At a TPSU program held at Bentley University just outside of Boston, the Executive Director of a local law firm expressed concern about the process of on boarding new employees.
Being new to the organization herself, the issue was front and center which is why she decided to attend TPSU to see if she could pick up some new ideas. Also learned at the program was knowledge about the changing fiduciary role of plan sponsors under the new DOL rule, an issue of great concern to law firms who understand fiduciary liability, as well as best practices around the auto plan.
Some of the best practices around on boarding new employees into a 401k or 403b include tailoring the message and delivery method depending on the demographics of the employees. There may be different messages for older and younger workers as well as highly compensated compared to less highly compensated workers as well as different delivery mechanisms.
Smaller organizations have the benefit of being able to speak with each new hire while larger ones have to automate the process. And how do we reach employees that are not located at the organization’s headquarters or work remotely like truckers?
Implementing auto-enrollment, auto-escalation and a managed default investment option takes care of any heavy lifting but there are issues. The auto-plan relies very heavily on integration of payroll and record keeper systems. Also, employees automatically enrolled are not engaged which can hurt them down the road.
The other issue is, even if the on boarding process for new employees is improved or even if the auto plan is instituted, what about current employees not enrolled in the plan? Should organizations circle back to them with the new process?
And whose responsibility is it to on board new workers? Many companies rely on a combination of their record keeper, especially for technology solutions and materials, and their advisor conducting a combination of education meetings and one on one consultations.
You only get one chance to make a first impression – having a stellar on boarding process for your 401k and 403b plan can have significant impact on the health of your worker’s retirement plan.
