Much of the conversation about 401(k) participation and whether participants are adequately saving for retirement centers on the plan sponsor. Plan design and administration play a big part in plan success. However, there is still much that an individual plan advisor can do to help improve participant 401(k) plan experiences and, ultimately, improve participant outcomes. Here are five ways to help plan participants make the most of their 401(k) plan.
1. Engage the audience by asking questions and starting a conversation
Jonathon Schultheiss, a PLANADVISER Top 100 Retirement Plan Adviser, asks participants, “What is the most important question about your retirement plan?” He hears many different statements about fees or asset allocation. When offers the question, “Can I retire?” the participants recognize the importance of the question. He promises them that before they leave that meeting they will know if they can retire. This engages the audience and makes a big difference in how the meeting runs.
2. Don’t lean too hard on the web portal as a tool
If participants are not engaged in the group meeting, they will not be motivated to navigate a new website with new login credentials. (With this context, it should be easy for advisors to understand why few participants use the portals!) Bring material that will answer their questions in a meaningful way.
3. Remember, you are not training them to be advisors, so do not overload them with information
Bring the basics. The industry has told them they need to pay attention to fees and asset allocation, but how will that information get participants to increase their contributions? Will it get them to talk about any outside assets that may be managed poorly? If someone is making a small contribution to the plan, conversations about asset allocation are useless—they need to increase their deferrals. The material brought to participant meetings must be simple and meaningful.
4. Be prepared to help those who have fallen behind or feel overwhelmed
Many lose hope when they realize that a successful retirement requires contributing a larger chunk of their take-home pay than they can afford. Be prepared to show them how they can take small steps toward retirement success. At the group level, talk about implementing an auto-increase contribution plan. If advisors don’t address the concerns of those who are overwhelmed, they will not engage in the meeting, putting them even further behind.
5. Provide more than retirement education to participants
Companies that provide a financial wellness benefit may see contributions increase over time. If employees are able to budget and pay off debt, then they have more funds available for retirement savings. Millennials in particular place a high value on financial wellness benefits. Helping participants understand and master these more basic financial steps can lead to bigger contributions and new clients in the long run.
Wrap Up
Financial advisors play an important role in helping retirement savers understand their retirement options and take steps toward a healthy retirement. Your job as a plan advisor is critical to helping plan participants fully engage in their company plan and be motivated to improve their chances of a successful retirement.
The Retirement Analysis Kit (TRAK) is retirement planning software with features for plan advisors to engage and educate participants – improving outcomes and growing their business at the same time.
Also, if you’re looking for more tips on engaging your participants, be sure to download our free whitepaper How Advisor-Driven Education Motivates Participants!
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