Remember the days when you would hail a taxi? Hoping desperately that their yellow light would be on and you would be their chosen passenger? Then once in the cab, you shared your address. With a nod, the driver would say, “Okay.” And off you’d go.
A captive in the back seat, you’d watch turn by turn as the driver navigated various streets, wondering if you were on the fastest route or an incoherent joyride by a road-rage-fueled maniac. You’d try to give directions, but they fell on deaf ears. With each new street and passing minute, tick-tick-tick, the meter would run. Stressed by the limited amount of dollars in your wallet, you calculated whether you had enough money to pay the mounting fare.
As the cabbie pulled up to your location and shouted the cost, the last calculation was the tip. How much extra would you pay for this miserable experience?
Now let’s take a look at some unsettling parallels between that taxi experience and some of our industry’s practices—from the idling on-boarding process to the clunky payroll uploading procedures that we currently ask our plan sponsor clients to endure.
Because if we don’t adapt, we might become the cab drivers of the Uber world.
Curbside for Enrollment: The Onboarding Process
The moment an employer decides they want to offer their employees a 401(k) plan is a moment to celebrate. It means the business has hit a stability milestone and they want to thank the talented team that got them there.
In today’s tech-enabled world, it should be as simple as pushing a few buttons.
Now, to be fair, we understand that there are a lot of moving pieces and information needed to set up a new plan, and we appreciate the effort and knowledge necessary to make it happen. But is that same level of knowledge and effort required from your new client? I think not!
Going back to our cab analogy, remember standing out in the cold with your hand in the air hoping to flag a ride? Doesn’t that seem silly to you now?
Now look at your current onboarding process and evaluate the process. How many steps are involved? When was the last time you actually looked at the paperwork? Where do your plan sponsors sign? Is it DocuSign, wet signatures or other options? Are the documents organized and easy to navigate and sign? Are they online? Paper? Both?
This is the first barrier. The more frustrating it is for employers to set up a plan, the less apt they will be to move forward. This goes for transfer plans too: The more cumbersome the transition process, the less likely the employer will want to change providers.
If an employer is in a state that mandates a state-sponsored plan, then it needs to make a choice. What is the path of least resistance? Is it the state-sponsored option or private enterprise? If the destination is the same (a retirement plan), which route is the easier one?
Taking this a step further, how would it reflect on our industry if a government program’s website were more functional, appealing, and easier to use than yours? If our industry can’t demonstrate that we’re better than a mandated government program, what does that bode for our industry’s future? That’s a low bar.
Once the employer goes through one to three months of waiting to set up or transfer its retirement plan (with their hand in the air, if you will), what’s next?
Memory or GPS Directions
For this, let’s focus on a hot topic: payroll. One response: API integration.
It is beyond baffling that this is not table stakes. Rather, some recordkeepers openly recommend copying and pasting payroll data—line item by line item, independently per employee, for each payroll cycle. What?! That’s the equivalent of paying the cab driver in pennies—technically legal tender, but highly inefficient.
The fact that recordkeepers are endorsing a manual upload process is simply unacceptable. It’s borderline offensive and needs to be fixed. Now.
Take a magnifying glass to your payroll process and make it easy. One click. Integrate with major payroll providers. Make friends. Look at payroll interfaces.
And if your process is beyond help, hire a consulting firm. Have them come in with fresh eyes. Let them evaluate your process. Break it, if necessary. Then put it back together in a way that makes sense.
Read more commentary by Rebecca Hourihan here.
‘Is the Meter Running’ or Straightforward Pricing?
When an employer wants to offer a retirement plan, they see value in it. Let them pay for the services and technology received. Employers are used to paying for services. Charge them. Charge per head, per employee, and/or per participant. It’s okay. They will pay it. Employers realize that things cost money. It’s the cost of doing business. State your costs. Describe your value.
When you get into an Uber, you know the cost. Section 408(b)2 has helped dramatically with disclosing plan costs. However, how many plan sponsors understand what they are paying for? We talk about benchmarking costs, but what about receiving value?
In our cab analogy, at the end of your ride, you’re expected to tip your driver for the terrible experience. When the recordkeeper experience is terrible, it cheapens the value of other services received (TPA, advisory, consulting, education, and more).
While technically the passenger arrived at the right destination safely, the journey to get there was horrible. Considering how much to “tip,” no wonder plan sponsors are challenging plan costs. They had a miserable experience. They want a refund. They don’t wantto tip the cabbie; it’s only expected, so therefore they do it.
Living in an On-Demand Society
Quick question: What group is about to become the largest employee demographic in history, starting this year? I’ll give you a hint: They don’t take taxis.
Millennials are about to become the largest (and still growing) employee demographic ever in American history. If you think they are going to be okay with a manual, tedious, copy-and-paste, error prone and painstaking process, you are mistaken.
This is an opportunity. Evolve now. Invest in technology. Update your systems. Otherwise the future looks bleak for the one standing out in the cold, hailing a cab that will never come as Ubers zip past.
Thanks for reading and Happy Marketing!
Rebecca Hourihan, AIF, PPC, is the founder and CMO of 401(k) Marketing, which she founded to assist qualified experts operate a professional business with professional marketing materials and ongoing awareness campaigns. This column originally appeared in the Spring issue of NAPA Net the Magazine.
