Two-thirds of defined contribution (DC) plan providers have launched mobile initiatives focused on plan participants, with more companies planning them, according to a new LIMRA research report, Moving Ahead With Mobile: Mobile Technology Initiatives Among Defined Contribution Plan Providers (2012).
Why does this matter?
At the end of third quarter 2012, employer- sponsored DC plans — including 401(k) plans, 403(b) plans, 457 plans, and other DC plans — held an estimated $5.0 trillion in assets.1 Retaining these assets is one of the top priorities for plan providers. LIMRA’s 2012 Asset Retention report found that eight in ten retirees and pre-retirees either left their assets in their retirement plan or rolled them over into an IRA. (chart). The study found that about half of individuals who left their money in their existing retirement plans and had decided to keep it there had a strong relationship with their plan providers at the time they left their employers. In addition, our research shows that “active” contact methods — traditionally defined as phone or in person — are more effective than passive such as postal mail or email for retaining assets.
Where do mobile apps fall in this spectrum?
Plan providers are seeking ways to engage plan participants to encourage them to keep their money in their existing retirement plan. Given that mobile device ownership has grown exponentially, leveraging mobile technology seems prudent.
According to the Pew Internet & American Life Project, smartphone ownership has grown to 45 percent of adults and tablet ownership has increased rapidly from only four percent of adults in September 2010 to 25 percent in August 2012. People are conducting much of their day-to-day financial activities like shopping, paying bills and banking on their mobile devices. It is reasonable to believe these consumers will expect to be able to manage their retirement plans this way as well. Plan providers recognize the need to extend access to information and services via mobile devices.
What are the benefits of adopting mobile program?
It’s a win for both the plan provider and participant. Mobile initiatives allow plan providers to expand their participant communication and education strategy, in a potentially less costly way (relative to traditional means), while offering participants the chance to monitor their accounts and access retirement planning calculators at their convenience.
For more information or to speak to a researcher, contact LIMRA Public Relations.
1 “The U.S. Retirement Market, Third Quarter 2012,” Investment Company Institute, 2012