When trying to engage pension members in retirement planning, some words are better than others.

Rob Kochel, vice-president at Invesco Ltd., advised employers at Benefits Canada’s 2019 Benefits and Pension Summit to do away with the financial industry jargon they use to explain retirement concepts to their plan members.

“It’s not what you say, it’s what people hear. We get to our first job and we already have a language that’s been built through higher education,” he said during a session at the event on April 17 in Toronto, noting people learn financial terminologies and are rewarded every day because other people use the same language.

Read: Why language matters in DC plan, investment communications: study

“So we speak that and we’re speaking a language that’s at a different level than the plan participant. We reinforce each other every day to say, ‘This works,’ and we’re surprised when we go to the diversity of the population out there that says, ‘I don’t get what you’re talking about.'”

The four dimensions of a successful pension plan include design, governance, investment strategy and participant engagement, he said. “The procedure of language that we use in describing any dimension of those things is absolutely critical to plan member engagement.”

And yet, plan members often don’t understand what industry experts are talking about, noted Kochel. In the session, he presented Invesco research on how plan members respond to financial lingo. Participants in the focus group listened to someone speak about retirement planning and, starting at a neutral score of 50, dialled up or down depending on whether they liked and understood the language being used.

Read: Three tips for improving employees’ pension literacy

One example of a word to lose is ‘fee,'” he said. “If you ask a Canadian consumer in 2019 about fees, what’s the first thing they think of? Roaming fee.”

That’s followed by baggage fee, bank fee, legal fee and hidden fee, he added. “The only word that works with fee is ‘no fee.'”

He recommended plan sponsors use the phrase ‘comfortable retirement,’ rather than ‘dream retirement.’ “No one knows people having a dream retirement.”

As for ‘financial freedom’ versus ‘financial security,’ Kochel noted people are interested in security. “Even millennials . . . [people assume] they’re all about financial freedom. No, they’re not. They’re about security.”

Read: Dress up pension communications for better impact

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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