When it’s working effectively, the 401(k) and employee benefit plans your company offers can help support your employee retention and employee recruitment strategies.
However, if your plan performs poorly, you and your employees may lose out on important plan benefits, including tax savings. To get the performance you need out of your employee 401(k) retirement plan, it’s important to have comprehensive employee retirement plan support.
If you suspect your employee benefit plan isn’t delivering enough value, look out for these four red flags that indicate you should reevaluate your options.
1. Your Employee 401(k) Plan Has Low Participation Rates
What percentage of your employees participate in your 401(k) plan? If the number is less than 80%, you may want to dig deeper.
Low participation rates indicate that either your employees are dissatisfied with your 401(k) plan options or they haven’t been properly educated about the value of the plan. When too few employees participate in your plan, the percentage your higher-compensation employees are able to contribute may be negatively impacted.
Ultimately, a low participation rate means your employee retirement plan simply is not functioning as it should. You don’t want a reputation as an employer that offers a subpar plan to discourage prospective employees from joining your organization and current employees from staying over the long term.
2. Your Employee Retirement Plan Advisor Is Never Around
To gain more consistent returns on your plan’s investments and encourage higher employee participation rates, you need your 401(k) plan advisors to meet regularly with your trustees and your staff. You also need your advisors to be available to answer questions or address concerns you may have about your plan and its performance.
Without regular support and advice, you risk lackluster plan performance, which may make your plan participants second guess their decision to enroll.
Ideally, when you selected your employee retirement plan provider, you set clear expectations for the level of service you would receive. If your provider isn’t meeting those expectations, you may need to consider other options.
3. Your Employee Benefits Plan Advisors Lack Expertise
Your advisors don’t just need to be available to address your company’s concerns about your plan; they need to have deep knowledge about plan management and investment strategy.
In most cases, you need a whole team of 401(k) plan investment advisors to help your employees gain consistent returns on the funds they contribute to your plan. They should also have ample years of experience both with various types of investments and with the regulatory nuances of managing retirement plans.
If you’re concerned that your advisors aren’t as qualified as they should be, consider reaching out to them to ask them about their experience.
4. Your Advisors Don’t Take An Active Approach With Investment Selection
Does your employee retirement plan provider actively reach out to you with news and ideas about your plan’s investments?
Some plan providers just sit back and collect plan management checks without caring about how investments are actually performing. If these plan providers ever deliver positive results to their clients, it is almost purely by chance.
If the growth of your plan’s investments is not meeting the category averages and associated benchmarks, your plan advisor should be reaching out to you with ideas about alternative investment options and strategies you can employ to boost performance. If that’s not happening, your employees aren’t getting the results they deserve from their 401(k) plan investment.
Consult A Third-Party Advisor Before Taking Action
Since it typically takes 90 to 120 days to transition to a new employee 401(k) plan, you need to be cautious about taking action too quickly.
Before you decide to switch providers, consult with a third-party 401(k) advisor. This advisor should help you objectively assess whether your company is getting a good deal based on the plan management fees you pay and the level of service you’re receiving.
If you’re not getting the service you expect, it may be because you opted for a low-cost plan when selecting providers.
If you decide you need more service or a different approach, sit down with your current plan provider to see if they’re able to meet your needs. Gaining more success from your employee retirement plan may simply depend on negotiating for more service or lower rates.
With a high-performing employee retirement benefit plan, you have a tool that supports employee retention and recruitment for your organization. If you suspect you’re not getting the value you need from your plan, look for the red flags above to determine whether you should reevaluate your options.
Explore how retirement benefits impact employee retention by reading our free e-book, Make Retirement Benefits Your Secret Weapon For Employee Retention.
