New & improved: Plan sponsors prioritizing 401(k) plan design amid today's challenges

Morgan Stanley at Work has released research from a workplace retirement study that shows plan sponsors continue to see the 401(k) as a leading retirement benefit when it comes to attracting and retaining talent. However, plan design is a differentiator for companies as are 401(k) plans with a financial advisor, or that offer features like Roth or company match.

Plan sponsors cite features of an attractive 401(k) plan to boost engagement and participation including:

• Access to a Financial Advisor strongly correlates with employee participation: Of those plan sponsors who reported full employee participation, 80% had a plan financial advisor. A 401(k) financial advisor brings value for enrollment, engagement, and talent.
• Plan design makes a difference: In addition to a 401(k) benefit plan, plan sponsors report 23% of companies also offer a Roth 401(k), followed by auto-enrollment (20%), and profit sharing (18%) to help encourage enrollment.
• Auto features help increase participation: Plan sponsors identified automatic escalation (43%), automatic employer contribution (40%), and automatic enrollment (37%) as plan features with the highest participation, helping employers meet employees where they are today.
• Education should be engaging, tailored, and digital: Most plan sponsors (87%) believe providers are sharing engaging participant retirement and financial education. However, they say content should be even more engaging and based on individual financial stages (44%), delivered through digital tools (39%), and specifically tailored to life events (36%).

With a tight labor market continuing to plague employers, high turnovers and employee options, plan sponsors are recognizing the need to differentiate themselves with the right benefits and financial options. Both the 401(k) plan itself, and its design, must be considered in tandem to emphasize that difference.

Related: Putting 401(k)s on autopilot: Take plan design to the next level in 2023

In an effort to differentiate itself, Morgan Stanley at Work, as part of its offering to employers and employees, has just released a new set of technology enhancements on its stock plan platforms Equity Edge Online (EEO) and Shareworks.

The updates are meant to create a smoother engagement for Morgan Stanley at Work’s corporate clients, which will allow all workplace 401(k) and benefits participants to view and manage their financial benefits offered across the Morgan Stanley at Work ecosystem of retirement, wellness, and equity compensation. This new rollout will allow participants to focus on fractional shares; access personalized participant videos, automated translations, and gifting vested shares in time for the year-end holidays.

“The last few years have seen us solidify a comprehensive workplace financial benefits ecosystem, finding new ways to empower our clients and their participants wherever they are in their journey,” said Mark Mitchell, Chief Product Officer of Morgan Stanley at Work. “As we remain laser-focused on engaging both participants and plan sponsors through intuitive digital experiences, these updates serve to strengthen the connective tissue across stock plan, retirement, and wellness, as we create a more seamless experience regardless of how you engage with us.”

Expanded and enhanced functionalities include:

• A feature in Shareworks that enables stock plan participants to easily gift or transfer their vested shares to family, friends, or charity.
• A fractional shares withholding capability in EEO that reduces the need for restricted stock recipients to fund tax consequences out of pocket, which is a major pain point. Now participants can simply use fractional shares up to a precisely rounded decimal point to cover tax collection needs.
• A new video experience on the Shareworks platform that offers companies the ability to engage directly with their participants through personalized vesting videos, connecting them to relevant information when it matters most.
• Expanded translation capabilities in Shareworks that allow plan administrators to navigate their company admin site in their native language, with the ability to translate the admin dashboard, employee tabs, delivered plans, reports, and tools tabs.