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Continuing the Conversation: Company Benefits when 401(k) Plan Includes Financial Education

Have you started the conversation at your company to determine how to get the biggest organization benefit from your company's 401(k) plan?

In last month’s Starting the Conversation blog I shared some facts to get company leadership talking. There’s a heavy organization cost when employees can’t retire at normal retirement age and an even greater burden when employees lack the solid financial foundation that allows them to build toward retirement.

Helping employees establish a solid financial foundation can have a positive workplace impact, and it is most logically accomplished through a financial education program that is part of a 401(k) plan. To get a sense of the workplace benefit, understand that half of all employees who reported being financially stressed said they spend three or more hours during the workweek dealing with personal financial issues, according to a PricewaterhouseCooper survey. Workplace stress can be overcome when employees are knowledgeable and confident on financial issues, with the help of an effective financial education program.

To get started in evaluating options for an effective financial education program, the first resource should be current 401(k) providers. A well-qualified retirement plan advisor can guide and assist employers in offering practical financial education. Key best financial education practices involve subject matter and method of delivery.

For subject matter, start out with the basics – budgeting, debt-management (and elimination), savings, insurance, home-buying, saving for children’s college. Once those issues have been mastered, move on to retirement preparation subjects: retirement income planning, wills, Long-Term Care insurance, estate planning and Social Security claiming strategies.

For optimum delivery methods, again a well-qualified retirement plan advisor can guide you on what’s available. In addition to answering questions 401(k) plan participants have about financial and investment management, your advisor should help provide basic financial information, through workplace meetings and webinars. And your advisor can point you in the direction of recordkeeping and other service providers that deliver personalized financial education.

Today’s technology makes possible individualized education programs and tailored messaging. Here’s an example of what can be accomplished: some platforms – available via computer and smart phone – survey users as they create accounts, asking questions about their spending and savings habits, their financial attitudes, and their progress toward retirement. Those answers allow the platforms to direct users to video education modules that help them master the financial information and skills that will improve their financial position. Users’ progression is measured as they complete modules and re-surveys, which direct them on to more advanced topics and ultimately retire-ability. Encouraging messaging can be “pushed” to users, and reminders can be sent to re-activate users who have slowed or stopped viewing the educational materials.

As your organization continues its conversation on ways to optimize the company retirement plan to its benefit and the benefit of employees, financial education programs are just one area to include in your conversation. Look for future blogs on 401(k) Plan Design, Making “Proper” Investing Easy, and Employee Communications. All are key strategies to help employees build a firm financial foundation and de-stress, while moving toward retire-ability. Your organization will benefit!


This blog is written to help make the lives of plan sponsors easier in the process of meeting legal requirements under ERISA for their defined contribution plans. Please understand that reading this blog should not alone take the place of a one-on-one consultation regarding the needs of your specific plan, and hence cannot be a guarantee against fiduciary breaches.

Starting the Conversation: Linking Retire-ability and Organization Viability

 Previously, I suggested that the ability of employees to retire at a normal retirement age is a benefit of as much significance to the organization for which they work as it is to them individually. Increasingly, employers recognize that it’s in their company’s best interest to do what they can to help their employees establish a firm financial footing and build toward retirement readiness.

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Do You Know the Three Rs of a Great 401(k) Plan?

A company 401(k) plan can be a great asset for an employer – with the three Rs resulting when the plan is thoughtfully designed and managed. Consulting with knowledgeable service providers, plan sponsors can construct a plan that will Recruit, Retain and Retire. The beneficiaries will be employer and employee alike.

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Did You Pass the Test? Possibilities Await!

When it comes to defined contribution retirement plans, employers have numerous goals. As I meet with them, there are two objectives that I hear frequently from those that sponsor a 401(k) plan. One is that they want to encourage greater participation and higher rates of saving to help company employees achieve financial security in retirement. Just as important, they want to make sure highly compensated executives and company owners can make the maximum contributions allowed by law.

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It’s Never Too Late to Keep a New Year’s Resolution

As a 401(k) or 403(b) plan sponsor, you have the opportunity to make a positive difference in the lives of your employees. With January behind us and New Year’s Resolutions fading fast, one resolution that employers can help employees keep alive is to progress along on the path toward financial security in retirement. An important step is making sure their retirement savings are properly invested.

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Would You Give an “A” to Your Financial Education Program?

New Year’s is a time to set goals and begin working toward achieving them. Employers that sponsor 401(k) and 403(b) plans can help employees improve their ability to enjoy a secure retirement by communicating with them about financial issues during this time of the year as one part of an effective year-long education program.

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Are You Among the 38%?

A record number of 401(k) and 403(b) plan sponsors – 38% – are actively seeking new plan advisors, according to a recent Fidelity Investments survey. That’s not a surprise given changes in the retirement plan industry. Among other things, the Department of Labor’s new Fiduciary Rule requires employers to confirm their advisors are acting as fiduciaries and in the best interests of their clients. Advisors who are unprepared have caused some employers to interview other advisors.

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408(b)2 Disclosures and the Fiduciary Rule

408(b)2 Provider Disclosures have created confusion for employers who sponsor 401(k) and 403(b) plans ever since the rules first requiring them took effect in 2012. To make matters worse, with the June 2017 effective date of the Department of Labor’s Fiduciary Rule, employers’ responsibility with respect to the disclosures increased.

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401(k) Fees: Participants’ Best Interests May Not Be Served by the “Race to the Bottom”

There’s good news for employers! Many have been on edge as they read about the “excessive fee” lawsuits filed against retirement plan fiduciaries, some of which have made their way to the U.S. Supreme Court. Or they’re shaken as they hear about the detailed fee document requests and questions from Department of Labor auditors to 401(k) and 403(b) plan sponsors and the fines and penalties that can result from DOL investigations.

While lawsuits and investigations have served a purpose in lowering plan fees, a side effect is that many plan sponsors, in their concern to meet compliance standards, have made a search for the lowest fees such a priority that they have unwittingly overlooked the best way to serve plan participants! In fact, when I meet with employers, they often first tell me they need to reduce plan fees to create a “hedge of protection” for themselves.

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