Now, remember when you turned the corner to the classroom only to see a film projector set up, waiting for the bell to start it off with a pleasant whir. The film could be a projection of your teacher giving the exact same lecture you fell asleep on earlier, and yet for some reason, in this form it would be entrancing. It was something a little different.
There's a lesson to be learned here. You can spoon-feed people all the facts and figures you want—hand-deliver all the information they need—but if you don't do it in an interesting format, you might as well shove that information back in the notebook. It's a lesson that holds particular weight in the wake of the Department of Labor's recently issued draft guidance on investment education. Employers previously feared offering too much in the way of training. Certain types of education could be categorized under the dreaded label "investment advice," prohibited by ERISA. Companies needn't tread as lightly anymore. "Employers want employees to make sound investment decisions for retirement, but the Department of Labor has been somewhat unclear on exactly what it would and wouldn't allow," says David Veeneman, head of investment education for Lincolnshire, Illinois-based Hewitt Associates. "The draft guidance on investment education appears to open a number of doors for employers, allowing them to provide asset allocation and portfolio investing examples to employees, which could make investment education far more effective." (See "The Four Safe Harbors of Investment Information,")
So, if you've been considering revamping—or introducing—pension education, now may be the time. But remember the lesson. Don't just throw together a lecture series. Think variety. Think eclectic. Think multimedia.
Multimedia—what it is and why it can help.
As a group, Americans probably won't be held up as the embodiment of careful savers. Good splurgers maybe; good spenders definitely; but saving in general is not our forte. There are several good reasons why this should concern employers. First, as we all know, the current employment contract is undergoing considerable revision. Few people remain at the same company their whole careers. The idea of a tidy little pension presented upon retirement is closing in on obsolescence. Companies want employees to take more control over their financial destinies. But employees need help. It's a new concept, and employees have to get their balance before we cut the cord entirely.
Look at the baby boomers—the 77 million Americans born between 1946 and 1964. In a study conducted by New York City-based Putnam Research on retirement savings, this group in particular demonstrated some alarming attitudes. Of more than 1,000 people surveyed, nearly 60% of baby boomers in their forties think they could personally face a retirement savings crisis. Why? A lot of it is attitude: Sixty percent of baby boomers surveyed reported they get very discouraged when they hear about the amount of money that needs to be saved for retirement. Fifty-four percent say they can't imagine what their retirement lives will be like.
Many employers may jump ahead of themselves, believing that what employees save is neither their business nor their responsibility. Technically they may be right, but society won't let them shirk this duty so easily. Employees have been trained to look to companies for guidance too long to completely break away now. For instance, in the Putnam survey, 74% of working Americans said their primary resource for information on saving for retirement was their employer—more than any other source, including family, friends or financial advisors.
But investment education isn't just crucial for employees who aren't saving. It's also crucial for employees who are. Just offering a plan isn't enough. Employees need to be able to use and understand it. What's the good of offering a lifesaver if the person can't figure out how to use it? Why spend time, energy and money on offering a benefit that employees can't appreciate?
For both these reasons—helping convince spenders to save, and raising the awareness of employees to value what they have—multimedia may be the next big thing in investment education. Multimedia can be defined several ways. In a broad sense, a multimedia presentation is one in which—you guessed it—more than one medium is used. For instance, a multimedia pension-education program could be one in which text (such as newsletters or pamphlets), graphics (such as charts and graphs illustrating key points), audio and video (such as a film or slides with a voice-over) are all used to relay information. We all know that some people respond better to verbal instructions, some to written, still others to physical demonstrations. We also know that some information is more suitable for certain formats. These broad multimedia programs take advantage of a variety of formats to hit the message home.
A second definition of multimedia is used to describe a new kind of technology. In this context, it's an application, such as a CD-ROM, that combines video clips, animation, photographs, illustrations, text and sound. These formats tend to be extremely interactive, inviting employees to click on certain icons to roll film, highlight text or flash graphic information. Generally, these instruments easily are customized to fit a company's needs and to tailor information to certain employee population groups. They're not particularly expensive either. The development of a multimedia presentation doesn't have to cost much more than producing a traditional video. But, unlike a video, a company can revise and update sections as it chooses.
