Lost in Translation: Helping Employees Appreciate Their 401(k)
Are the 401(k) or retirement plan benefits you offer to your employees appreciated? Maybe more importantly, do your employees fully understand the benefits you offer? In many cases, the answer to the first question is largely dependent on the answer to the second. How can they fully appreciate the benefits you offer if they don’t truly understand them?
Educating your employees about their benefits, specifically retirement benefits, is critical if you have any hope of creating a workforce that is Retirement Ready. So who is responsible for leading these education efforts? Well, that all depends upon the service providers you work with. Some 401(k) plan advisors only interface with the plan committee and leave all of the participant education to the record keeper or TPA. Other advisors are more hands-on and provide in person enrollment and education sessions themselves. There isn’t a right or wrong way to approach it, but if you rely on the record keeper or TPA to educate your employees, you need to make sure you are aware of what they can and cannot do for your employees.
Generally, a record keeper or TPA will not be able to provide investment advice. They will provide general information about the plan provisions and the investment platform as well as some basic investment information. As the plan sponsor, you need to make sure that the message they are communicating about the benefits you offer is adequately covered.
If you want your employees to have access to investment advice, then you will either need to engage a fee-based advisor that can deliver those services, or incorporate some type of add-on advice solution offered by many record keepers. Keep in mind that these add-on services are usually somewhat cookie-cutter and often come with an additional cost.
Ultimately, if you want to make sure your employees are getting the right message, you need to interview your current service providers and document what they will and will not provide. The outcome of that discussion may necessitate switching record keepers or hiring a specialist, fee-based advisor that can best support your plan’s needs.