2 Reasons to Switch 401(k) Providers for Your Employees
Deliver more value to employees with a 401(k) plan that fits the unique needs of your business. Your current plan might be costing you and your employees higher fees without as much value as you realize. Check out these two reasons to switch 401(k) providers for your employees.
For Your Employees
As the administrator of your company’s 401(k) plan, you probably have a lot of other responsibilities, too. And you might think that if your employees aren’t complaining about the plan, why change it? But even if that appears to be true, there are many reasons why you might want to take a second look. Your current plan might be costing you and your employees higher fees without as much value as you realize.
Consider this: If you haven’t reviewed the alternatives lately, you might find that a lot has changed, and that your current plan is outdated. Plus, employees are becoming more aware of the impact of paying higher 401(k) fees—and they’re expecting more services for their money. You may discover that switching plans is a smart strategy for your business as well as your employees.
Here’s a look at a two reasons you might consider finding a new service provider, and just a few of the many benefits of making a switch. It may be that a change will do you good! It’s important to continually check in to make sure you’ve got the best possible plan.
REASON 1 You want to deliver the most value to your employees
It’s a satisfying feeling to be able to put something in the “done” pile—especially when there are a lot of things requiring your time and attention. But when it comes to something as critical as retirement savings, it’s important to continually check in to make sure you’ve got the best possible plan.
For a business like yours, keeping your staff happy is the key to a loyal, productive workplace. You want to make sure that everyone is satisfied with the service and the retirement savings they achieve with their 401(k) plan. Your employees expect more value from the benefits they receive, and their contentment levels with their benefits can have a big impact on their overall job satisfaction. Consider these findings from the 2016 Transamerica Center for Retirement Studies:
- Workers highly value employer-sponsored retirement benefits—89% of workers say that an employee-funded retirement plan is “very” or “somewhat” important.
- The majority of workers (77%) agree that retirement savings programs offered by a prospective employer will be a major factor in their job search decision.
Have you checked in recently with your employees about how they feel about their 401(k) plan? Many employees don’t even realize that they have the ability to reach out and get help if they have issues or questions about their plans. Ask your employees. Use a survey, a quick poll, or maybe just a walk through the workplace to find out what they really think—and what’s really important to them.
When talking with your employees to determine their level of satisfaction with your current plan, some questions you might want them to consider include:
- Do you feel financially prepared for retirement?
- Do you understand your 401(k) and its benefits?
- Are you confident in your 401(k) investment choices?
- Do you have access to one-to-one, in-person education with an investment professional?
It’s also important to have a plan that will appeal to potential new hires. Prospective employees are always looking for better benefits from their employers. The presence of a robust 401(k) can become the deciding factor for your candidates. If you can’t deliver, they’re more likely to look elsewhere.
And finally, consider this: The Employee Retirement Income Security Act (ERISA) requires several tests each year to prove 401(k) plans do not discriminate in favor of employees with higher incomes. If your plan isn’t compelling enough, your workers may choose not to participate in it. That’s not only bad for them, it’s also bad for your plan, because reduced participation of lower income employees can put many plans at risk of being out of compliance.
REASON 2 You may be paying too much in fees
You want to do what’s right for your workforce, and you want to make sure you’re getting the best possible results for their investment. Paying too much in fees can make it difficult for participants to reach their retirement goals as quickly as they would like. It’s also a common problem in a lot of 401(k) plans.
As your employees contribute to their accounts, the earnings on the investments increase retirement income over time. However, the fees and expenses paid for your plan can substantially reduce the growth in these accounts—especially over a lifetime of participation. That’s why a clear, transparent fee structure is so important. Many of the fees paid by plan participants are buried in complex fee arrangements.
Take a moment to check the fees you’re currently paying for your 401(k) plan. If you’re not sure about your current fee structure, Fisher 401(k) Solutions is available to analyze the fees you’re paying, summarize the different types of fees and compare to other plans to see how yours stack up.
Once you understand your fees and you’ve compared them to the other options available, you can make a better-informed decision. If you discover that the fees you’re paying are higher than they should be, you can make a change based on the new information you have on hand—and take action with confidence.
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