By Brad King, Washington State Department of Retirement Systems
At the 1968 Olympic Games, U.S. long jumper Bob Beamon shattered the world record by almost two feet. It was a record that stood for 23 years, and to this day, remains the Olympic Games record. Beamon’s jump is considered by many to be the greatest individual achievement in Olympic history. It even coined a word: Beamonesque, which has come to mean any truly unbelievable performance.
When the State of Washington recently changed its Deferred Compensation Program (DCP) and Plan 3 investment fund lineup, industry experts advised that a five to seven percent response rate from customers was the norm. Following the combined efforts of the Department of Retirement Systems (DRS), the Washington State Investment Board (WSIB), record keepers ICMA-RC and Great-West Retirement Services®, and fund managers Alliance Bernstein and BlackRock, over 30 percent of impacted members took some type of action with their investments. That result was beyond impressive.
You might say it was Beamonesque.
“We knew early on that one of the key success measures of this project was people moving their money on their own – making a choice,” says Shawn Merchant, Assistant Director of DRS’s Policy & Strategic Initiatives Division, whose unit oversaw the project. “Our communications plan and subsequent actions were determined based on that goal.”
“We tried to get information out early and frequently,” adds DRS’s Gayle McGee, the Fund Transition Manager, when asked the key reason for the high rate of customer response. “We wanted people to know what was coming.”
The Fund Transition project formally began in February 2011, although a full year of research preceded that during which the WSIB reviewed the latest information on menu design, member behavior and various investment options. In total, six funds from the DCP lineup and three from the Plan 3 roster were discontinued (an additional fund also underwent a name change). Four new funds were added.
“My impression is that two main factors influenced customers to take action,” says Phil Paroian, Senior Investment Officer with the WSIB. “One was that this was such a major change, especially on the DCP side; and two, the good communications plan. The communications pieces that came from DRS were as strong as I’ve seen.”
The communications plan included a dedicated website; a transition guide specifically targeted to each of the three audiences impacted (members of the state’s Plan 3 pension systems; DCP participants; and a combined guide for both Plan 3 and DCP members); articles in the Plan 3 and DCP quarterly newsletters; online video tutorials prepared by the Plan 3 and DCP record keepers; a postcard reminder that was mailed in the weeks just before the fund transition deadline; and a follow-up letter after the deadline. WSIB also held training sessions for DRS team members to help them prepare for member questions.
“Branding was a big part of the communications plan,” says Merchant, “The colors and graphics were fantastic.”
The combination of effective branding and multiple communication channels was a big key to success, says Brent Neese, Vice President of Great-West’s Government Markets.
“DRS created a successful communication strategy with multiple touch points, which resulted in a very high response rate from participants.”
All of the project’s branded communication materials, including the guides, postcards and mailing envelopes were designed at DRS by Graphic Designer Billie Jean Kam and former Communications Director Dawn Gothro. Keeping the design “in house” spared the costs that would have been associated with hiring an outside design firm.
“Every time there was an announcement either on the website or in the printed materials related to the transition, you knew right away what it was,” says ICMA-RC’s Vice-President, Client Services Rose Roberts.
Roberts adds that along with the branding, the postcard reminder and the dedicated website were instrumental in getting the word out and encouraging folks to take action.
“The postcard was probably the most effective,” she says. “Not a lot of people like to read a thick piece of mail. The postcard was a quick reminder that could be read and digested easily.”
Merchant agrees with Roberts regarding the postcard reminder.
“The postcard was branded with the look and feel of all the project communications items; it was inexpensive and it boiled down all the details to the essential message that the funds were changing,” he says.
The postcard was mailed after the transition guides had been mailed. It was sent to members who were invested in any of the funds that were changing.
“This really helped,” says McGee, “because people are more inclined to quickly pick up and read a postcard than a book-style publication.”
McGee says the variety of information and the timing of mailings were intentional.
“We tried to continually get information in front of people in as many ways as possible.”
Fund transition communications began with the Transition Guide that was mailed to members. A guide was created for each of the three populations affected by the transition:
A section of the DRS website dedicated to the fund transition was launched early on in the process as well. At the same time, care was taken to get information out internally to DRS, Great-West and ICMA-RC staff so that member questions could be answered.
Also early on in the process, representatives with Alliance-Bernstein came to DRS and made presentations on “investor behavior” which included why having an almost unlimited number of fund choices is not always the best option for investors. History shows that for many investors, having an unlimited number of choices can be overwhelming; and being overwhelmed can often lead to inaction.
“We owe the folks at Alliance-Bernstein a big ‘thank you’,” Merchant says. “They were great partners in helping educate us as to the best lineup of funds to offer. They showed us data that indicated having a diversified, but not unlimited, range of choice was best for the vast majority of our membership.”
State Investment Board members also provided education on the fund lineup for DRS team members.
“State Investment Board team members came over and met with our front line teams for a high level review of why the funds were changing and what the new fund options were,” says McGee. “Our Education and Outreach Unit (team members who present DCP retirement planning and investment seminars around the state) were getting lots of questions very early on in the process. We were able to address these questions through a ‘talking points’ document the project team provided to front line teams and in the communication materials we put together.”
Both DCP and Plan 3 have newsletters that are included in quarterly statement mailings. Articles detailing the fund transition were included in each of these quarterly newsletters.
From DRS to the WSIB to the record keepers and fund managers, all agree that early, often and careful planning and communication are the keys to the success of a complex project.
“If you’re contemplating a complex fund transition, make sure that everybody is on board,” says David Thatcher, WSIB’s Investment Officer for Public Equity. “A lot of parties need to get involved to make sure the communications going out are timely.”
“Planning, planning, planning,” echoes Paroian, “and then more planning. In fact, over plan because these are major changes we’re talking about. We had weekly conference calls starting early on, and then even more frequently as we got closer to the implementation date.”
Paroian adds that he hopes the necessity of this level of planning, the enormity of the changes and the possibility of negative reaction doesn’t discourage other organizations from making changes that are in the best interest of their customers.
“A lot of organizations shy away from making improvements because they fear negative reactions,” he says. “While it’s true that with a change like this, some will react negatively. Out of the thousands impacted, we had only 15 to 20 that were very upset. In some cases, I completely understood their concern, but we explained that these changes were in the best interest of the vast majority of our customers. By the time we were done, some may have disagreed with us, but we hope everyone understood the reasons for the change.”
In addition to the planning, the collaboration of all the parties involved was the key, says Neese.
“The cooperation and coordination among all the partnering organizations resulted in a seamless transition – across the board.”
“In the end, thanks to the team’s hard work, the planning and the communication, the fund transition was a ‘non-event’”, says Merchant, with respect to the dedicated call center established by DRS in anticipation of an extraordinary increase in calls. “Call volumes did go up, but overall things went very smoothly. Thanks to the regular meetings, and the ongoing status reports, everyone was aware of issues. When anomalies came up we were able to respond right away and keep everyone informed.”
Beamonesque. Whether it applies to a brilliant leap that shatters a world record, or to the combined efforts of many organizations to achieve an unheard of response rate from customers, it’s just the right word.