401k Auto-Enrollment Statistics Reflect Success
401k auto-enrollment statistics continue to tell a good story. After a Plan Sponsor University (TPSU) Fiduciary Education Program at University of Memphis Mr. Fred Barstein, Founder and CEO of TPSU interviewed Mr. Walter Grant, Adjunct Lecturer of TPSU. One of the topics discussed were the positive results demonstrated in 401k automatic enrollment statistics.
During the interview, Mr. Grant provides a firsthand account of the improved participation rates achieved by a metal-stamping company with 450 participants. In this case, strong communication took the plan from 30% participation to 57%. Subsequently, implementing auto-enrollment took the participation rate from 57% to 94.3% – and holding. These are 401k automatic enrollment statistics of which both, the plan sponsor and the retirement plan advisor can be proud!
Full Transcript Below
Fred Barstein:
Fred Barstein here, at the University of Memphis. Just completed a TPSU program. We’re catching our very busy adjunct lecturer and advisor, Walter Grant. He’s been with us for a couple of years, with Ageis Retirement.
Walter Grant:
That’s correct.
Fred Barstein:
One of the elite retirement groups in the country, based here in the South. We just had a great program. Walt’s really passionate about behavioral finance, and participant education and engagement, great advisor. But, wanted to talk about what he’s seeing in the market, as we’re seeing plans sponsors sort of wake up to this, and adopt this auto plan, auto-enrollment. What are you seeing in the market?
Walter Grant:
Well, absolutely, I think it’s taken a lot of time for plan sponsors to digest what we’ve been telling them, over the course of the year. They’ve warmed up to it. We had a case, recently, back at the end of 2016, was about a 450 person group, steel stamping business, and they actually weren’t having any communication with the employees whatsoever. But, the owner really wants to, very parental, really want to help every participant. They had a Safe Harbor match on a 450 man group. I’ve never seen that before, first of all.
Fred Barstein:
Right. Right. Wow.
Walter Grant:
He wanted his employees to benefit from the plan. Day one, the record keeper wasn’t doing their job. Secondly, there was a 30% participation rate. We step in, first meeting, just to talk to them about auto-enroll. They’ve already, by the way-
Fred Barstein:
Sure.
Walter Grant:
… at this point, they said they were gonna do it. We step in and were promoting the auto-enrollment feature to it … went up from 30 to 57%. Just moved the needle just by letting people know, and communicating. Auto-enrollment stuck at 94.3, I think-
Fred Barstein:
Wow.
Walter Grant:
… was the actual final percentage. It’s still sticking today.
Fred Barstein:
Probably there was like a buzz in the whole company about that, right?
Walter Grant:
Oh, there was. I mean, the fact that people … in fact, most people that were talking to my team and myself, we’re very thankful, because they meant to do something. They meant to get into the plan. They wanted to. They either missed the timing. They missed the opportunity ’cause they got busy.
Fred Barstein:
Right. Right.
Walter Grant:
They didn’t fill out the forms. They never talked to them. They never saw anybody.
Fred Barstein:
It’s probably a great recruiting and retention tool for that company, right?
Walter Grant:
Oh, absolutely. In fact, they just merged with another company. We’re getting ready to do the same thing with that.
Fred Barstein:
Yeah.
Walter Grant:
They can have a worse participation rate. I think it’s like 25%, currently.
Fred Barstein:
Wow.
Walter Grant:
The owner’s very excited about doing it. He loves saying the participants benefit from it. In fact, he loved helping them out so much, he gives them an extraordinary $250 care, each one, as a profit-sharing component, just for being a part of the plan. He wanted to entice them to get on.
Fred Barstein:
Right. We’re starting to see companies really wake up and pay more attention. Why do you think that is?
Walter Grant:
I just, I think, as I mentioned in the lecture, I think just companies are becoming more parental. They understand that they need their employees to be able to retire. I think it’s gonna help them benefit them in the workforce, meaning they’re gonna be more productive folks inside their job when they feel like they’ve got a balance, that they’ll be able to retire.
Fred Barstein:
I’m sure it’s this way, but unemployment rates are pretty low, right now.
Walter Grant:
Oh, absolutely.
Fred Barstein:
Hiring people is hard.
Walter Grant:
Oh yeah.
Fred Barstein:
This could be one of the things that tip the scale.
Walter Grant:
Absolutely. In this company, per se, I’ve never had a Safe Harbor do auto-enroll the way that they’ve done it. He’s wanted to even change that formula again. I’m telling you, all the companies we meet with going forward, and existing plans, they’re warming up to it. There’s gonna be more and more of those going forward.
Fred Barstein:
Right. Well, thanks for your support of TPSU. Great program, today.
Walter Grant:
Absolutely. It was fantastic.
Fred Barstein:
Great. We’ll see you in February.
Walter Grant:
Absolutely. Thank you, Fred.
Fred Barstein:
Very good. Thank you, Walter.
Walter Grant:
Thank you.
