We know that traditional financial education for investors has mostly failed even when employees in a 401k or 403b plan are required to participate. Research shows a 0.1% change in behavior. But are there simple and obvious solutions defined contribution plan sponsors concerned about the financial security of their employees can employ now?
A plan sponsor at a 260 Maine based company attending a TPSU program held at Merrimac College in North Andover, Massachusetts is considering a novel approach. Many of her new employees are recent college grads – before formal training starts, older workers informally meet and greet the new ones. One of the “about to retire” employees said that they wish they could tell these younger workers to start saving early because, if they had, they would be in a better position at retirement.
Which spawned a new idea which the HR specialist at the Maine based company is planning to institute. Along with explaining retirement benefits as part of formal training, she hopes to include these older workers to tell stories about how they wish they had started saving earlier and more which will certainly have a greater impact with minimal cost or work.
At a TPSU program held at Queens University in Charlotte, NC, the VP of HR at AAA of the Carolinas explained how her group leverages employees participating in the 401k plan to speak with others becoming what she calls “401k Champions.” Selecting from a cross section of their employee base, these 401k Champions are educated by the company’s provider to go out and talk about the benefits and features of the 401k plan but obviously not providing investment advice. They go out on shop floors traveling to branch offices pairing Champions with employees like them and participating in all group meetings. AAA’s 401k Champions also speak with senior management about the company’s retirement plan becoming the voice of the 401k plan.
Using older employees to speaker to younger ones about their s