However, despite the potential appeal, few companies have committed to using these instruments. In a survey of 157 employers, conducted by Washington, D.C.-based Watson Wyatt Worldwide, employers were asked to name their current and planned uses of technology. Only 6% of employers use multimedia computers currently, and only 6% are planning on any implementation in the near future.
If you have a pension plan, why not let your employees in on how to use it to their advantage? It's a curious position that chooses to be generous in an employee benefit area, but scrimp on the education required to make the most of it. It's like launching a new product line and not advertising it. Two years ago, Iselin, New Jersey-based Engelhard Corp. realized that was just what it was doing—and decided to fix the situation by plunging into multimedia.
Engelhard offered the pension of a lifetime—and spread the word in a variety of ways.
It was precisely because Engelhard Corp. was offering such a generous benefit that it committed to overhauling its education program. The firm knew it wasn't reaching a large audience. For one thing, they seemed to show little recognition that a large portion of their retirement income would have to come from their own savings. And in focus groups, employees were impressed with the 401(k), but oblivious when it came to the pension plan. "When we asked people to list their benefits, people never mentioned the pension plan at all, and it's one of their most valuable benefits," says Dennis Wirtz, manager of HR policies and plans.
To assist employees in understanding their pension plan, and financial investing in general, Engelhard started out with a very simple idea. The company wanted a software system that would help it demonstrate its retirement planning program. The system needed to be sophisticated enough to allow employees to toy around with a variety of investment synopses, flexible enough to incorporate Engelhard's own pension plan and user friendly enough not to scare anyone away.
After an exhaustive marketplace search, Engelhard had found a lot of software that had some of what it wanted, but no software had all the requisites. That's when the firm approached New York City-based Coopers & Lybrand (C&L) to customize its Retirement Counselor software for Engelhard. Throughout the process, Wirtz worked closely with Coopers & Lybrand people to make the software truly reflect his company. "He was really a part of the development process," says Brian Guthrie, director of actuarial systems for Coopers & Lybrand. "He helped frame the language that would appear on the screens because he knew how Engelhard employees were used to receiving communication." For instance, in a section on gauging future inflation, the software doesn't scroll out intricate figures and formulas. Instead it compares inflation of the '80s to today's and helps make solid, real-life comparisons.
The final result was software that allows employees to input their income and pension at Engelhard and add their spouse's income and various investment scenarios. They can estimate their own expenses, their savings habits and the impact of inflation. The software will project how much they'll need and how much they'll actually have in the future. All this, and the software remains user friendly. "We wanted it to be very easy for people who were shy about using these kinds of things, and we wanted it to be very powerful for people who wanted to roll their sleeves up and really get into it," explains Wirtz. "We didn't know how we could do that without intimidating one group or short-changing the other. So we built into the program two modes: One is like the beginner's—it just gives them a snapshot. The other is very detailed—you can get as detailed as you want."
After spending so much time and energy on the project, however, the HR department knew it couldn't just hand out the diskettes and expect the system to catch on. That's where Ruth Hunt, principal and national communications practice leader for C&L's HR advisory group, came in. Throughout several sessions of brainstorming with Engelhard HR professionals, Hunt remembers the company kept returning to the important fact that sound investment decisions were a lifetime process. It wasn't all about retirement planning, they said, because retirement planning was in turn affected by how an employee handled investments along the way—buying the first house, managing debts correctly, saving for children's college education. This message led to the education theme: Destination Lifetime. "The beauty of the message we're trying to send is that no matter what my age, this is relevant to me," says Hunt. "Traditional retirement planning and education programs are so focused on the end goal that they turn off the younger part of the population. So we came up with a sort of yellow-brick road theme, leading them on a journey, instead of just looking at the end goal."
