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How’s Your Retirement Plan?

Greetings and thanks for you interest – in my first article for The Insider. As a Financial Advisor, it is my mission to make significant improvements in my clients’ abilities to achieve their long-term financial goals. I do this by acting as a financial ally and coordinating my expertise with other council or planning professionals. Such is the case in my working relationship with Bates Insurance Group. Our independent status provides clients access to the broadest range of competitive products and services in the marketplace – without bias toward the product, but rather you, the client!

Employee participation

Now that you spent all of that time and energy to get that 401k plan started – the one that everyone wanted – low and behold, hardly anyone is participating. Or, participation rates are falling. What’s up with that?

How you compare to others out there

Here are a few things to consider –

  • How’s your “match”? The idea of “free” money has a strong appeal. Statistically, 75% of companies with plans provide a matching contribution, and the average is 4.1% of payroll.
  • What’s your elimination period? Results show 50% of plans are 90 days or less.
  • Investment Options: 80% of plans offer 10 or more investment choices. Yet, more choice is not always better. Research shows that more choices generally lead to lower participation rates and great allocations to money market, or less-risk associated investments. This leads to poorer returns, and apathy to the plan. The easier the better and today this means “Target-Based” funds.
  • Provide loans and hardship withdrawal options. Many employees don’t want to put money into a plan that they can’t get to if an emergency comes up. Generally, the associated costs can be borne by the employee.
  • Provide an Investment Advice Service or offer one-on-one meetings to participants by a qualified financial advisor to help participants ensure that they will meet their retirement goals.
  • Consider Automatic Enrollment. Research shows that the biggest problems for employee enrollment are procrastination and inertia. With automatic enrollment, they now have to make an active decision to opt-out.

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