Many firms are using data mining to customize the data provided to recordkeepers and plan sponsors in order to tailor participants’ options. Karen Remmele, an analyst at Cerulli Associates, said the trend is growing as providers search for ways to engage participants with their retirement plans. She said the best way is to segment a database into unique parts and have data that corresponds to participants’ different life stages.”
Shari Klahr, v.p. of strategic distribution at recordkeeper PFPC, said the firm is conducting research and building a database on the investment habits of different age groups in retirement plans in order to sell age-appropriate funds. She did not specify what the data will look like when sold to providers, nor is there a timetable for the project’s completion.
Other firms, such as Wealth Management Systems, are targeting IRAs. Jude Metcalfe, ceo, said the firm plans to factor in social security, health insurance costs, inflation and income to help participants understand which IRA account is right for them. “Participants are able to see what would happen to their assets if they stayed with the provider of the old plan or decided to switch.”
The data mining also enables Wealth Management Systems to customize educational tools. Getting people educated leads to more participant action, Metcalfe said. “Education is important because most people aren’t going to stay at one job... If you help them understand what to do with that money in their old 401(k) it can attract people to IRA programs and different IRA managers.” The educational tools will be available on the Web and in print.
Mercer has enlisted Personix, an arm of Fiserv Output Solutions, to provide customized statements to plan participants. David Cotter, v.p. of sales of investment services at Personix, said the company will provide individualized quarterly statements that contains multiple sections. “Showing [participants via] plans this kind of information can cut down a lot of the costs that are involved with research.” Personix utilizes a messaging feature that allows plan trustees to review data such as the different fund types and loans. “We are also communicating what service options a plan has selected and the ones they have not. Then we show them how to make the necessary changes. This helps plans see a bigger picture than just returns.”
Cotter said the statements allow for feedback on the plan sponsor level. “We just aren’t able yet to... provide feedback on a participant level.” Personix also provides this service with AIG VALIC.