CONTRIBUTORS
Kevin Murphy
Head of Institutional Retirement and Strategic Growth,
Franklin Templeton
Personalization is all around us. From entertainment to retail shopping, health care, travel and fundraising, we receive a daily cascade of alerts, messages, emails, images and social media telling us what to buy, when to check our blood pressure, where to travel, and when to show up.
The messaging is customized, seemingly just for us.
While this communication touches so many aspects of our lives, we may not be receiving helpful, valid information on some of the most important choices we make—like saving for the future and investing.
When it comes to financial services, communications tend to lean toward the status quo and are generally not personalized.
Consider an advertisement showing a middle-aged couple walking from their private plane at their seaside resort. It’s nice to dream, but is this really a relevant message for the majority of working Americans?
Through personalization, we can engage people where they are in their life stage. One can argue that most workers want peace of mind. They want to know they will have some form of reliable income in the next phase of their life. Providers and advisors have the opportunity, and responsibility, to present it in a way that is goals-based for individuals.
Communications can be tailored to individuals and their goals.
Complex choices and guidance
Amazon, Spotify, Netflix and many others all use data and algorithms to analyze your browsing history and preferences and suggest products tailored to your taste. Streaming platforms curate content based on your viewing habits.
Despite the increasing complexity of investment options and the growing need for tailored guidance, the financial industry has lagged behind other industries in innovating and delivering personalized solutions to investors, especially those with limited knowledge of investing.
Even healthcare providers leverage data to personalize treatment plans for patients. There are a growing number of platforms using data-driven, online messaging which encourages patients to seek testing and monitor other health issues in between doctor visits. Yet, when it comes to managing finances and investments, individuals are often left to navigate a labyrinth of jargon-laden options without adequate guidance.
The consequences of this oversight are profound.
While individuals need to be accountable for their personal finances, the availability of professional guidance and advice is in short supply. Looking ahead, it will only be more challenging for investors to access expert advice with the predicted shortage of new financial advisors entering the industry.
Impact of digital influence
Novice investors, intimidated by the complexity of financial markets and lacking in-depth knowledge of investment strategies, may hesitate to act (paralysis) or make uninformed decisions. They may not save enough, or take on too much or not enough risk, which could jeopardize their financial future.
The one-size-fits-all approach fails to account for the diverse needs and goals of individual investors, leading to suboptimal outcomes.
Technology and personalization can provide some answers and make it easier to provide guidance to more people.
Workplace-driven messaging
We believe the workplace has become the financial epicenter for most American workers that generally don’t have access to professional advice. The workplace can be the most efficient way of communicating educational information and guidance.
Workplace communications take the conversation to a new level.
Personalization adds depth to the message and encourages investors to be more engaged with their investments. Personalization can go a long way in helping savers avoid inertia and other behavior that can undermine their progress.
Technology is the driver.
Employers have a wealth of data—from payroll information to employee demographics—enabling them to facilitate personalized financial wellness programs for their workforce.
According to Franklin Templeton's 2024 Voice of the American Workplace study,1 employees are willing to provide more data in exchange for personalized financial guidance. This highlights the untapped potential for employers to play a pivotal role in promoting financial literacy and empowerment among their employees. Our study found that 84% of workers said they would like to see more personalized investment options in their 401(k) tailored to their unique financial situation, using factors such as age and income.2 In addition, 82% said they would like their employer to offer more personalized benefits, customized to meet their individual needs.3
By integrating personalized savings and investing solutions into workplace benefits packages, employers can empower their workforce to make informed financial decisions, ultimately enhancing employee satisfaction, loyalty and overall wellbeing. By offering these services within the workplace environment, financial service providers can maximize efficiency and accessibility, reaching more individuals.
We believe the time has come for the financial services industry to embrace innovation and prioritize the delivery of personalized solutions and democratize advice for all working Americans, and at every stage of life. By leveraging technology, data, and the efficiency of workplace solutions, we can empower individuals to navigate the complexities of saving and investing with confidence and achieve their long-term financial goals, whatever they may be, because every goal is unique to an individual!
