Why Employees Are Talking About 401(k)
See how a few simple communication tools and techniques can help your employees want to enroll in and actively save into the company 401(k). Improving your employee participation and savings rates can make your 401(k) plan healthier—and make it a more effective employee retention tool.
A lot of plan managers decide to keep the 401(k) plan they’ve got rather than making a change. After all, if no one is complaining, why change it?
However, that can be a mistake for your business as well as your employees. But how do you find out what your employees really think of your 401(k) plan—without rocking the boat?
Recently, Fisher Investments held a series of focus groups with small business owners and employees of small businesses to find out what they think of their company 401(k) plans. What we discovered made it clear that there’s a disconnect between employers and their workers.
Key findings included:
- Most employees said they are not financially prepared for retirement. Even though employees are participating in a company-sponsored 401(k) plan, they generally had low confidence levels when it came to saving enough for retirement. They felt under-educated on financial topics and didn’t know where to find help.
- Employees don’t want to speak up about their 401(k). What did employees say they want more of? In-person, one-on-one 401(k) enrollment support and ongoing financial education. However, employees said that they were not going to ask for it because they were afraid of rocking the boat.
- Employers believe there is a better 401(k) plan out there. Employers all said they thought there is a better plan out there. However, because they hadn’t heard any complaints from their employees, they didn’t see a need to re-evaluate their 401(k).
- Employers think employee satisfaction is about the company match. Sometimes you don’t want to ask your employees about a benefit of the company, as it could open a proverbial can of worms. But employees are also looking for other benefits from their 401(k)—from short waiting periods so they can start saving faster, to investment guidance and investment options that align with their goals.
These findings present a pattern: Employees are not communicating their 401(k) plan concerns, and employers are assuming that since no one is saying anything about it, the plan is fine. So how can you find out what your employees really think without making it a big deal?
In this guide, we’ll discuss strategies for getting insights into what your employees want from 401(k) plans and service providers and give you tips to respond with confidence.
Tip #1: Try Using Our Simple Survey
One of the ways we’ve helped potential clients create a feedback loop is with our four-question employee survey. It allows you to ask some key questions about how your employees feel about retirement, without setting expectations that there will be change. In fact, it can be an excellent guide for you, too.
You can copy and paste these questions into an email:
- Do you feel financially prepared for retirement? Yes/No
- Do you understand your 401(k) and its benefits? Yes/No
- Are you confident in your 401(k) investment choices? Yes/No
- Do you have access to one-on-one, in-person education with an investment professional? Yes/No
Tip #2: Hold Small Group Discussions
A good way to quickly get insight into what your employees are thinking in terms of retirement is to schedule small group discussions. In these meetings, you can uncover their priorities when it comes to retirement planning: Is it enrolling in a 401(k), finding more ways to save, learning more about the investing industry, or understanding social security?
Below, we’ve outlined different groups of people you could put together for a robust discussion on these topics.
- Newly eligible employees: Talk to them to find out how much they know about their 401(k) options, and if they are planning to participate. If not, it’s a good time to find out why so you can work with your service provider to better encourage participation. Ideally, the information will be fresh in their minds, especially if they’ve just finished orientation.
- Younger employees, interns, and recent grads: With a group of people who have not previously taken part in a 401(k) plan, you can get excellent insights into what they are looking for in terms of financial education and investment guidance.
- Management: Managers are likely to have conversations with employees about benefits, and may overhear conversations between others in which they can offer great insights and feedback. Managers can be a great way to keep “an ear to the ground” for discovering what workers are thinking.
Tip #3: Put What You Learn to Work for You
Once you know what’s important to employees, you can take a hard look at your plan fees, plan design, and services to determine if they’re right for your business.
- Fees and other expenses: High fees can cut into the savings and potential investment earnings of owners, managers, and employee over time. Fees are often paid by the employees, so they should be reasonable for the services the 401(k) provider is offering.
- Matching contributions: Employees may ask about employer match contributions. When an employer matches employee contributions, it can be a major boost to participation in the plan, but it may not be right for all businesses. Tweaking your plan design may help you find ways to make your 401(k) more attractive to employees—including by adding matching contributions, safe harbor provisions, or profit sharing.
- Employee education and support: Choosing a plan provider that provides ongoing education opportunities can be a smart decision, as employees may not feel confident in their investment choices or their current plan for retirement. But your service expectations shouldn’t end there—and if your current provider isn’t meeting your employees’ needs, you’re now armed with the insights you need to find one who will.
Create a list of common themes you hear from your employees, as well as their survey results, and share them with your service provider. They should be able to give you some recommendations for changes to help your plan better meet the needs of your employees. If you’re considering a new service provider, share your employee feedback with those providers and ask what recommendations they would make—it’s a great way to determine which providers are the best fits for your company, and you’ll be ready to make changes to your existing 401(k) or choose a new one with confidence.
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