Education in the defined contribution industry has had limited success if measured by change in behavior. It’s time to review the methodology.

Over the course of working closely with UCLA’s Executive Education group at Anderson School of Management in 2010 to create the C(k)P program by TRAU, and after over 600 TPSU programs with 10,000 plan sponsors, I’ve picked up some valuable lessons about how adults learn that retirement plan advisors can leverage to enable clients, especially mid-level HR and finance professionals, to produce better outcomes for their employees.

I introduce every TPSU programs with three questions:

  1. Who has no other job than to oversee their organization’s retirement plan?
  2. Who has formal training? and
  3. Has an employee ever asked which fund they should select?

The answers often are revealing about the current state of retirement planning at work.

Rarely do we find someone who has no other responsibilities – some juggle up to 10 roles. Many have little or no formal training – half got their job after someone walked into their office and said, “Good luck, you’re now in charge of our 401k plan.” Finally, we expect employees to manage what is essentially a personal defined benefit plan, which means they have to know where to invest, how much to save and, if successful, how to create a lifetime paycheck after only 30 minutes of education.

The Ideal Plan solves the accumulation problem for most participants, but most plan sponsors still are surprisingly reluctant to adopt it. Perhaps we need to rethink our approach.

Adults do not learn by listening or reading training manuals – they learn by interacting and doing. They trust peers more than experts. Using acronyms and code sections without defining and putting them into context, which our industry does often, is insulting, presumptuous and off-putting.

Though their ERISA knowledge may be limited, plan sponsors are not stupid and can sense when something is not right. For that reason, TRAU and TPSU do not allow any blatant sales pitches or marketing in the curriculum, which engenders more open, honest and candid discussions. When a rogue lecturer turns into a pitch person, the temperature in the room drops and the interaction stops.

The pandemic and the ensuing war for talent has been a boon for RPAs, with retirement now a strategic benefit that can be used to recruit and retain talent. The workplace is now a key platform to help employees without access to a personal advisor deal with other financial issues. Zoom and remote platforms make it easier to reach more employees and their spouses off hours.

How RPAs position themselves with plan sponsors and participants is crucial – sales person or partner? Plan advisors have unique access, something most wealth advisors have not figured out yet, but it is all wasted if they do not leverage their positions in the best possible light – as educators and stewards.

The DC and financial services industries had moved away from commissions because brokers are seen as representing the interests of product manufacturers and themselves over the best interest of clients. To generate more revenue as plan fees decline, many RPAs are creating and representing products and services for which they are paid a separate fee, like proprietary investments or financial wellness programs, creating de facto commissions. Fiduciaries can follow the rules while still putting their interests before their clients’. Stewardship is about selflessness – doing well by doing good.

It is hard to enable people to learn on their own with guidance. In some cases, like with participants trying to accumulate assets, it can seem easier just to do it for them. But it’s best, where possible, to create an environment that results in engagement and provides an safe environment where people do not feel like they are being sold anything.

The Tao Te Ching, a 2500 year old text called the most widely read book after the bible, puts it better in chapter 17:

“When the Master governs, the people

are hardly aware that he exists.

Next best is a leader who is loved.

Next, one who is feared.

The worst is one who is despised.

If you don’t trust the people,

you make them untrustworthy.

The Master doesn’t talk, he acts.

When his work is done,

the people say, ‘Amazing:

we did it, all by ourselves!'”

These are lofty goals that may be hard to achieve but are directionally important because the opposite way could be damaging, wasting valuable opportunities for advisors and providers to help more people realize financial freedom through DC plans and the workplace.


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