Engaging senior management and getting them to pay attention to their 401k or 403b plan can be a challenge. But without that engagement, making progress on improving the plan and helping employees to retire is difficult and even impossible. After a TPSU program held at Virginia Tech (Arlington campus) conducted by the Washington Financial Group, the HR manager at a small organization in the DC area discloses the keys to getting buy in for the 403b plan from senior management.
On the one hand, because the plan had been neglected, the HR manager at the 109 person not for profit organization told senior management that the plan may have been out of compliance, possibly risking fines and penalties. On the other hand, he told his supervisors that many of the improvements suggested would not cost any additional money, even the hiring of a plan advisor. At the same time the HR manager was able to get senior managers excited about the plan with one person who was asked to serve on the newly formed investment committee agreeing saying, “It would be an honor.”
The DC-based 403b plan was primed to make improvements quickly partly because they had a new manager eager to make changes but also because the plan had a generous match which many employees did not take advantage of. So the HR manager quickly installed auto enrollment and auto escalation which helped employees to be more likely to take advantage of the match.
The big improvement was hiring an experienced and qualified retirement plan advisor which the organization had resisted because they thought it would cost too much. Though the expense has to be reasonable for the services rendered, the cost of an advisor can be borne by participants which will ultimately benefit from the advice and guidance. And because the match was so generous, the HR manager and senior management felt comfortable off-loading the advisor’s cost to participants.
Many simple improvements to a defined contribution do not involve additional costs and others can be subsidized by participants who receive the benefit anyway which is key to engaging senior management, many of whom are very cost sensitive.
