Smart financial advisers have an opportunity to help smaller companies see the value in offering a retirement plan, and support them as they navigate the various challenges associated with doing so.
Specifically, small businesses may be more focused on day-to-day operations, and may lack the resources needed to create and maintain a retirement program. They also may encounter other challenges such as costs, determining how to manage fiduciary responsibilities and risk, choosing the right investments, and developing the right expertise to administer and oversee a retirement plan.
Because of these perceived obstacles, small employers may feel as if offering a retirement plan to employees is just too much work. But financial advisers should feel empowered to help employers understand that offering a retirement plan doesnt have to be costly or complicated — in fact, it can provide a great opportunity to attract new employees while increasing productivity and retention.STICKY EMPLOYEES
The numbers speak for themselves. According to the Towers Watson 2013-14 Global Benefit Attitudes Survey, employees who have a retirement plan that meets their needs are five times more likely to be highly engaged than those who dont. They are also more likely to stay with the same company until they retire.
The same survey found that nearly half of respondents (45%) cited their companys retirement/ health care program as an important reason they plan to stay at their firm.
Moreover, having a retirement plan fuels Americans confidence about retiring comfortably — a challenge for many employees. The Employee Benefit Research Institutes 2015 Retirement Confidence Survey revealed a strong relationship between retirement plan participation and an increased confidence in employees ability to retire. Among those with a retirement plan, the percentage of very confident responses increased from 14% in 2013 to 28% in 2015.
Offering a retirement plan can pay off for a business in the long run, but what, specifically, can advisers do to communicate the message now?HOW TO HELP
First, advisers can help small-business owners envision what a retirement plan would look like by sharing their expertise on plan design. The same plan that works for a multinational corporation probably wont work for a small business, so advisers can help business owners identify the type of plan that would be most suitable.
Second, beyond plan type, advisers also can provide education on fee structures, investment options, and how employers can administer and supervise a plan while ensuring compliance.
Third, and perhaps most importantly, advisers can counsel small-business owners on how to develop a strong communications program so employees are well aware of their benefits and know to whom they can turn for help.
By focusing on what matters most to employers — including employee engagement and decreasing turnover — advisers can be at the forefront of helping small businesses offer retirement plans. After all, employers, regardless of size, all want the same thing: a productive workforce and a successful business.
Joe DeSilva is senior vice president and general manager of ADP Retirement Services.