The Hidden Opportunities in 401k Participant Education
The first time I saw bottled water for sale, I thought it was absurd. I’m from Oregon, where clean, abundant water flows from the tap. I figured bottled water might work in drier states, but certainly not here. Who in their right mind would pay a dollar for something so readily available?
I couldn’t have been more wrong. Today, bottled water is a $50 billion industry.
Just as I initially dismissed bottled water, many 401(k) plan advisors overlook one of the most valuable opportunities in retirement planning: participant education.
Too often, advisors focus primarily on the business owner or other high-net-worth individuals in the company, treating the plan as a loss-leader to secure those accounts. In doing so, they ignore the broader group of employees and miss a powerful way to serve more people and significantly grow their AUM.
The Real Problem: Low Engagement
Only 10% – 15% of participants visit their recordkeeper’s portal, and only a fraction of them use the available retirement planning tools. Even fewer take meaningful action based on what they learn. Most participants are disengaged from their plan — and it’s not because they don’t care, but rather because no one has connected with them in a way that resonates.
Here’s the truth: What matters most to participants isn’t fees, investment options, asset allocation, or even the employer match. It’s whether they are on track to retire. That’s the why behind the plan—yet most presentations skip over it entirely. Advisors who focus their message on retirement readiness instantly build relevance and engagement.
A Better Way: Leverage Technology to Educate Everyone
Today, advisors have access to data and tools that can transform how they serve participants. If recordkeepers can use participant data to forecast retirement readiness, why can’t advisors do the same?
By downloading plan data from the recordkeeper and importing it into planning tools, an advisor can efficiently generate personalized reports for every participant. This enables annual, proactive education at scale, turning a role of reaction into one of leadership and advocacy.
When 100% of participants receive meaningful, individualized education each year, everything changes. Participants appreciate the guidance and begin to view their advisor as a trusted resource.
And advisors themselves enjoy six key benefits:
- Increased Deferrals
Most default contribution rates are far too low to fund a comfortable retirement. Showing participants their gaps early, with clear, personalized visuals, often prompts real, corrective action.
- Discovery of Outside Assets
Participants frequently have assets in old 401(k)s or IRAs. When they trust their advisor and value the guidance he or she provides, they’re more inclined to bring those assets into the conversation—and potentially under management.
- Fee Justification
When all advisors look the same, price becomes the only differentiator. By offering high-quality, participant-wide education, advisors can set themselves apart from the crowd. This value-add becomes a defensible justification for higher fees.
- Legal Protection
Offering regular, documented education helps mitigate fiduciary risk. It can also provide a defense against participant lawsuits claiming negligence or lack of communication, especially near retirement.
- Stronger Client Retention
When the advisor’s relationship is with the entire employee base, not just the owner or key contacts, the plan becomes much stickier. The advisor becomes embedded in the culture of the company, no longer just a vendor.
- Powerful Prospecting
Employers who care about their employees notice the difference when advisors take the time to provide valuable education. Offering participant education is a clear competitive advantage when competing for new plans because it differentiates the advisor and speaks to employers’ goals.
401k Participant Education Makes a Difference
Advisors who educate every participant, year after year, consistently report two things: how rewarding it is to make a real difference in people’s lives, and how transformative it is for their practice. In many cases, what was previously a loss leader becomes a driver of growth.
When I first saw bottled water, I saw something trivial. But the real value wasn’t the water — it was the delivery.
Advisors may view participant education in the same way, as an unnecessary add-on, but when done right, it’s a game-changer for participants and advisors alike.
Article originally published on NAPA: https://www.napa-net.org/news/2025/5/the-hidden-opportunities-in-401k-participant-education/
