I want to use this post to challenge Plan Sponsors. We all know that when you offer a retirement plan to your employees like a 401(k) plan it comes with many responsibilities. The to-do list is very long and includes a prudent review of many areas like investments, fees, compliance, upcoming regulations, education and vendor services. Don’t get me wrong, all of these things are very important and definitely can impact the success of a plan. However, I fear that sometimes when buried in all these typical review areas we sometimes lose sight of what is really important. Ask yourself the most important question of all.
Q. Why was the retirement plan set up in the first place?
A. If you boil your answer down to the very core, then the plan is in place so people can build wealth for retirement. It is really that simple.
How about Plan Sponsors (and their Advisors) put aside the fund analytics for a second and first focus on what really matters. Implement a way to measure, monitor and impact the success of each individual plan participant. My advice would be to not overthink it and just start simple. Start with the deferral rates and the account balances of each of your participants. Set goals based on these two metrics and then measure and monitor on a regular basis to track your success. Of course just measuring and monitoring won’t change the situation but it will provide the launching pad and accountability that will lead to the creation of programs and initiatives that will move the needle. A plan of attack if you will.
“Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” ~ Pablo Picasso
What could the plan be?
-Create effective educational campaigns, I am not talking about free pizza and some dude in a suit giving a power point presentation.
-Finally “grow a pair” and put in place those darn auto-enroll and auto-increase programs we have been talking about of years. No more excuses….Just Do It.
-Have some interoffice challenges or contests that center on 401k participation and engagement.
-Have one-on-one retirement goal setting meetings with the employees.
-Fire a couple of employees that just are not pulling their weight and put their salary money towards increasing the match. (Kidding when I first wrote this one, but heck….if they are not pulling their weight and the company can get the work done without em’…why not? LOL