CoPilot 401(k)—changing the conversation in the retirement industry

CoPilot 401(k)—changing the conversation in the retirement industry

The retirement industry has seen significant changes in recent years—and for good reason. The looming retirement crisis has long since been on the industry’s radar, and in an effort to “close the gap,” new regulations have been imposed designed to help more workers have access to retirement savings plans than ever before. And now that the once-favored defined benefit plans have succumbed in popularity to defined contribution plans, the burden of saving for a financially-secure retirement has essentially been placed on the employee, rather than the employer, for the first time.

As the industry continues to change, shouldn’t the way we talk to clients about retirement planning and preparation change, too? How can we change the conversation to get clients and plan participants on track to reach their retirement goals? Let’s start from the beginning.

Pain points workers feel when saving for retirement

With the pressure of planning for (and securing) a comfortable retirement now in the hands of workers for the first time, it should come as no surprise that financial stress runs rampant among today’s Americans. And even though the government has stepped in to help more workers have access to retirement savings plans than in the past, America’s Retirement Income Deficit still raised from $6.6 trillion in 2010 to $7.7 trillion in 2015 [1].

Savers seem to struggle to understand how their everyday decisions can affect long-term retirement outcomes—like how borrowing a few thousand from their 401(k) to help fund a down payment on a new house can have a much bigger impact on their overall account balance at retirement age or how choosing to prioritize student loan payments over saving for retirement can potentially add years to their working life. There must be a way to help savers actually visualize how their decisions can affect their years of retirement later in life, right?

More on that in a minute.

Also contributing to the retirement “gap” is savers’ unrealistic expectations about retirement. Too many times someone has said that they don’t need to save for retirement because they’ll “never retire anyway,” but that’s not a realistic mindset or a safeguarded plan. In fact, a recent study from the Employee Benefit Research Institute found that 79 percent of workers plan to continue working (at least part-time) in retirement, but in reality, only 29 percent of people are actually able to do so [2]. And for the most part, these unexpected retirees didn’t reach retirement because they realized they actually could afford it, but instead because of reasons out of their control—like their own ill health.

Why advisors need to change the way they speak to clients about retirement

We’ve seen the statistics surrounding retirement readiness and lack of confidence when it comes to retirement planning, and they’re not good. That being said, advisors are in a prime position to help clients avoid falling into the trap of improper planning and preparation, and instead help them get on the path to retirement readiness.

It all starts with changing the conversation.

Workers still have a serious lack of understanding when it comes to financial jargon and decoding the things their advisor says to them during meetings; Step 1 of changing the conversation: speak in a language your clients understand. Give them detailed explanations when using industry terms that could have more than one meaning in their lives, like contribution, match, rollover, distribution, etc. And read their body language when talking about finance-specific topics; if they look like they could be confused, go into a little bit more detail than you normally would—as they may be too embarrassed to stop you outright and ask for clarification.

Financial jargon meanings and definitions

Study after study has shown that workers demonstrate better financial habits when they have a better understanding of financial concepts, and while great strides have been in made in recent years to advance financial literacy rates among the general population, we still have a long way to go. The reality is that many people still lack the financial literacy it takes to make sound decisions about their retirement savings [3].

This profound lack of financial understanding has caused uncertainty among workers, with about half of retirement savers saying they expect to be financially ready to retire by the time they reach the age they’d like to retire, and roughly half thinking their savings will be enough to last a lifetime [4]. While this statistic may seem somewhat optimistic, it’s worth noting that only about half of savers feel this way—leaving out a huge portion of retirement savers who are not as confident in their retirement outcomes. And hang in there…things are about to get worse.

Less than two-fifths of non-retired adults think their retirement savings are on track to reach their goals, and instead of proactively trying to calculate if their current contribution rate will allow them to live the life they’ve envisioned in retirement, 25 percent admit that they don’t know when they last checked or have never checked to see if their savings rate is on par to meet their retirement goals [5].

And among those that do know how much they have saved or are projected to have saved at retirement time, do they understand how those savings will equate to real-world yearly or monthly income in retirement? Do they understand how long $325,000, for example, in their 401(k) would last them? They may think $325,000 seems like a great little nest egg, setting them up for a comfortable retirement—but in reality, that money will likely last them less than a decade, potentially setting them up for a financially-stressed retirement instead. And the reality is: 66 percent of savers fall into this boat, admitting they can’t confidently say how much monthly income their savings will actually provide in retirement [4].


