Blog : DC Retirement | October 09, 2024

Impact of the AI revolution on retirement planning

Dina Caggiula
Head of Participant Experience, Institutional Investor Group
This is the first in an ongoing series: Well on Your Way® with Dina

Hello, I’m Dina Caggiula, and I lead our Participant Experience organization. My team and I spend each day thinking about how to optimize your participants' end-to-end journeys—from the moment they enroll with us, through retirement, and in all the milestones in between.

I’m excited to welcome you to the first issue of Well on Your Way with Dina. This space will give you the chance to see how we keep innovating to turn every participant interaction into a positive action. Our mission is clear: Create personalized experiences that empower participants to take positive steps toward financial well-being.

These days, there’s no bigger subject than artificial intelligence (AI). Whether we use ChatGPT, smart speakers, or mobile apps, AI will continue to permeate our daily lives. So I thought it would be appropriate to make AI the subject of our first article. And when I think about this topic, I always think about its impact on my children and their futures.

I have a 9-year-old daughter and 5-year-old son, both part of Generation Alpha. They’re growing up with remarkable technology right at their fingertips, all powered by AI. In 15 or 20 years, when my kids are preparing for their first jobs, their experiences will be dramatically different than mine, or even that of Gen Z.

That’s because 65% of Generation Alpha will work in a job that doesn’t yet exist, primarily because AI will continue to create an outpouring of new industries and other fields of work.1

At Vanguard, we look to emerging technologies to solve both future and present business problems. While many financial services firms are using AI, our approach is unique to Vanguard's values. Our AI strategy is for the sole purpose of driving investor outcomes—rooted in deep research and expertise.

I recently spoke about our intentional yet multifaceted approach to AI at a VanguardNEXT event in New York City. AI is already adding significant value to our investors through our personalization engine and internal and external chatbots, and it is at the core of our participant experience. Below are three ways that AI is having a transformative impact on our service and participant experience.

Simplifying knowledge management

Plan rules can be complex. From regulations to tax codes, our associates navigate multiple sources while speaking to participants. That's why we're piloting a new contact center bot called AI Crew Assistant that can quickly locate relevant information and deliver it to our associates in real time. From helpful articles and education on financial well-being to tools in our Financial Wellness Hub, AI Crew Assistant serves up links that can then be shared with the participant caller. 
This ensures a better call experience because an associate can focus on the participant instead of data retrieval. And it allows for a more consistent experience regardless of who participants speak to on the phone.
AI is also helping us provide an omnichannel experience to our participants externally. In 2021, we delivered the industry’s first transactional chatbot on our website for participants. Not only can it answer participants’ most frequently asked questions, it can also handle low-risk transactions such as paying off a loan. Next year, we will further enhance this bot by using generative AI to make it feel even more human-like and conversational.

Hyperpersonalization to inspire action

Like AI, hyperpersonalization is everywhere. In the simplest terms, hyperpersonalization is the use of AI to to tailor an experience to individual preferences, behaviors, or needs.
By using AI:
Our personalization engine can sift through millions of data points to determine an individual’s next-best action.
Our expert thought leadership can be distilled to make it more understandable and applicable to participant problems.
Our systems, processes, and monitoring capabilities that use AI are designed to be fair, inclusive, and unbiased.

Financial well-being

Both that deep level of personalization and AI carry through to our Financial Wellness tools and capabilities. Last year, 72.5% of participants took at least one positive action to improve their financial well-being.2

For example, our Emergency Savings Calculator can estimate how much a participant should have on hand for a small or large emergency. It also predicts specific industry and regional trends to more accurately refine its estimate for an emergency reserve.

With our Goal Optimizer tool, participants can calculate how to save for multiple goals at the same time, such as retirement, education, and a new home. Once the participant enters their financial target for each goal, the tool suggests ways to help fully fund all of those aspirations—like changing their retirement date or how much they’ll put down on a new home.

The potential to change financial futures

There's no question that AI will continue to disrupt the retirement industry. We're excited to continue to intentionally use it to help change the financial futures for our participants.

1 McCrindle, Understanding Generation Alpha, 2020.

2 Vanguard, as of August 31, 2024.