401(k) Providers: A New Vision is Needed to Stanch the Bleeding of 401(k) Assets

Time to inject 21st century technology into the asset retention process!

Improving low retention rates of 401(k) assets is one of the most vexing problems facing 401(k) plan providers. According to PLANSPONSOR Chief Operating Officer, Nick Platt, “Due to demographic trends, financial services providers will experience significant retirement asset outflows in the next 10 years. A comprehensive rollover capture strategy is critical to the net retention of assets during this period.”

For a number of providers the asset bleeding is already in full swing. Year after year, the assets held by a majority of retiring or transferring participants leave numerous providers for other pastures. Notice I didn’t says greener pastures; the simple truth is that, in many cases, the existing pasture was already sufficiently green. It just wasn’t appreciated as such.

This sad fact implies a high-stakes breakdown in communications; the value of keeping assets with existing providers isn’t being communicated effectively to participants, if at all. Yet with so much at stake, one would think that the providers would be more focused on optimizing the communication of their long-term value to plan participants. Why does this suboptimal condition endure? Where’s the, “comprehensive rollover strategy?”

Now, the answer! The best analogy I can think of is as follows: In terms of participant-facing communications, the 401(k) industry is operating on a DOS operating system in a Windows world. Unless and until it moves to the financial services equivalent of the Windows operating system, providers will lose billions of dollars more to aggressive competitors targeting their rollover assets.

I’ve lately been assessing the “state-of-the-art” in rollover communications. From my point of view it’s not a pretty picture. A new, high-tech “operating system” is called for. So, humbly, here is “The Macchia Vision” for how asset retention can be improved significantly:

Personalization + Web Delivery + Streaming Video + Convenience = Asset Retention Success


The technology exists to create personalized websites (microsites) down to the individual plan participant level. Whether the number of plan participants in a given plan is 100 or 100,000, each individual can be provided his or her very own microsite with a unique URL. The microsites can be customized (branded or co-branded) to the plan sponsor level, and they can carry all required disclosure language. The content on the microsites can be managed by the provider via a web interface. Key or unique messages that may be important to the plan sponsor may be included on the microsites.

Web Delivery

Imagine Fred Jones, an office worker and plan participant at ZYZ Office Products, receiving this email from his 401(k) provider, ABC Retirement Company:

Dear Fred,

With retirement right around the corner it’s time for you to consider how you will convert your retirement assets into durable, inflation-adjusted retirement income. This is no small challenge, and meeting it requires a solid plan. Fortunately, ABC Retirement Company has developed such a plan; an attractive, low-cost and flexible solution designed to help you create the highest level of retirement income based upon your accumulated assets.

To help you learn about all of your options for generating retirement income, ABC Retirement Company has created a 30-minute, on-demand video program called, “Retirement: A Time for Security.” The video is engaging, informative and full of valuable information and insights.

Now, the best part: To help you view the program with the maximum of convenience, ABC Retirement Company has created for you your own website. This website is unique to you, and has its own web address. Simply click on www.FJones.ABCRetirement.com to watch the movie.

After learning why keeping your 401(k) assets with ABC is a wise decision, you may simply click the Rollover Action Button to indicate your desire to keep your assets invested with us. We will call or email you with any additional information we may need to fulfill your request.

Please feel free to share your website with family members or friends who may also face the challenge of creating long-term retirement security. And please know how much we look forward to being your retirement income provider.


ABC Retirement Company

Streaming Video

401(k) providers must realize that their participants are living in a society which is undergoing a transition in the manner in which people acquire knowledge. Less and less information is acquired by reading, and more and more is acquired by watching. Read my opening remarks to RIIA’s 2007 Managing Retirement Income conference for more on this topic.

Streaming videos, which are presentations that engage, motivate and connect emotionally with the viewer, are an indispensable component of “The Macchia Vision.” Placing video content in the center of the rollover communications effort implies nothing but advantages:

Video presentations are NASD and/or provider-reviewed; they are compliant by definition

Video presentations are consistent across all plan participant interactions

Video presentations present a much fuller value-based story than PDF documents and brochures are able to convey

Video presentations meet the information conveyance format that today’s participants have come to expect; it’s what they receive from retailers, manufacturers, real estate, health care- all other large industries

Video presentations can be interactive; viewers may input data and see real-time results within the needs-based presentation

Video presentations provide the critically important context for the purchase of investment products


Convenience is so very important. Busy lives mean that people will learn and evaluate during times outside of normal workday hours. It may be that 10:45 PM is the only convenient time for Fred Jones to learn about ABC’s rollover strategy. Why shouldn’t ABC accommodate Fred on his terms? Convenience for the plan participant is another indispensable component of “The Macchia Vision”.

Asset Retention Success

Think about it from Fred’s perspective. “The Macchia Vision” placed his relationship with ABC Retirement Company on an entirely different level; one that’s far more personal, value-based, engaging, informative, contemporary and convenient. Did I forget to mention, compliant? The “power” shifted to Fred; he became empowered to hit the “Action Button” on his terms.

ABC delivered to Fred, not a sterile opportunity to remain a customer, but rather, ABC delivered a genuine “experience”, one that played-up to Fred’s ego… and his needs.

It will be interesting to see if 401(k) providers begin to adopt the process illustrated above. I’m convinced it’s a strategy worthy of investment and implementation. Common sense, in my judgment, says that it’s the right thing at the right time.

©Copyright 2007 David A. Macchia. All rights reserved.