Tuesday, September 4, 2018
A vast majority of Americans rely on their employer’s retirement plan and Social Security for their retirement income needs. However, more than half of U.S. workers have less than $50,000 saved for retirement. Nearly a third have saved nothing! As Americans live longer and health care costs continue to increase, employees need more help than ever planning for retirement.
As an employer and plan sponsor, you may be thinking, “I offer my employees a solid retirement plan; if they take advantage of it, that’s great. If not, that’s their problem.” However, a recent study by Prudential Financial found that employees who can’t retire on time may cost their employers as much as $50,000 in incremental costs every year.
Helping employees reach their retirement goals is no longer a check-the-box benefit. Having the right retirement plan for your employees matters. And having the right plan starts with hiring the right plan advisor.
The right advisor will sit on your side of the table and serve solely in the best interests of your plan and your employees. The right advisor will offer conflict-free advice and ensure that the fees on your plan are reasonable, so more money stays in the plan for when your employees retire.
Individuals who can’t retire on time may cost their employers as much as $50,000 in incremental costs every year.
Here are 10 tips for selecting a retirement plan advisor who will increase the likelihood of your employees reaching their retirement goals.
Tip 1: Make sure your plan advisor is contractually obligated to make decisions that “are in the best interests of” (the fiduciary standard), and not just “suitable for” your employees.
Tip 2: Make sure your plan advisor is willing to be a named fiduciary at both the plan and employee level.
Tip 3: Make sure you eliminate revenue sharing from your retirement plan and that you know exactly how your plan advisor gets paid. Hidden fees can eat away at retirement savings.
Tip 4: Make sure your plan advisor has the proper certifications.
Tip 5: Make sure your plan advisor is conflict-free (doesn’t sell products).
Tip 6: Require your plan advisor to meet with your employees, educate them on the benefits of the retirement plan, the investment options available in the plan, provide them with guidance, and be available for questions throughout the year.
Tip 7: Require your plan advisor to provide your employees with completely objective financial education like budgeting, navigating Social Security benefits, managing debt, and planning for children’s college expenses.
Tip 8: Require your plan advisor to offer financial planning tools for your employees.
Prudent retirement plan advisors can’t limit the scope of their role to plan administration or investment allocation and monitoring.
Tip 9: Understand your plan advisor’s investment philosophy and ask to see the investment options available in their own company’s retirement plan, as well as the options for other clients they service. One telltale sign of a reputable advisor is that they practice what they preach—they provide the same services, solutions, and investment options for their own company retirement plan.
Tip 10: Make sure your plan advisor is independent of the recordkeepers for your plan and the fund companies they are recommending so they can be completely objective.
Prudent retirement plan advisors can’t limit the scope of their role to plan administration or investment allocation and monitoring. Fulfilling their fiduciary obligations extends to ongoing education and support for plan participants, ultimately ensuring that employees are on track to reach their retirement goals.
Are you looking for advice specific to your situation? Reach out to our team of retirement plan advisors.
Eric Sholberg, AIFA serves as a retirement plan advisor at Brighton Jones.
Read more from our blog: