Let’s talk 401(k)s: Getting employees more comfortable about building wealth is key

Years ago, people were taught from childhood not to talk about their money. Forbes cites a study indicating 62% of people don’t want to talk about money and 32% would even talk about death instead of money.  This trend towards secrecy can be a barrier when it comes to saving for your own retirement. It is OK to talk about money!

Trends have been changing over the years. Day trading became popular during the pandemic.  Talking more about money became popular even before that, as the popularity of financial news on cable TV stations picked up, as CNBC did in 1996.   According to CNBC, 56% of millennials and 49% of Gen Z talk about money regularly, compared to 22% of baby boomers.

Employees should feel comfortable talking about their 401(k) and other investments for several reasons – and here is how employer can help:

1. 401(k) talk heightens awareness of what your company offers as a retirement savings plan. Some people think of “benefits” as a bland heading for a category like health insurance. They don’t feel it is important until the day they need it, then they just want to know it is there. They probably know exactly how many vacation days they have left this year, but little about the choices available in their 401(k) or the company match. The company spends a lot of money providing good benefits. The firm can make information available through various channels, but then people want to learn from their peers.
2. Company benefits are a recruiting incentive. Carrymoney.com reports the average 401(k) match is 4% – 6% of compensation, with a 50% match up to 6% of their salary. Some companies offer better plans. As an example, Boeing matches dollar for dollar up to a threshold of 10% of their eligible pay. Employees telling your friends how your company offers a better 401(k) match than the average makes it easier for the firm to hire the best employees.
3. Make financial education Many people would like to learn more about managing and saving money, but do they know where to turn? This gets us back to the 62% of people who do not want to talk about money. If your firm provides personalized financial education through a third party provider, your employees may be comfortable talking with a stranger not directly connected to the company.
4. Best practices are passed by word of mouth. Many people have the experience of needing to choose a health plan, waiting until the last moment and asking the person sitting next to them, “Which one did you choose?” If an employee does not understand which investment options are offered in the company retirement plan, it makes sense to ask for advice from another knowledgeable employee.
5. Employees don’t know what you don’t know. It is good for employees to socialize. They develop bonds outside their work responsibilities. They can learn a lot by listening in on the conversations around the table. They might be hesitant to bring up a question about benefits because they don’t want to “look stupid” but they are comfortable listening in and learning.
6. Times have changed: Have employees changed with them? Many people adopt a “set it and forget it” attitude to life. According to research quotes in Forbes, only 23% of homeowners shopped around for better rates. Employees might have made their investment selection in your 401(k) years ago and left it that way. In the meantime, new options might have been added to your plan. Are they aware?
7. Retirees regret not getting started sooner. Employees are concerned about their retirement. According to a survey quoted by money.com, 75% of retirees wished they had started saving for retirement earlier. If older employees feel the same way and the next generation in their family is entering the workforce, encourage them to encourage their children to take full advantage of the retirement plan savings program available with their employer.

Related: Paycheck for life? New guaranteed income offering may be a ‘gamechanger’ for 401(k)s

Talking about money does not mean bragging about money. Employees are sharing information to help others and asking questions to learn more to help plan their own retirement.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.