Defining Three Distinct Investor Personas
The three groups—roughly of equal proportions based on years of surveys—have specific characteristics beyond demographics. Each persona reflects an investment style, learning preference, engagement level, risk profile and other qualities:
- Capable – Confident, knowledgeable investors who score high on our financial literacy test and have higher plan account balances
- Eager – Younger participants with greater enthusiasm and confidence but lower literacy scores, and—likely because they skew younger—lower account balances
- Conservative – Cautious, diligent savers with lower confidence and investing acumen, yet they may know (or need) more than they realize
Stronger Engagement Requires Targeted Outreach
Broad-reaching plan communications are a good start, especially if the messaging is straightforward, uses storytelling visuals and always includes a call to action. But the path to better retirement planning engagement, and outcomes, also requires hands-on messaging.
To engage more deeply with plan participants, connections need high-touch relevance, which is harder to achieve with a wider net. We believe that grouping participants by these distinct investor personas can help plan sponsors discover better ways to connect with participants—communicating and engaging with them on their own terms to foster better long-term results. The idea is to understand participants first to provide more of what they find useful.
Generating retirement confidence and investment knowledge, for example, has been an ongoing challenge for sponsors. The pandemic exacerbated the problem in recent years, but the trend began well beforehand. One reason: the growing use of default options and automated plan features. Although these features are incredibly helpful in many ways, they don’t require ongoing sponsor outreach or proactive participant engagement, which we are finding can lead to surprises down the road. This could explain why a growing number of participants eventually think they won’t hit their retirement income goals, or why retirees look back and wish they saved more.
Even Capable Participants Need Help
Compared with other personas, Capable participants are long-term investors, financial planning enthusiasts and confident decision makers (Display). But even though they’re quite self-reliant, they can still use plan sponsor help.
For example, many Capables may be too aggressively postured in their investment mix and need timely reminders of the potential downside to taking too much risk. Thought-provoking content about the risks and rewards of different investment types or perspective on trending topics, like market volatility challenges or the long-term effects of inflation, can be helpful, too.
