Make it personal! Touting retirement plan options tailored to employees’ needs is key
Employees are turning to their employers as the epicenter for financial information and desire advice on their financial assets outside the 401(k) plan, such as life insurance and emergency savings.
Innovation in the retirement industry
Is today’s retirement system broken/? Does it accomplish the mission of helping hard-working Americans save for and enjoy a desirable quality of life during their retirement years? This has long been a hotly-debated topic with plenty of supporting evidence on both sides of the argument. I contend today’s retirement system has areas that need to be addressed (and actively are, with regulations such as SECURE 2.0), but the overall framework does work. In a world where immediate gratification is king, what appears to be broken is the lack of engagement on a topic where delayed gratification reigns supreme. Regardless of how well-prepared you are (or are not), one thing is certain – millions of Americans need advice on their finances and it’s the driving force behind innovation in the retirement services industry. These employee-centric advancements are squarely focused on meeting the demands of today’s consumers and helping them feel more confident with their financial direction. More on this in a moment.
Retirement savings vehicles have transformed significantly over the past decades. Those of the five generations in today’s workforce closest to retirement likely remember (and if fortunate enough, are privy to payments from) pensions plans while the youngest of today’s workforce will be the first generation to have to shoulder to the weight of savings for retirement solely leveraging the structure of a 401(k) plan. While the defined contribution structure places the savings risk on the employee, employers have a responsibility to help their employees adequately prepare for retirement. This responsibility looks like properly designing their retirement plan and monitoring investments as a fiduciary, making (or exceeding) adequate matching contributions for your employees, and making accessible the latest and greatest tools and resources the industry has to offer to support their financial journey.
Employers as the epicenter
Employees are turning to their employers as the epicenter for financial advice – not so much for advice from their employer but rather to access quality resources and advice through various workplace solutions. HR professionals, specifically, are the linchpin to these programs reaching their employees and having the intended impact on retirement preparedness. I have found the most successful plans we work with, defined by participant outcomes, are the ones where the HR professional(s) are highly-engaged on the topic and make it their personal mission to ensure their employees have the best resources the industry has to offer.
Related: Holistic financial well-being benefits for a multi-generational workforce
In a study conducted by Informa/Wealthmanagement.com, wealth advisors and retirement plan advisors alike shared common messages around the themes they are noticing from their clients. Customization and personalization is a growing demand in the financial services industry, a shift likely caused by consumer engagements in other industries like retail (think about how personalized your Amazon experience is, for example). Additionally, clients desire more holistic advice, including advice on their financial assets outside the 401(k) plan (or other employer plans), such as retirement accounts held at other institutions, real estate, life insurance, and even cash in the bank. Advancements in technology have made it easier than ever to deliver on these requests for customization and holistic advice and employers can take a leg-up in the talent battle by delivering these great benefits through their workplace offerings.
The power of advice
Helping employees feel secure in their financial future is an invaluable tool for HR professionals. Beyond the basic 401(k) plan, employee financial wellness programs are beginning to address these demands for customization, personalization and more. Some programs are merely education-only while other, more sophisticated offerings provide your employees advice on their in-plan assets. However designed, though, they often stop short of helping your employees manage their financial assets that fall outside their 401(k) plan. People, regardless of how much they have stashed away, often feel they don’t have enough saved to justify working with or paying for a financial advisor.
To address this concern and serve your employees’ holistic advice needs, employers and HR professionals are turning to advice programs like Marsh McLennan Agency’s recently launched program MMA IRA platform. This low-cost, provider-agnostic individual retirement account (IRA) solution is available to all employees and allows them to move their outside assets and former 401(k) balances into a consolidated IRA, regardless of account size, benefitting from an institutional investment approach previously available only to the largest, most sophisticated investors. When combined with a well-designed retirement plan and financial well-being solution, such programs deliver a customized and holistic solution, serving the underserved IRA investor by bringing Wall Street to Main Street.
Financial security is the goal. When the clock is punched and your employees head home, they want to know they are adequately addressing their money concerns. Your employees want access to people and resources that can help them plan, give them advice, carry out the strategy and, ultimately, provide them reassurance they are on the right path. Highly-engaged employers and HR professionals are the gatekeepers to helping people find this financial security they seek.
Craig Reid is National Practice Leader of Retirement & Wealth at Marsh McLennan Agency.