Pro Tips for Locating Missing Participants

When plan sponsors consider missing participants, their predominant emotion is likely to be frustration – driven by a caseload of missing or unresponsive participants that defy resolution. As an administrator of IRAs, a 401(k)-plan sponsor and a provider of commercial search services, we understand completely.

Along the way, we’ve learned a great deal about the art and science of locating missing participants and we’ve concluded that a large portion of missing participant problems can be addressed with the right mix of structure, diligence, technology, documentation, and preventative measures.

With that in mind, I’ve assembled some useful tips from our search “pros” – practical, field-tested ideas for locating missing plan participants and keeping participant data in shape.

Start With What You Have
Before spending money or engaging a commercial search firm, take a close look at your own records. The correct information for many missing participants may simply be buried in a system you already control.

Check your plan and payroll files for alternate addresses, phone numbers, or emergency contacts. Beneficiary forms and loan applications can be useful -- participants often use more up-to-date addresses there than on their original enrollment forms.

If your organization has been through mergers, acquisitions, or a change in payroll vendors, consider examining legacy systems where lost participants can be rediscovered by reconciling old HR or payroll data.

Be Smart About Using Commercial Search Services
If internal efforts fail, it’s time to look outward, and consider the use of commercial search services that typically provide multiple service levels, each applying increasing levels of search intensity.

When engaging a commercial search services provider, perform low-cost, electronic searches first.

Ideally, a commercially available e-Search should:

• Search for participant address update(s) across multiple databases
• Indicate if a participant could be deceased, and if so, provide contact information for close relatives, if available

For participants whose initial e-Searches do not yield acceptable results, selectively increase search intensity. Not every missing participant requires a full-blown forensic search, but high-value or time-sensitive cases may warrant them.

Make Outreach Count
Returning updated addresses from missing participant searches may sometimes be only half the battle – for intensive searches, the other half can include participant outreach to verify the information – particularly for unresponsive participants.

Unfortunately, too many outreach efforts fail because they’re either unconvincing, confusing or simply get lost in the shuffle.

Effective participant communications should:

• Clearly identify yourself. Use your company and plan name, logo, and recognizable branding so participants know the message is legitimate.
• Create urgency. Messages like “Don’t risk losing access to your retirement benefits” can help overcome procrastination.
• Simplify the response. Provide multiple, easy-to-use channels for updates – call center, website, or IVR -- and make the update process easily accessible, simple and crystal clear.
• Go the extra mile. When necessary, send mailings to multiple addresses, including those found during your search process. Even consider including an outbound calling initiative with your written outreach.

In an era of phishing scams and fraud alerts, clarity and credibility are essential to getting participants to respond.

Document Everything
Search and outreach activities should be backed by detailed documentation -- not only for fiduciary protection but also for audit readiness.

Keep an audit-ready record of every search step taken, including:

• When and how each search was performed
• Which databases or services were used
• Any results or evidence of outreach attempts
• Final determinations for each participant (located, unresponsive, deceased, etc.)

In situations where participants should be receiving benefits, but are otherwise still deemed missing, having your commercial search provider provide an audit letter attesting to the search steps that were undertaken on your behalf can be extremely helpful.

Prevention: The Best Missing Participant Strategy
While there are effective ways to find missing participants, prevention is always cheaper and easier than cleanup.

Consider embedding these practices in your plan’s day-to-day operations:

• Effectively deal with your small account problem. Adopt a fiduciary-friendly automatic rollover program that includes all balances below $7,000 and includes support for auto portability.
• Capture personal contact details early. Before employees leave, collect their personal email and mobile number. Corporate contact info will quickly go stale.
• Encourage online registration. Participants with digital access to their accounts are far less likely to become missing.
• Send periodic reminders. Gentle nudges to verify or update contact info -- especially before job changes or layoffs -- can keep your data fresh.

Each of these steps helps build a culture of accurate, up-to-date participant data, reducing the risk of accounts going dormant or unclaimed.

Stop Chasing Ghosts
Doing these things consistently will reduce your missing participant caseload, manage your risk, reduce your level of frustration and you’ll find yourself spending less time chasing ghosts, and more time helping participants achieve better retirement outcomes.