Saving and investing for retirement among average American workers through tax-advantaged company retirement plans has received heightened attention in recent weeks, as public visibility around the Retirement Enhancement and Savings Act of 2018 introduced in the U.S. Senate last month continues to build.
Certainly, a lack of retirement readiness continues to be a serious issue for many American workers across the country. However, looking beyond potential legislative fixes, it’s clear that retirement plan advisors can serve a more vital role than ever before in helping to address this national problem by delivering new tools to encourage workers to more fully engage with their employers’ retirement plans.
And in our experience, nothing more effectively motivates employees to maximize their engagement with company retirement plans—from higher enrollment, to increased monthly contributions – than helping them feel in control of their financial lives. But this doesn’t happen overnight.
For retirement plan advisors and plan sponsors, simply sending employees the right communications materials or even providing them with greater visibility toward their long-term goals won’t do the trick unless these steps are taken as part of a robust, consistent and personalized financial wellness program.
Effective financial wellness programs can diagnose an employee’s financial situation in a way that demystifies the process of planning for the future, establish a roadmap that shows them the milestones they need to hit in order to achieve their goals, and coach them step by step to take control of their financial destiny by making better decisions over time.
Based on this, what are some of the top characteristics of financial wellness programs that plan advisors and plan sponsors should actively look for when it comes to significantly boosting retirement plan engagement?
1) Exam-Based, Goal-Oriented Personalized Planning
Plan sponsors and plan advisors typically have neither the time nor resources to conduct an in-depth discovery process for each employee. Yet, it’s still possible for each participant to have a personalized plan tailored to his or her needs, which will give them a greater sense of control over their future.
One of the best ways to accomplish this is to administer a brief but meaningful financial wellness examination to identify each employee’s top financial priorities, debt levels, retirement readiness and other key details.
Based on the results, plan sponsors, plan advisors and their financial wellness partners can develop individually tailored plans for each employee, starting them on the path to greater control by meeting them at the appropriate starting point and helping them progress from there.