Retirement plans tend to be one of a company’s least promoted benefits, yet they can be one of the biggest rewards for an employee. We at Retirement Benefits Group find that many employees underutilize this amazing benefit, thus limiting their total possible compensation in instances where the company matches contributions.
As employees see their total compensation packages aren’t where they think they should be, workplace morale can spiral downward.
Unfortunately, the education that employees receive about their company’s retirement plan has historically been boring investment gibberish that focuses on saving more and asset allocation. By the end of the first five minutes, employees are wondering when the madness will end. After they’re able to escape, the employees head back to their desks and dive back into their work, never acting on the information they just received.
Many people make poor financial decisions in their lives, and they bring those decisions to the workplace. The stress that comes with worrying about paying for college or high credit card debt can burn hours and hours of productive work time because their minds aren’t focused on the task at hand. A company can regain those productive hours by helping their employees work toward a solution.
4 Questions You Should Ask an Adviser
- How do you get paid?
These should be the first words out of your mouth. It addresses the biggest concern from the beginning. Some advisers will be paid on a fee based on assets. Ask about a flat fee for services vs. a fee on assets. Ask what happens if the adviser receives a commission? Will they reduce their annual fee?
- Are you an accumulation adviser or a retirement adviser?
Some advisers are solely focused on investment returns and growing assets. They pay little attention to the nuances of retirement. Other advisers are focused on retirement and everything a person needs to consider as they transition (more financial planning). Some do both. Learning about how the adviser focuses their attention on a regular basis can help you make the decision on which one to use for your benefit.
- What types of investments and investment products do you use?
Look for an adviser who is well rounded and open to all types of investments and investment products. You should keep an open mind to all types of investment products as well. The financial services industry is constantly changing to reflect the needs of the investor. Contrary to popular belief, most investment products are not bad for a person to use. It is just as important to make certain they are used correctly for the right need.
- Am I hearing a sales pitch?
If a financial professional starts to pitch you an investment without initially planning, stay away. The first thing they will do is to start selling you on the features and benefits of the product they are trying to sell. Without knowing you, how will they truly know if it fits you? Be weary of the sales pitch!
It starts with a shift in thinking.
We suggest making the change from thinking about it not as “retirement education,” but rather “financial wellness” (we call it “Passion for the Participant”). Make the commitment to help your employees understand the effect on their financial lives with the decisions they make. A company can easily evolve its health and wellness programs into a financial wellness challenge.
Why Not Combine Programs?
If the company has a health and wellness program in which the employees are encouraged to track their calorie intake and exercise, why not have them track their spending at the same time? Bring in experts who can sit with employees on a one-on-one basis to discuss various financial issues. Host experts on insurance, long-term care, debt management, Social Security, college planning, Medicare, transitioning to retirement, and more. A financially comfortable employee will be a more productive worker.
What else can be done? First, when an employee starts a new job, there are a lot of moving parts and a ton of paperwork. Typically, the employee will get an overwhelming packet of information. The orientation meeting is often as brief as possible with an information dump, making it difficult for anyone to make the most appropriate decisions at that time. Besides, new employees want to make the best first impression by getting to work and working hard until they settle into their position. This means they put many of the decisions onto the back burner. Consider phasing in the orientation with simple topics and conversations. Take care of the necessary paperwork on Day One, then phase in information on the retirement plan benefits when the employee can make more informed decisions. Implementing auto-enrollment will at least get them into the plan and allow them to change it later.
Another option, hire one or two financial consultants for the employees to use as needed. In many instances, this can be an adviser associated with the firm who consults on your retirement plan. Provide their name and contact information to the new employee and vice versa. A phone call or meeting can be established to help the employee with financial issues, setting up their retirement plan and or moving their money from a previous employer. Vetting this consultant is key to making certain they are there to help the employee and not sell to the employee. Making arrangements for a fee to be paid to the consultant for their services will help to deter a sales approach. Keep in mind, some employees will gravitate to the adviser for more personal services outside of the scope of services within the plan. This is not an issue. Just make certain appropriate agreements are signed to hold the company harmless. Overall, employees will see this as a benefit.
Take your employee wellness to new heights by incorporating financial wellness. With this added confidence, your employees will be better prepared to take on the challenges they face during the workday.