Clearly, the industry hasn’t been getting through to savers or successfully helping them transition their mindset to a more retirement-ready one. So how can advisors fully change the conversation to help plan participants and clients reach the retirement they’ve always envisioned? Step 1 was to speak their language; Step 2 is to align their retirement goals and dreams with a strategy that helps them turn those goals and dreams into a reality. And thanks to a study published by T. Rowe Price [6], the industry already knows exactly what savers are looking for in a retirement plan to help them get there:

When workers were asked “When thinking about [guidance] to help you achieve your lifetime financial goals, how important is having [guidance] that does the following?”

  • 88 percent said ease-of-use is important

  • 81 percent say it’s important to receive alerts when there are critical developments in their account

  • 82 percent say personalized recommendations tailored to their specific financial situation are important

  • And 78 percent say it’s important that their plan motivates them to stay on track

So the final step in changing the conversation: speaking clients’ language while aligning their goals and dreams with a strategy that helps them get there.

The CoPilot solution

Changing the conversation to a saver-centric retirement landscape

CoPilot is a fully-bundled retirement service designed with the participant in mind—designed to change the conversation. The main goal is maximum retirement readiness among its participants, taking to heart what workers said about the importance of ease-of-use, alerts regarding activities that may jeopardize the health of their account, personalized recommendations for their individual financial situation, and motivation to keep them on track.

CoPilot understands that 401(k) balance statements can be hard for participants to read and even harder to understand, so CoPilot breaks it down differently—in a way that actually means something to the saver. Participants don’t simply see a dollar sign attached to their 401(k) account, they see a projection of how many “Years of Retirement” their current savings and 401(k) savings projection might amount to. They also visually see the gap between the amount of retired years they’d like to enjoy and the amount of years they’re actually on track to have.

Plus, CoPilot’s built-in alerts and nudges help savers understand how everyday decisions can affect their retirement outcomes and help them learn what they can do to get back on track. Did the participant lower their contribution rate by a percentage point? The YOR tool shows them that they now are on track to have fewer years of retirement, and they’ll visually see how that small change in their savings strategy will ultimately affect their retirement outcomes. Not only that—CoPilot tells the participant how much it would cost for them to “buy” another year of retirement, helping them further understand that even small increases in contribution levels can have a sizeable effect on a nest egg over the course of a career.

A recent study by J.P. Morgan found that when it comes to helping participants save for retirement, “The more specific and immediately-actionable the savings projections are, the more effective they will be.” [7]

Well, how much more “specific and immediately-actionable” can something be than “Buy another year of retirement for $X!”?

Aligning retirement service with financial advisor needs

CoPilot also comes with many benefits for you, the financial advisor—beginning with its fully-bundled 3(38) solution. CoPilot includes a named Investment Fiduciary (PAi Trust) and
3(38) investment manager (Wilshire), providing you with two levels of fiduciary protection and minimizing your fiduciary risk and liability. Plus, ongoing maintenance to the plan is kept at bay—giving you more time to focus on your clients and growing your book of business, while CoPilot focuses on what it does best: 401(k).

Since advisors are busy and often don’t have time to devote to attentively monitoring each and every participants’ activities, CoPilot takes care of it for you with built-in participant monitoring. The retirement service regularly checks in with participants, keeping their retirement goals front and center and top-of-mind all throughout their savings journey—maximizing their retirement readiness at the end of their career.

And that’s the whole goal after all, right?

Focus on changing the conversation with clients into one they can understand, and watch them start turning old bad habits into financially-savvy decisions. For more information about changing the conversation with the revolutionary CoPilot 401(k) retirement service, contact one of our retirement professionals today: 800.236.7400, Option 1.



[1] Nation’s retirement income deficit now $7.7 trillion, Center for Retirement Research at Boston College, 2015.

[2] 2017 RCS fact sheet #2: Expectations about retirement, Employee Benefit Research Institute, 2017.

[3] The Aegon Retirement Readiness Survey 2018, Aegon Center for Longevity and Retirement, 2018.

[4] 2018 Defined Contribution Plan Participant Survey—Part 1: Understand the state of the participant, J.P. Morgan Asset Management, 2018.

[5] Report on the Economic Well-Being of U.S. Households in 2017, The Federal Reserve System, 2018.

[6] Retirement Savings and Spending 4: Behaviors and Attitudes Toward Financial Advice, T.W. Price, 2018. 

[7] 2018 Defined Contribution Plan Participant Survey—Part 2: Motivate participants to save, J.P. Morgan Asset Management, 2018.