Key Elements to an Effective Virtual Meeting – Part III

by | Feb 2, 2021 | Growing Advisors Business

You Are Here

Communicate with clarity

While my oldest daughter was studying abroad in France, my wife visited her during spring break a few years ago. Soon after arriving, they traveled to Africa to visit some family friends. They got very little sleep during their return red-eye flight, but when they landed, they picked up their rental car and headed out to see France. Their first aim was to find a place to pull over and get some rest. Next, they wanted to get out of Paris, but they found themselves circling the roundabout around the Arc de Triomphe with no GPS. It was the last place they wanted to be. They were driving in an unfamiliar country, and my daughter was confident they were breaking so many traffic laws that they would end up in a French prison that night. If they had known where they were, they could have made better decisions with clarity for their journey.


The same is true for retirement planning.


Helping people plan for retirement has become so sophisticated and detailed that we often overlook our failure to communicate the basics to them. This growing sophistication has been compounded by ever-changing 401(k) rules and data-driven analytics.

The rules for 401(k) plans are becoming increasingly complex and will likely continue to do so—it seems to be a feature of our bureaucracy. But we need to avoid overburdening 401(k) participants with that complexity. Certainly, some of the details must be presented, but they should be kept to a minimum for the same reason most people do not read a disclaimer page: It does not engage them.

The latest software programs promise to deliver more analysis, marketed to us as if we cannot live without it. Few people push back against the sophistication that is added to each new product. Instead, we buy into the latest analysis we can present to participants, whether it engages them or not.

The changing 401(k) rules and high-tech analytical software can cause us to miss the essential steps in giving participants information—clearly letting them know where they are today.

So, let’s go back to the basics.

How can we communicate with clarity?

The first aspect of clarity is to be proactive in providing information. Unfortunately, many advisors defer to the participant portal. They may talk about aspects of the retirement plan, including plan design, fees, regulations, or the market, but they overlook participants’ critical need to know where they are. This knowledge is the foundation for making all other aspects of the retirement plan relevant. It is the most important part of the retirement planning process, yet many advisors do not proactively address it. Naturally, talking about other aspects of a retirement plan is more meaningful when a person understands his or her level of preparedness for retirement. If participants do not know where they are in their retirement preparedness journey, they become more academic and detached. Proactively providing specific information about the participants’ situation can give them context and address their greater needs.

Another key aspect of clarity is to communicate as concretely as possible. One common rule of thumb is that a 401(k) should have one year of salary saved for every five years you are over age 25. (In other words, you should have one year of salary saved at age 30, two years of salary at age 35, etc.) While this may be a good guideline (I didn’t do any analysis on it and cannot vouch for it), it won’t resonate with many participants because they will feel behind, and it doesn’t help them understand what they need to do to be successful in the future. That guideline provides no direction and has no concrete calls to action.

In contrast, specific directions start with clear information about where the participants are right now. For example, a participant may realize that he does not have enough saved in his retirement plan. Imagine a 55-year-old finding he should have six years of income in his retirement plan but actually has only four years of income. This specific information is meaningful, but it is not concrete. How can he solve for the shortfall? Just increasing his contribution would be like throwing a dart in a dark room. And what other actions could he take? (I’ll cover that next month.) Knowing where participants are today is critical, and having concrete steps to move forward allows them to make better decisions.

Options for solving the retirement shortfall need to be presented clearly so that participants can make the best decision for themselves. The more specific and concrete an action is, the better the odds of them making a change and improving their scenario. For example, telling a client to increase her contributions from 3% to 8% is specific, but it could be more concrete. Most clients would not know how a 5% increase in contributions would affect their take-home pay. Once clients know how much they would have to give up in their take-home pay, they can make better decisions for themselves. This is actionable, concrete information for clients.

You might be objecting to my argument, recognizing that this figure will often be more than a typical participant can afford—and I agree with you. That leads us to next month’s blog, where I’ll cover how to provide clear steps (plural) forward. Hold onto your objections until you read next month’s blog.

Just as my wife and daughter needed to know where they were in Paris, our 401(k) participants need to know where they are in preparing for retirement. To help them, we need to provide specific and concrete steps for moving forward in a positive way. Having a good idea of where you are—and what you need to arrive at your destination—helps us not only when we are driving a car in a foreign country but also when we are helping people plan for retirement.

Subscribe for Blog Updates

Get our newsletters and notifications of our latest blog posts

Tips for Working with Public-Sector Employees

Are you looking for new clients? How would you like to tap into an underserved group of over 23 million people? Your next client may be someone you already know like your mail carrier, your local firefighter, or your child’s teacher. Public-sector employees are one of the largest groups of...

40 Open-Ended Questions to Engage Your Clients

Open-Ended Questions hold a special power of engagement which can help build rapport and trust between people. I think most people get this instinctively and, as we wrote recently, there are studies that reveal the unique strengths of asking questions.

3 Ways to Engage Participants in 401(k) Education

If Ben Franklin had to hold 401(k) education meetings, surely he would have had participants leaning forward in their chairs. So why do many 401(k) advisors struggle with participant education? It’s because most advisors fail to make these sessions interesting. And the fastest way for advisors to...

The Bucket Strategy – What It Is, and What It Can Do for You

The bucket strategy provides an opportunity to capitalize on longer-term market growth in the earlier years of retirement while easing the fear of risk and the tendency to overreact to market fluctuations.

Can your clients afford their kids’ college education?

Retirement isn’t the only thing for which many families are saving; many are also trying to save for their children’s future college expenses. Faced with the need to save for retirement and the desire to save money to help defray soaring college expenses, many families are feeling overwhelmed. If...

How to Build Client Relationships with Questions

Questions have a unique power and learning to be a better question asker can have a big impact on your personal and professional relationships. 

Leverage Micro Plans for Macro Growth

Advisors in the micro plan space received higher marks for their ability to build relationships with clients and provide group or one-on-one participant education.