This Time It’s Personal

In an increasingly customizable world, employees want retirement solutions tailored to their specific needs. After all, if their monthly dog toy subscription box can be customized, why shouldn’t their retirement plan?

It’s no secret that people tend to prefer customized goods; after all, things tend to “fit” better when they’re made with you in mind. While the traditional and expensive standards like tailored suits and clothing, personal shoppers, or home chefs still exist, the average consumer now has more accessible and affordable options available to them like the near-ubiquitous subscription boxes. These can include anything from personalized clothing and accessories, meal delivery boxes, or even vitamins (for you or for your dog). In an increasingly customizable world, retirement saving strategies are no exception to this trend.

The way these personally curated services tend to work is via profiling; users take a quiz on their needs or preferences and are then assigned to a preexisting profile based on their choices. Like a BuzzFeed quiz with a purpose, or popular personality tests like the Myers-Briggs, the answers potential customers provide regarding their habits, styles, needs, and desires inform the products that best suits them. From this starting point, customers are often able to further curate their personal experience, adding and removing specific items within the universe of products recommended to them based on their profile.

In an increasingly customizable world, employees want retirement solutions tailored to their specific needs. After all, if their monthly dog toy subscription box can be customized, why shouldn’t their retirement plan? An example of this is the RISA (Retirement Income Style Awareness ) matrix, developed through their study involving over 1,400 participants. The matrix was created by Dr. Alejandro Murguía, and Dr. Wade D. Pfau, and is a system that uses six factors to pinpoint someone’s personal retirement preferences. While it certainly seems like common sense that the approach should fit the individual, they note that such research is necessary as, “from among available options, advisors tend to offer the approach they feel most comfortable with or are otherwise licensed or incentivized to provide, with little consideration for whether it matches a client’s style.”[1] To state the obvious; if the shoe doesn’t fit, employees won’t wear it.

Murguía and Pfau use the first two of the six RISA factors (probability-based vs. safety first and optionality vs. commitment) to create a profile quadrant determining the approximate level of risk and flexibility a person may prefer, then narrow their approach using the other four factors (“time-based versus perpetuity income floors, accumulation versus distribution, front-loading versus back-loading retirement income, and true versus technical liquidity”) to find a strategy that best fits that person. While this is simply one approach, this research is long overdue in a sector that employees will readily admit often lacks the level of immediate and accessible personalization that’s already du jour in other industries.

There’s another lesson here, albeit one that’s less obvious: personality quizzes and subscription boxes are something people know about and in which they want to participate. Subscription boxes in particular hit that sweet spot between the unknown and the familiar; profiling removes most of the “what if I don’t like it?” stress, while still leaving room for additional control via specific selection, or the thrill of surprise (still guided by the aforementioned profiling). As saving for retirement is a daunting task, anything sponsors can do to make this experience less intimidating (or perhaps even enjoyable?) and more familiar will help employees form positive associations and want to keep coming back and doing more. By using employees’ self-reported profiling, sponsors can begin meeting them where they are and then help create customized plans that meet their immediate and long-term financial wants and needs in a way to which they are more likely to respond. Realistically, employees are more likely to stick to a plan that’s tailored to them and their habits and doesn’t expect them to meet expectations that are personally unrealistic. It may not be as fun as getting new clothes, but it can be even more beneficial.


These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.

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