How Creating The Best Plan Benefits More Than Just Your Employees Financial Security
Published on: July 31, 2015
Recently, my 10 year old son finished a very successful spring season of competitive baseball. The team did well; it had a winning record, two tournament championships and a World Series event. During the season, I also saw my son learn what it takes to be the best ball player he can be. Through hard work, perseverance, listening and applying what he learned, he was able to maximize his potential. And when he was at his best, his team became better.
What does my son and his baseball team have to do with a retirement plan? Often I hear business owners talk about being the “best,” having the best product, service or technology. However, I find what makes a company the “best” is when the employees are allowed and encouraged to reach their potential. Numerous studies highlight that employee productivity and job satisfaction increase dramatically with an increased sense of financial security, yet very few employers take this knowledge and consider creating the “best” retirement plan for their employees. They seem to not see what I do: a plan allows, encourages and incents employees to be more financially secure and it is a big part of helping them maximize employee potential for the company. When the employees are at their best, the company will perform at its best too, just like my son and his team.
There is no one “best” retirement plan; each is unique and tailored. However, all “best” plans share one common theme: the employer strives to design a retirement plan that creates successful outcomes for employee participants. These plans embrace features that help participants save more, remove barriers to participation, simplify decision making and accommodate specific preferences.
“Best” plan features might include:
- Behavioral finance practices that nudge participants to save more
- Automatic enrollment and/or automatic escalation
- Employer matching programs
- Minimum deferral rates
- No penalties for loan and hardship withdrawal provisions
- Education programs and communications for employees that are frequent
- Employer paid record keeping fees
In considering a change to retirement plan features, employers often cite increased cost and employee pushback as the main reasons for not adopting them. However, plan features, such as the above, are key in maximizing the retirement outcomes for employees. They help employees feel more financially secure and successful, which can lead to increased satisfaction, less stress, higher productivity and lower employee turnover. While it is difficult to project the costs amended features may have on the plan, it is also important to weigh financial benefits content employees have on productivity and longevity with the company. One way to help determine the cost benefits is to work with a quality retirement plan advisor and/or TPA. Revising your plan is additional work and involves more to consider, but, in my opinion, you can’t become the best company without hard work, perseverance, listening and applying what you’ve learned.
Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member
Written by Brandon Nicklas
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