There’s ample evidence that plan advisors add value in many ways, including coming up with creative new ways to boost retirement readiness. But what about the new ideas coming from plan sponsors?
Writing in the spring issue of NAPA Net the Magazine, Steff Chalk, executive director of The Retirement Advisor University (TRAU) and The Plan Sponsor Institute (TPSI), offers some example of plan sponsors’ creativity from TPSI’s recent fiduciary training sessions for employers around the country.
1. Technology
More than one plan sponsor shared stories of increased participation and deferral rates resulting from the production and distribution of 3-minute company videos highlighting the benefits of the 401(k) plan, Chalk says. In each instance, the team member on the screen was under 30 years old. “These companies each received a substantial payback on the time and effort — each campaign was described as highly successful and inexpensive,” he reports.
2. Exclusionary Strategy
This strategy will not be appropriate for most companies, Chalk cautions, but it is difficult to argue with the results: 100% participation. “The day began as a typical retirement advisor education day and the advisor did his thing,” he relates. At the conclusion of the advisor’s remarks, the president of the firm took the floor and said the following: “This company is offering you free money. We are making an offer to you to accept the free money. If you do not accept our offer of free money, then I think you are stupid. I do not work with stupid people.” A bold delivery that may not work for most, “but highly successful as a campaign,” Chalk observes, “moving the participation needle from below 70% to 100%.”
3. Visual/Vocal
One HR director described an unorthodox strategy and the corresponding steps used with plan participants and eligible employees who were not taking full advantage of the entire 401(k) company match. “At each individual participant meeting the HR director urged participation increases,” Chalk relates. They would first discuss the 401(k) plan, the importance of saving for retirement and the matching company contribution. The discussion would then progress to “the exact amount of money the participant was refusing to accept and losing each pay period.” That number would then be converted to a monthly number (with the participant multiplying the match times the number of pay periods per month) and this monthly amount was discussed. Next the same process was used to convert the monthly amount to an annual amount — again with the participant performing the math. The final step was to have the participant sign a form stating they fully understood that they were being offered a benefit equal to “X” dollars per year being deposited into their retirement account — and that they were choosing to refuse that benefit. “This process was successful in taking ‘full-match’ participation to more than 95% in 3 years,” according to the HR director.
In addition to Chalk’s regular “Inside the Plan Sponsor’s Mind” column, the spring issue of NAPA Net the Magazine includes the cover story on NAPA’s top plan advisors under 40, as well as feature articles on custom TDFs and the Obama administration’s take on open MEPs. The issue also features insights from regular contributors Jerry Bramlett, Warren Cormier, Nevin Adams, David Levine, Brian Graff, Don Trone, Joseph DeNoyior, Jania Stout, Fred Barstein and Lisa Greenwald Schneider.
To view Chalk’s column, click here and select “Plan Sponsor Creativity Making a Difference.” And to view a pdf of the full 56-page issue, click here.
