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Saving plans tap social media

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Saving plans tap social media

At the Teachers Insurance and Annuity Assn., College Retirement Equities Fund, retirees can view a password-protected Web site that enables people to talk about retirement issues. On the organization's Facebook page, visitors can play the Nest Egg Challenge with friends, an interactive game that encourages discussions about trimming expenses and saving money.

Putnam Investments operates three blogs, including the Retirement Savings Challenge, which not only provides the Putnam perspective via charts and commentary, but also directs viewers to Scribd, a Web site where people can post documents and original writing.

A Putnam article, “Why the 401(k) Will Prevail—And How,” is a recent addition to Scribd. Two other Putnam blogs provide financial information as well as links to the company's Twitter and Facebook pages.

And among several clients of consultants like Hewitt Associates Inc. and Towers Watson & Co., participants can turn to their respective plan sponsors' accounts on the Twitter real-time messaging service. There they can find an assortment of brief comments alerting them to sources of greater detail about retirement strategies.

Money managers have begun using social media—including Facebook, Twitter, YouTube and LinkedIn—to educate participants about retirement savings.

“Our goal is financial literacy,” said Jeffrey Fleischman, chief digital officer of TIAA-CREF, New York. “Our commitment is very much around speaking to customers in their comfort zone.”

Like others interviewed for this story, Mr. Fleischman said his organization emphasizes education—it doesn't use social media for account servicing—to avoid raising red flags with government regulators. “We have a high level of engagement from our legal and compliance teams,” he explained. “They review content the way they review our content in other information sources.”

Legal and regulatory concerns are among reasons money managers and plan sponsors are moving cautiously in using social media on the job.

“It's been our experience that companies want to do it by disseminating bite-size information,” said Marina Edwards, senior consultant for defined contribution at Towers Watson in Chicago. She wouldn't name any companies, but said retailers appear to be the most interested in using social media to communicate retirement information.

People in their 20s, 30s and early 40s are the most active users, she said. “Plan sponsors believe that (social media) resonates with younger workers, but it's still a small percentage of the employees,” Ms. Edwards said.

Twitter appears the most popular source because it offers “short bites of information,” she said. “It's relevant...but the information is not confidential and it's not advice.” Twitter, available over multiple devices such as cell phones and personal digital assistants, demands brevity: Messages can contain only 140 characters.

Ms. Edwards said that while larger plan sponsors appear to be the most interested in using social media tools, they also have the most concerns about them.

“Companies don't feel comfortable with the level of internal (information technology) support and knowledge,” Ms. Edwards said.

She said clients' biggest questions involve monitoring sites, guarding against inappropriate language or behavior, making sure employees aren't wasting time, making sure proprietary information is secure and addressing employee dissent that could spill out on social media.

Some clients of Lincolnshire, Ill.-based Hewitt Associates, use Twitter to post retirement-plan reminders, and they host blogs that allow employees to offer “share my story” retirement planning experiences, said Jim Hoff, solutions and strategies leader in Hewitt's communications practice. He declined to name any clients.

Participants are encouraged to post “how I saved” or “how I retired” stories because they have “more impact” than a corporate pronouncement, Mr. Hoff said.

Clients also use Twitter to provide participants with retirement plan information. “It offers a quick tip or a reminder,” Mr. Hoff said.

Putnam has a big social media arsenal: blogs, Facebook, Twitter and YouTube. “The key isn't so much vehicles...you need content to make people interested,” said Jeffrey R. Carney, global head of marketing for products and retirement.

Log onto the company's YouTube connection, for example, and you'll find video interviews with Putnam executives, as well as links to instructional videos from other sources about 401(k) plans and even a “60 Minutes” segment on problems with 401(k) plans.

Putnam provides education, not advice, through its social media outlets, making sure it doesn't run afoul of the Financial Industry Regulatory Authority, which monitors investment advertising and communications. “We're trained in a regulatory world,” Mr. Carney said. “We actively monitor.”

Putnam uses essentially the same content for each outlet, making modifications in presentation to fit the media site, said Mark McKenna, director of communications. “We would have a more casual setting in Facebook and would adjust our content to that end,” he said.

Baltimore-based T. Rowe Price Group Inc. uses some social media and is conducting research about expanding such sources. It has a message board for plan executives to discuss management and regulatory issues, and they can communicate through a Web site, webinars and e-mail, said Matthew McOsker, product development manager for technology.

But there's no Facebook or Twitter among the offerings. “I'm not sure they would use them,” Mr. McOsker said. “A lot of corporations block Facebook—period. That's a big consideration.”

The company is conducting interviews and focus groups with plan executives and consumers to decide whether to add Facebook and Twitter.

“We've yet to see good, hard evidence that significant portions of users” would use Facebook or Twitter, Mr. McOsker said. “Sponsors are not beating down the door for Facebook and Twitter.”

Mr. McOsker said his research to date shows plan sponsors' major concerns are cost, legal issues, technical expertise and demands on human resources departments. He expects to complete his research in another month or two.

Many plan sponsors and money managers employing some social media have done so for only a year or two. And although the retirement plan industry is moving cautiously, some research suggests there's greater interest in finding new ways to communicate financial information.

In a survey to be released later this month, Kasina L.L.C., a New York-based research and advisory firm, reports that 84% of respondents from asset management firms believe social media is “here to stay” and will have a “significant impact” on financial services, said Eric Daugherty, director of research.

Mr. Daugherty said Kasina solicited responses from “over 100 people,” getting 64 responses from 48 firms for the Web-based survey that was conducted in December. The survey found that 16% of respondents believe social media will not have a significant impact on financial services. Kasina's clients include asset managers, brokerage firms and insurance companies.

Forty-eight percent of respondents “engaged in some form” of social media, Mr. Daugherty said. Some of that social media use is being financed informally. Two-thirds of respondents said they have “no current or planned specific budget” for social media activities, Mr. Daugherty said.

Robert Steyer is a reporter for Pensions & Investments, a sister publication of Business Insurance.