Having the right advisor on your 401k is the fuel that will feed the engine-of-success for your company retirement plan. It is simple to state to your workforce or to prospective employees that your company “has a 401(k) plan with a match!” However, for most retirement plan sponsors, the stark reality is, their own 401k plan, and the existing advisor, can and should be doing much more in preparing employees for retirement.
Do your Employees have Access to the Right Advisor?
During the recent 401(k) Summit, George Fraser, an experienced Retirement Plan Advisor, spent some time pointing out that the specific words an advisor chooses to use, when communicating with plan participants, can make a significant difference.
That significant difference manifests itself in how a participant’s own social security account should be perceived. Suddenly the savings hurdle seems less challenging for all workers.
Most plan participants do not understand the “head start” they actually have already earned when saving for their own retirement. Mr. Fraser, an ardent advocate for employee education since the early 1990s, adroitly points-out to each plan participant the head-start they receive by participating in social security. This helps participants to realize that they have two partners in their retirement savings efforts – both their employer and social security – will be contributing to their future retirement savings account.
Results Matter to the Right Advisor
When a plan sponsor does have the right advisor working on their 401(k) plan, they will notice that the advisor sometimes plays a role that has them pointing-out-the-obvious to plan participants. Mr. Fraser shares his wisdom with participants by using the price of the daily cup of coffee at Starbucks or the cost of a pack of cigarettes. Starbucks Coffee or cigarettes are lifestyle choices which carry a cost that could be better-compounded inside of a 401(k) plan or an Individual Retirement Account (IRA).
What is the Cost of Not Having the Right Financial Advisor?
Financial Finesse, the Society of Actuaries and industry professionals estimate the additional increased cost to be between $10,000 and $50,000 per employee for every year that an employee postpones retirement due to financial reasons. Employers need to budget for that true-cost if they offer a retirement plan that does not prepare their employees to be financially sound at age 65.
