by Craig Rosenthal
Aug 17, 2021
3 Simple Steps to Add Value and Enhance Retirement Plan Effectiveness
A Chinese proverb states that “A journey of a thousand miles begins with a single step.” If the journey is a Plan Sponsor and their Advisor jointly acknowledging that plan design can drive successful retirement outcomes, then their second step on this trek is the recognition that this is not a “set it and forget it” effort.
I think most if not all of us know that 401(k) plan design can significantly impact retirement outcomes. In fact, plan design can positively influence participant saving and investing behaviors. You can help your clients maximize their plan design to enhance their plan’s effectiveness and achieve their goals while improving retirement outcomes. Here are three easy steps:
Step 1: Understand your clients’ goalsFirst, aim to provide value to your clients by helping them implement or update their retirement plan according to their company’s specific needs. Of course, every employer has unique objectives. To best serve those objectives, you must first understand what they are. A thoughtfully designed retirement plan can achieve a variety of goals, including:
Often, there are a variety of conflicting and sometimes corresponding goals employers wish to achieve when setting up a retirement plan. Once you’ve helped clarify their goals, you can provide valuable guidance that helps your clients implement an effective retirement plan.
Keep in mind, that we are coming up on a very important plan administrative deadline: Cycle 3. You can help open plan related conversations now and help the employer get ahead of plan design changes before the July 31st, 2022 deadline.
Step 2: Identify value-add plan design features
There is a broad variety of plan design features available to help employers achieve their objectives. Introducing your clients to these features and offering insights on how the different options will impact retirement outcomes is a value-add service you can easily provide. Some of these options may include:
Step 3: Optimize the plan design to enhance effectiveness
You can increase a retirement plan’s effectiveness by optimizing its plan design. Of course, “effectiveness” is in the eye of the beholder. As mentioned above, this depends largely on the employer’s goals and objectives and the plan’s ability to help achieve them. For instance, if an employer’s goal is to optimize tax credits and increase savings opportunities, their ideal plan design might include a Safe Harbor plan. For employers who want to increase the competitiveness of their retirement plan in order to enhance recruiting and retention efforts, an effective plan design could incorporate matching contributions, emergency savings accounts and managed risk-based portfolio investment options to help employees better allocate their retirement assets and improve savings outcomes.
As their trusted advisor, your role includes educating clients about plan customization to reflect their specific goals. However, you may be challenged by the amount of time required to sort through and synthesize available data.
If you are looking for a helpful tool to make sense of the array of plan design variations, check out the Retirement Outcomes Evaluator (ROE) from Fiduciary Decisions. It can help make your job easier. It streamlines the review and benchmarking process through demonstrating how different plan designs can improve plan effectiveness, and by extension, retirement outcomes. ROE enables you to add value for employers by quickly evaluating an unlimited number of plan design combinations and providing customized recommendations for on-time retirement the way your clients want.
To learn more about the ROE and how you can use it to deepen your client relationships by helping them achieve their company and retirement plan goals, contact us.
 Pfau, Wade. Forbes. “The importance of retirement plan advisors.” May 24, 2016.
Craig is Head of Strategy and Chief Marketing Officer for Fiduciary Decisions. In this role, he is responsible for driving Product and Partnership strategy as well as the overall messaging and marketing for the firm.
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