actually be. Maybe they're working hard to get their financial house in order. Maybe they have an awareness of where they're at. Maybe they've decided tackling debt is more important and they're working towards being in a place where they can save in their workplace plan.

And so maybe that person is very much engaged as well.

At Schwab the approach that we've taken is really to integrate it into all aspects of the participant experience. And we use these four pillars to think about it.

The first is really around how do we make sure that we're giving people the tools and the information that they need in the channel that they want. Often, it is in this digital channel. We do use financial coaches quite a bit. It's something that we've done for years. And in the context of financial wellness, those coaching conversations are very much focused on understanding a person's particular situation and identifying what are the one or two things that I need to do when I leave this coaching conversation and before I check back in again in the future.

Educational resources are important, right? But you need to continue to evolve them with the data that you have so that the curated content and smart messaging sits alongside of your general education. And then we have a belief, knowing what we do about participants, that it's not only about the workplace plan. Often, it's other things that surround it. And so what we do is bring to bear solutions that are flexible and that are really taking into consideration all of those things.

I want to leave you, I guess, with two key messages. The first is around data. We have so much more data and insights than we've ever had. That is only going to increase.

It's important to protect that data, right? But it's also important to use those insights to consider an individual's personal situation and where they're at on their financial journey, and encourage them to take that next action.

The second would be around the fact that we—I'll use the collective we, so plan sponsors, consultants, and providers that support them—we have an opportunity to rethink engagement in the context of financial ownership. And if we do that, I think it broadens the opportunities for all of us, really, to make a difference in the lives of the participants we serve.

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Catherine Golladay: Helping participants move from engagement to action

At Schwab, we really look at someone's financial journey as this series of phases—earner, saver, investor, owner. And we believe that if you help someone within each of these phases, that can have a meaningful and lasting impact.