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401k Plan Participant Education Should Be Measured

401k Plan Participant Education Should Be Measured 

401k plan participant education is an important function sometimes missed or not appropriately addressed by each plan sponsor Fiduciary.  It cannot be assumed that 401k plan participant education is meeting the needs of every 401k plan participant.  A single question should regularly be asked by every plan fiduciary – Are our 401k plan participants taking full advantage of the 401k retirement benefits?  Prudent retirement plan fiduciaries should always be asking that question of their 401k plan participants.   At the conclusion of a TPSU program held at the location of Villanova University in the greater Philadelphia, Pennsylvania area, Fred Barstein, Founder and CEO of The Plan Sponsor University (TPSU), met with Joe, who is responsible for accounting as the Chief Accounting Officer at his organization.  Joe’s firm has approximately 1,900 employees. One question Joe and his organization continually ask is, “Are our employees getting everything they can out of the retirement plan?” His firm frequently provides 401k plan participant education; but, it is truly difficult to know if the time, effort and money being spent are helping the employees. However, the difficulty associated with the question should not deter plan fiduciaries from seeking the answer.

Full Transcript Here

Fred Barstein:
Fred Barstein with 401kTV. Just completed that TPSU Program at Villanova University, great campus. And I am here with Joe. Welcome Joe.

Joe:
Thank you.

Fred Barstein:
Okay, if we ask you a few questions?

Joe:
Absolutely.

Fred Barstein:
Thank you. But before we do, tell us a little bit about the size of your organization and your role there.

Joe:
Okay. I’m chief accounting officer and the size is roughly about 1900 employees.

Fred Barstein:
Great. So one of the things you brought up, which I think is a big issue is we’re spending a lot of time, and money, and effort on education and financial wellness and all of that. But I thought you had a great point about, well I’m not sure it’s having an effect. So what’s your concern?

Joe:
Well, having so many employees, we offer multiple times where we invite the employees in, to see an advisor, and the advisor will do education on funds and good use of your 401(k).

Fred Barstein:
Sure.

Joe:
But I worry that it kind of goes in one ear and not the other. And I believe our company offers all the necessary.

Fred Barstein:
Right.

Joe:
Availability of training and education. I always worry if they respond to it.

Fred Barstein:
Right. So how would you want … how could you know if they were actually responding?

Joe:
It’s very hard because we’re so dispersed. But I guess if enrollment goes up-

Fred Barstein:
Right.

Joe:
…we happen to have auto enrollment, so that muddies it a little bit. So it’s very hard to [crosstalk 00:01:44]-

Fred Barstein:
Maybe deferral rates, account balances.

Joe:
Yes.

Fred Barstein:
Behavior, things like that. So, but I think it’s a great question, because we just don’t want to do things and not worry about the result. I mean let’s do things that actually works.

Joe:
Great. The end goal is for them to be able to retire.

Fred Barstein:
That’s right. Outcomes ultimately, how much income replacement, how much of the income have they replaced in their DC plan. Great. Well final question. I know you’ve been here quite a few times, so thank you. Couple of things that you may want to take back and implement in the office in the next 30 to 90 days?

Joe:
Yeah I’d like to reduce the amount of loans we allow in our plan, so maybe look at our plan and make those changes.

Fred Barstein:
That would be great. Well, thank you for your time and thanks for coming at TPSU.

Joe:
Very welcome.

Fred Barstein:
Hopefully you’ve enjoyed it and you do it. You keep coming back.

Joe:
I do, I-

Fred Barstein:
…I’m sure it’s not the food.

Joe:
No, I enjoy it very much.

Fred Barstein:
Very good. And thank you for watching 401kTV.

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