Insurance companies and their intermediaries are often failingto connect with those who may need retirement planning advice andsolutions, particularly via employee benefit plans and among theless affluent, a survey by Deloitte's Center for Financial Servicesrevealed.

The survey of nearly 4,500 consumers from a wide range of age andincome groups found this failure to communicate to be one of fivebarriers preventing the industry from more effectively reachingprospects when it comes to retirement planning.

(Ourlast blog on this survey focused on the first of the fivebarriers — conflicting priorities. Future blogs will address lackof product awareness, mistrust of financial institutions, and a “doit myself” mentality among consumers.)

Many retirement planning prospects — even those who might beconsidered more lucrative from an asset-gathering perspective — arenot being actively engaged by financial services providers. Six in10 surveyed by Deloitte say they have not had interactions in thepast two years with any financial institution about theirretirement savings and income needs, whether via in-personmeetings, phone conversations, e-mail communications or seminars.This disengaged percentage rose to about three out of four amongthose 45 and younger.

Even half of the respondents between ages 56 and 64 — thosepresumably with the greatest need for assistance given theirproximity to retirement — said no one had been in touch with themon this subject. And fewer than one in four with a 401(k) plan saidthey had been contacted by the plan provider to discuss theirretirement needs.

Not surprisingly, financial institutions appear to beconcentrating most of their marketing efforts at the affluentsegment. Deloitte's survey confirmed that the higher one'shousehold income, the more likely respondents were to say they hadbeen contacted by a financial institution about their retirementneeds, particularly among those reporting household incomes above$200,000. That leaves large segments of the population underservedwhen it comes to retirement services.

Ideally, the workplace is a natural venue to communicate withthe widest range of consumers about their retirement needs, giventhat for many Americans, a work-based 401(k) may be the only “plan”they have in place beyond Social Security to finance theirretirement. Indeed, since their introduction in the 1970s, 401(k)shave radically altered the retirement landscape, putting more ofthe onus on individual savings while making the workplace one ofthe more important channels for retirement awareness andplanning.

In fact, four in 10 between the ages of 26 and 45 surveyed byDeloitte cited affiliation with their employer as one of thereasons for choosing a financial institution to meet theirretirement needs. However, it appears that financial servicesinstitutions have not been able to fully tap the potential ofworkplace marketing.

Deloitte's survey found that nearly half of those with a 401(k)or some other workplace retirement plan were either not beingoffered retirement advice through their plan provider (28 percent)or didn't know if such advice was even available (19 percent).

Meanwhile, 57 percent of respondents who were offered retirementadvice through their plan provider did not take advantage of thisopportunity. One in four said that the main reason why was becausethey didn't need retirement planning advice. (We'll deal with thisparticular barrier in a future column about the “do it myself”mentality among many consumers.) Nearly the same percentage saidthey already had their own financial planner. But about 20 percentsaid they didn't feel they had the time for such consultations,while 10 percent do not trust the employer's retirementadvisor.

Changes promulgated by the Pension Protection Act of 2006 (PPA)have provided employers with some additional flexibility to offerinvestment advisory services to 401(k) plan participants. Butsignificant restrictions remain under the statute and relatedregulations. As a consequence, many employers are concerned aboutincurring liabilities if they provide investment advice via theirretirement plans.

One way to overcome the communications barrier in aneconomically feasible way might be to bolster workplace marketingefforts. The workplace already has set the stage for holisticfinancial planning, given the easy access to retirement accounts,life and health insurance, and other financial services deliveredvia employee benefit plans and funded by payrolldeductions.

Progress has already been made in leveraging this channel byinfluencing savings behaviors through auto enrollment and defaultinvestment options in 401(k) plans. But there may be additionalsteps financial institutions can take to proactively reach moreprospects via the workplace.

Many of the diagnostic tools offered through workplace marketingtoday require the consumer to take the initiative, typicallythrough web-based retirement calculators that offer very broadinvestment option suggestions.

A more proactive alternative might be to offer holisticfinancial planning seminars for employees and their spouses. Planparticipants are already offered information about retirementthrough a number of workplace channels — including on-site seminars— but our survey analysis suggests that many don't take fulladvantage of this opportunity. One reason might be because suchseminars often address retirement savings and income planning in avacuum, while ignoring conflicting financial priorities.

For the long term, financial institutions and employer groupsmight strengthen this channel for service providers and consumersalike by seeking additional legislative and regulatory reformsgiving plan providers more flexibility to address employeeretirement needs, while also offering employers protection frompotential liability.

In the next installment of this series, we'll examine howfinancial institutions could overcome a third barrier discouragingor preventing many people from planning for retirement — a lack ofawareness among consumers with a number of product options at theirdisposal.

In the meantime, a full report on the survey results and theirimplications—“Meetingthe Retirement Challenge: New Approaches and Solutions for theFinancial Services Industry”—can be accessed with this link.