It's time to revolutionize and put the power of personalized guidance into the hands of every investor.
Insights to action
There are opportunities for providers, employers and advisors. Here are some key areas to consider taking action:
- Customize guidance: By leveraging technology and data analytics, financial services providers can offer customized guidance and investment strategies that align with an individual's risk tolerance, financial goals and stage of life. Providers can inform investors about available solutions that are tailored to their unique needs and preferences.
- Embrace technology: Advisors to workplace clients can embrace the new value proposition by leveraging and activating technology to provide more access and to democratize advice for those who need it most—average working Americans who are not typically sought after by large providers.
- Personalize advice: The need for tailored communication creates an opportunity for advisors to provide guidance and tools to help plan sponsors build a robust, personalized communication program with savers.
- Digitize communications: Financial advisors have recognized for a long time the demand for personalized, custom service from clients. The shift to increased digital communications accelerated trends already in progress. Financial advisors are leveraging technology to deliver personalized services, enhance the customer experience, and grow their business. Timely communications around specific financial opportunities or checking in on life milestones sends the message: we are focused on you and your unique financial plan. In fact, a recent Cerulli study found advisors defined as “heavy”’ technology users experienced more growth than “light” users. The study noted nearly 30% of heavy users had higher-growth practices over the most recent three-year period.4
Endnotes
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The Voice of the American Employer Survey was conducted by The Harris Poll on behalf of Franklin Templeton from November 6 to November 17, 2023. All 1,000 respondents, based in the United States, are classified as employers, defined as having at least some influence over company benefits and/or hiring at organizations with over 100 employees. Respondents represent a mix of industries, company size, role, age, and race. The Voice of the American Worker Survey was conducted by The Harris Poll on behalf of Franklin Templeton from November 9th to November 21, 2023, among 2,001 employed US adults. All respondents had some form of retirement savings. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. Findings from 2020 reference a study of a similar nature that was conducted by The Harris Poll on behalf of Franklin Templeton from October 16 to 28, 2020, among 1,007 employed US adults, study from 2021 also references a similar survey conducted among 1,005 employed adults from October 28 to November 15, and a study from 2022 also references a similar survey conducted among 1,000 employed adults from October 17 to October 27.
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Ibid.
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Ibid.
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Source: “The Cerulli Report: The State of Wealth Management Technology 2024.” Cerulli. April 2024.
For additional information, please contact the Franklin Templeton Retirement Sales Department at (800) 530-2432.
The Voice of the American Employer Survey was conducted by The Harris Poll on behalf of Franklin Templeton from November 6 to November 17, 2023. All 1,000 respondents, based in the United States, are classified as employers, defined as having at least some influence over company benefits and/or hiring at organizations with over 100 employees. Respondents represent a mix of industries, company size, role, age, and race.
This presentation also references a qualitative study conducted by The Harris Poll on behalf of Franklin Templeton from August 15 to August 25, 2023, among 15 American employers. All interviewees were full-time employees working in human resources, who have influence over employee benefits, and included those with titles such as HR Manager, HR Director or HR Vice President, among others.
This was a blind study, as Franklin Templeton was not mentioned in order to avoid bias.
The Voice of the American Worker Survey was conducted by The Harris Poll on behalf of Franklin Templeton from November 9 to November 21, 2023, among 2,001 employed US adults. All respondents had some form of retirement savings. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. Findings from 2020 reference a study of a similar nature that was conducted by The Harris Poll on behalf of Franklin Templeton from October 16 to 28, 2020, among 1,007 employed US adults, study from 2021 also references a similar survey conducted among 1,005 employed adults from October 28 to November 15, and a study from 2022 also references a similar survey conducted among 1,000 employed adults from October 17 to October 27.
Franklin Templeton is not affiliated with The Harris Poll, Harris Insights & Analytics, a Stagwell LLC Company.
Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.