Once the theme was decided, Engelhard had to figure out how to generate enough enthusiasm that eligible employees would want to attend the two-hour education seminar. Engelhard launched a promotional campaign of sorts, using an onslaught of e-mail teasers and posters. The posters offered such images as a price tag on a dinner and a movie a few years down the line—and then asked employees if they'd be able to afford it.
Once Engelhard generated enough buzz, it began offering the seminars. These seminars had three goals. The first was to try to get employees to think about planning for retirement and to think more consciously about their savings approach. The second was to offer an overview of the different funds particular to the company and a general guide in terms of investing. The third and final prong was to explain how to use the software. Spouses were welcome to attend.
At the seminars, Engelhard uses a full range of media to make its point. Employees receive a tote bag filled with crayons and a notebook with worksheets and investment guides. To get employees focused on their futures, the group plays some interactive games. One activity asks employees to take the crayons and draw their future. Most draw a house, a college diploma or a car. "These are things they want," says Mairi Robertson, manager of employee services and programs. "Then we ask them to put a time line and a price tag against those ideals. Very often you find that people might know what their goals are, but they have absolutely no idea how they're going to pay for them. It's a very visible way of getting people to focus in on planning for their lifetimes."
To keep the dialogue going, the group is then asked to discuss the reasons they're not saving as carefully as they might. Some admit they'd rather live for the day and worry later. Others believe they don't need to worry about it yet. Still others complain they have too many bills already. Some, of course, say they are saving just what they should. These comments are then placed in one of four savings personality categories: Impulsives, who live for the moment; Deniers, who prefer to ignore future problems; Strugglers, who'd like to save but can't afford to; and Planners, who are right on target. "I think people start to realize they're not on their own, that everybody struggles in some area," says Robertson.
Once employees recognize the need to save, the group turns to the brass tacks of investment education and the use of the Retirement Counselor. Investment education training begins with a video called "When I'm 64," supplied by Vanguard, Engelhard's investment vendor. The video discusses inflation and the need to save for the future to protect against it. Vanguard and Coopers & Lybrand together also compiled a variety of print material, included in the tote bag. Some explains the Retirement Counselor software; some offers planning worksheets for people who don't want to use the computer. To keep the enthusiasm burning, attendees also write themselves a letter in which they detail their investment goals and action steps to reach those goals. "Those are then mailed back to the participants as a reminder when they're busy," says Hunt. "You come out of a seminar really energized, but it's difficult in the daily grind to get back to that."
So did Engelhard rouse enough enthusiasm? Did it get its message across? "Our programs have been very well-attended," says Robertson. "The feedback we've received has been excellent. Some have said it's the best thing Engelhard has ever done for its people."
Not only has there been an appreciation, but more importantly, there's been a new understanding on the part of attendees. "It may be the first step along the way in the sense that employees are ready to take ownership of their planning and realize the value of their benefits," says Guthrie. "They're making the shift that if they don't do [their own investment planning], nobody's going to do it for them."
All this comes at a surprisingly low price tag to the company. A little creative thinking on Engelhard's part allowed the firm to take advantage of some of its vendors' already-produced media—the video and investment worksheets—combined with posters and an inexpensive e-mail campaign to create a true multimedia education piece at a reasonable cost.
Companies also can opt for high-tech multimedia approaches.
The more you add to an education presentation, the more likely you'll capture everyone's attention. A study conducted by the Minneapolis-based University of Minnesota and St. Paul-based 3M Corp. showed that presentations incorporating visuals—such as slides, transparencies and graphics—were 43% more effective at motivating an audience than presentations with no visual aids. To take this one step further, a University of Arizona study discovered that presenters who use multimedia enhancement increased an audience's agreement with them by 17% and increased their credibility by 27%.
These advantages can come at a surprisingly reasonable cost. Although a full CD-ROM with the works—myriad video, animation and photography clips—can cost anywhere from $300,000 to $1 million, modest price tags are also achievable. Your basic multimedia program, minus the extra bells and whistles but still boasting video and stock photography, can be had for $20,000 to $25,000, which is comparable to the cost of many education programs.
