Personalization in workplace retirement plans
Personalization is an innovative approach to retirement savings that allows us to move beyond the traditional “one-size-fits-most” solution and design strategies to account for an individual’s unique needs and goals.
The shift towards personalization
For many U.S. workers, the single largest asset they own – except for their home – is their workplace retirement savings plan. Why should personalization be an option for every other aspect of their lives except their retirement plan at work? We believe every U.S. worker and household has the right to a personalized experience and financial well-being throughout each phase of life.
Why personalization?
It is more than just a buzz word, and you should take a moment to consider the following:
What U.S. workers want.
Workplace retirement plan participants are especially eager for personalized resources and strategies to help achieve their unique financial goals.
Source: Franklin Templeton’s 2023 Voice of The American Worker Survey.
78%
“I would be interested in a more personalized 401(k) investment option (i.e., personalized portfolio – using factors such as age and income) tailored to my unique financial situation.”
77%
“A more personalized 401(k) investment option would encourage me to participate and/or contribute more to my retirement savings.”
68%
“I wish my employer recommended financial strategies to me based on my income and financial goals.”
Differentiate your service.
Many workplace retirement plans use Target Date Funds as their default option and for good reasons – they are easy to install and can help reduce liability for plan fiduciaries.
Personalization offers these benefits and much more:
An elevated participant experience
Meet participants where they are with an adaptive solution designed for their unique retirement goals.
An innovative plan solution
Empower plan fiduciaries with a comprehensive strategy that provides customized advice on a larger scale, all while maintaining their fiduciary liability, minimizing administrative workload, and controlling plan expenses.
Participant driven outcomes
Embrace a goals-oriented approach that underscores your dedication to assisting participants in attaining their unique retirement objectives.
A unique default investment option
Personalized solutions can serve as the default investment option, offering participants an individualized strategy tailored to their distinct requirements.
When one-size-fits-most doesn’t work
Similar ages but very different financial situations and retirement needs.
Steve (Age 48)
Owns home | $125k salary | Single | Graduate degree | 15% elective deferral | $200k in plan assets | $100k in outside investments.
Bob (Age 45)
Does not own a home | $55k salary | Married | GED | 3% automatic enrollment | $10k in plan assets | under $2k in outside investments.
Anne (Age 46)
Owns home and rental properties | $60k salary | Married | bachelor’s degree | 12% elective deferral | $150k in plan assets | more than $250k in outside investments.
Denise (Age 47)
Owns home | $225k salary | recently divorced | PhD | Maximum elective deferrals | $1M in plan assets | $3m in outside investments.
Plan sponsors should remain flexible in adjusting their plan administration to shifts in technology and investment strategies.
Review our topic paper to evaluate key factors that can help you adapt to changes in choosing a default investment option for your plan.
Contact us to learn more about our personalized solution.
Important Information
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only, and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. As a financial professional, only you can provide your customers with personalized advice and investment recommendations tailored to their specific goals, individual situation, and risk tolerance.
Franklin Templeton does not provide legal or tax advice. Federal and state laws and regulations are complex and subject to change, which can materially impact results. Franklin Distributors, LLC. (FD, LLC) cannot guarantee that such information is accurate, complete or timely; and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.
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