So six months later, why doesn’t the thing work yet?
Implementation, installation, integration. Whatever you call it, getting a new technology up and running in a retirement plan is usually much harder than anyone expects. (Ever tried to launch a website?) Implementation is the elephant in the room: it’s big, it’s bad, and nobody wants to talk about it. Especially because it only happens after the deal has closed.
Putting the "service" back in financial service
Maybe the problem is that we’re not really talking about a technology, but about a service. Technology is just the delivery vehicle. This is especially true with anything as complex as retirement plan advice and management. Customers expect much more than good software, clean data, and a nice interface. They’re paying for the end result, a solution that works for them (and in this case their customers, the 401(k) plan participants) in the real world. And that means their world.
Speed bumps and roadblocks
We’ve worked with a lot of plans over the years, plus we’ve heard a lot of stories. Here are some of the top barriers to a successful implementation, along with some advice on making the journey as smooth as possible:
- Plan rules. There’s not such thing as a typical retirement plan. Making a system fit into a unique new plan environment requires either a lot of built-in knowledge and flexibility, or a lot of last-minute tinkering. Guess which one usually happens? Find out how robust and flexible a given technology really is before you commit.
- Legacy issues. Most plans contain legacy populations, provisions, and funds. Some are virtually patchwork quilts made from the remnants of older programs. What skeletons are in your closet?
- Third parties. Working with the plan sponsor is one thing. Dealing with the plan provider is an entirely different business. Likewise the recordkeeper, and anyone else. (Rule of thumb: Complexity increases exponentially with the number of parties involved.) How does a technology vendor handle these relationships?
- Communication. Getting the program running is hard enough. Getting employees to sign up is even harder. Look at just about any set of statistics, such as this recent Hewitt study, on 401(k) participation overall. Then expect a fraction of those numbers to adopt something new and different right out of the gate.
If you build it, will they come?
Let’s focus on communicating to participants a bit more. What works? No two successful communication strategies are alike, because different cultures – and different individuals – respond to different approaches.
The best communicators ask lots of questions: Where do employees get their information? What communication channels are available? What’s worked in the past? What has failed? Do the same: Who will run the employee meetings, mail the letters, and man the phones? What kind of personalization is available? What’s included for free? And finally, how will we measure success?
In the end it all comes down to hard work. Once the wrapping paper is off there’s still a lot to be done, and even in the best case, it’s probably more than you bargained for. The best advice I can give is to find out exactly what that work will be, who’s going to do it, and whether they’ve done it successfully before. “Please read instructions before assembly.”