Multimedia products, such as CD-ROMs, are still little more than a twinkling on the horizon for most organizations—particularly for use in investment education. But Boston-based Scudder Defined Contribution Services Inc., a financial-services firm, hopes to change that. The company has added a multimedia component to some of its investment counseling seminars.
Michele Corkery, product development manager of defined contribution services, believes multimedia will increasingly be used in training and education because it's the sole means of offering information that's sure to reach almost everyone. "Adults learn in different ways. Some are visual learners; some learn by hearing; some learn by doing. One of the primary advantages of multimedia is that it reaches all those different types of learners." In addition, the interactive nature of multimedia engages users and helps them better retain information.
Because of the combination of improving retention and offering interaction, Scudder jumped on the idea of using multimedia for pension education. "When you mention 'mutual fund,' some people's eyes glaze over," she says. "We need to make sure employees understand the information, and you can't understand the information if you're not engaged. So multimedia is a way for us to engage people so we can educate them better. It helps make a dry topic more interactive."
But Scudder also realizes multimedia carries with it a challenge: Many employees are technophobes. They don't mind the use of multimedia—as long as it's in someone else's hands. That's why the firm decided to provide the tool to the 20 trainers who work in the field—not directly to employees. These representatives themselves have completed some extensive education on how to manipulate the instrument to tailor each presentation to a particular audience. "It's a performance meant to be orchestrated between the presenter and the multimedia piece," explains Corkery.
Let's say some employees have neglected to figure future inflation into their investment planning. This is obviously a piece of the education that really needs to sink in. Using the multimedia program, which is contained on the hard drive of a laptop, the presenter could ask his or her audience: "If you had $4,000 to spend in 1945, what could you have bought?" The presenter clicks on the screen, and a picture of an airplane appears, its engine racing. Next question: "If you put that money under your mattress until 1965, what could you have bought?" Another click brings a roaring Mustang to life. The demonstration goes all the way to 2045, where a final click shows a bicycle wheeling onto the screen—your $4,000 at work. "That captures people's attention," says Corkery. "It hits home."
The primary goal of the presentation, however, is to explain such retirement-planning yawners as tax-deferred compounding and dollar-cost averaging in an invigorating way. To do so, the multimedia package displays what looks like a retirement party, inviting employees to eavesdrop on the guests. The party-goers are of all different ages and ethnic backgrounds, and demonstrate a variety of lifestyles. As the presenter clicks on each one, the person offers his or her prospects for retirement based on the plans he or she has made. "Right now, there's a real wow-factor out there with multimedia, because it's still new to people," says Corkery. "To click on a photograph and have this person come alive on video and start to talk—people are so fascinated with that."
Apparently so: Since last autumn, Scudder has given the multimedia presentation at 12 companies, reaching more than 10,000 employees—who have given rave reviews. For instance, the firm surveyed 1,000 attendees on their reaction to the presentation. Nine out of 10 said they'd follow up for additional investment planning information. Ninety-nine percent of those surveyed reported being very pleased with the presenter and enthusiastic about the information they received.
For companies considering multimedia education technology, Corkery has some advice. First and foremost, define the goal for using multimedia. Don't do it just because it's something new. Make sure it can meet your goals. Corkery also recommends that for your first multimedia venture, use an outside vendor, and look at that vendor as a partner in developing the product. "Multimedia is interdisciplinary," she says. "You need to have people working on the project who are well-versed in the content. You also need to have technical people, and adult-learning theorists. You need a number of different people who have different skills they can bring to the project."
Pension education is too important—for employees and companies alike—to risk a half-hearted approach. Multimedia—whether it be a broad use of videos, charts, text and interaction, or a single application of technology—offers the aggressive agenda of information exchange that companies need. It can make the difference between employees who count the seconds 'til school is out and those who move to the head of the class.
Personnel Journal, April 1996, Vol. 75, No. 4, pp. 70-77.