We talk a lot about the use of auto-enrollment and the “ideal plan” to boost deferral rates and increase income replacement rates for defined contribution (DC) participants, but engaging employees in financial wellness programs is equally as important. Pete Carlson, the Education Coordinator at Lakeside Wealth Management in Northern Indiana, talks about how they increased current participants in their company’s DC plan from an average of 5% to over 7% after just one round of meetings.
Lakeside provides group and one on one meetings with their 134 DC clients not just to educate them about the benefits of their DC plan and how to maximize them but also to educate them about tax diversification through the use of Roth 401(k)s. At a recent set of meetings with 72 employees, the results were stunning. New plan participants ended up deferring and average of 6%, current employees increased deferrals by over 20% and more than 50% of the employees took advantage of the company’s Roth offering which is way above the national average of 8%.
Though plans that employ the auto features of the “ideal plan” may get complacent thinking they have done enough, engaging people in their own retirement and financial planning, though difficult, is equally important. Though not all plan advisors, especially investment consultants on larger plans, have the capacity to conduct one on one meetings, a growing number of advisors using technology and new methods to engage employees are providing comprehensive financial wellness programs.
Getting people to sign up for individual meetings can be hard even if there’s no cost. Lakeside uses an interesting technique to get employees to sign up with one of their clients. Group meetings are required led by Lakeside – employees then have the option to sign up for one on one meetings afterwards. The take-up rate is close to 90%.
