PLANADVISER - January/February 2022 - 26

improving outcomes / plan design
CLIENT CONCERN: " We just redesigned the plan. "
ADVISER RESPONSE: " Best practices keep changing, and you
need to keep up. "
Reviewing and updating plan design is an ongoing task,
given the ever-changing regulations for retirement plans,
plus each employer's evolving demographics and goals. " Plan
design needs to be responsive to these changes in the business
and workforce to ensure the needs of both are met-and
that means reviewing the plan design on a periodic basis to
ensure it still works as intended, " says Michael Olah, director
of plan solutions at OneAmerica in Akron, Ohio. " A good plan
design has a shelf life of around three to five years. "
Critical is to accompany each iteration of the design with
tailored communications that tell the employee population
why the company has made the adjustment and how that
can help them meet their personal financial goals.
" Much of plan design effectiveness turns on the ability to
market or present the change, " Eickman notes.
CLIENT CONCERN: " Our employees already opted out of the
plan once. "
ADVISER RESPONSE: " That doesn't mean they're not interested. "
Automatic re-enrollment sweeps can counteract the inertia
of employees who are not contributing-or not contributing
enough-to saving for their retirement. Employees may still
opt out or reduce their contribution rate at any time, says
Tom Armstrong, vice president, customer analytics and
insights at Voya Financial in Braintree, Massachusetts.
" When we see metrics such as 'nine out of 10 employees
let the re-enrollment or automatic enrollment happen,' it's a
good indicator that the majority of participants appreciate
and benefit from these course corrections, " he says.
CLIENT CONCERN: " Employees don't want us to increase their
contribution rates. "
ADVISER RESPONSE: " They may not push back as much as you
think they will. "
According to research from J.P. Morgan Asset Management, of
the 30% of plan participants whose employer automatically
upped their contributions, 99% said they were satisfied.
Remind sponsors that simply enrolling employees in the
plan may be too little to set them up for retirement security,
particularly if the auto-enrollment amount is a modest 3%
or 4%. Auto-escalations can raise workers to a more meaningful
contribution level over time.
The Setting Every Community Up for Retirement
Enhancement (SECURE) Act lets employers automatically
increase participants' deferral rates in safe harbor plans to
a maximum 15%. Employees may opt out or reduce their
rate at any time.
An additional other benefit of utilizing automatic escalation
is that it provides an annual touchpoint by which
employers can reach out to their plan's participants.
" You have to communicate and let them know it's going
to happen, " Olah says. " Most plans using auto-enrollment
are now at least considering auto-escalation as well. "
CLIENT CONCERN: " We like the idea of financial wellness but
aren't sure it makes sense for us to pay for it. "
ADVISER RESPONSE: " Reducing financial stress can improve
your company's bottom line. Here's how ... "
For millions of Americans, one takeaway from the pandemic
has been a greater awareness of their own financial precarity.
A 2021 MetLife study found that 86% of employees reported
that their finances were and are expected to remain a top
source of stress; more than one-quarter said they are less
productive at work due to financial worries.
Data from financial wellness provider LearnLux indicated
even higher levels of financial stress-and among workers at
every income level. " says Rebecca Liebman CEO and founder
of LearnLux in Boston.
She says, " If that raises employer clients' concerns,
advisers might discuss how professional advice can help
ease stress. The advice could be in the form of digital tools or
access to an adviser who meets with employees one on one.
" Once an employer truly and genuinely understands the
value of professional advice to its employees, and eventually
the organization's bottom line, it becomes more comfortable
with various payment options, " Eickman says. " At that
point, it's easy to turn to plan assets as a fairly reasonable
source of payment, in part because it requires no direct
capital outlay from the organization, and in part because it
requires no direct capital outlay from the employees. "
CLIENT CONCERN: " Expanding eligibility will cost our company
too much. "
ADVISER RESPONSE: " Here's exactly how much it will cost. "
Running the numbers for plan sponsors can assuage fears
about the expense of implementing new plan design. For
this conversation, advisers should come prepared with
data on the potential expense of expanded eligibility-and
the potential benefits, says Edward Gottfried, director of
product at Betterment for Business in New York City.
" The trend has been toward shortening eligibility requirements,
with more clients using immediate deferral, " Olah
says.
" Usually when you're hiring someone,
the person's
already thinking about the health insurance and other benefits,
so you can get him involved and making choices about
the retirement plan, as well. Then you can back it up with
auto-enrollment, saying if he doesn't make any decisions in
30 days, you'll automatically enroll him. "
CLIENT CONCERN: " We're more focused on recruitment than on
benefits right now. "
ADVISER RESPONSE: " In this labor market, financial benefits can
be a recruitment tool. "
Employers need to make their benefits package as attractive
and valuable to potential and current employees as possible.
26 | planadviser.com January-February 2022
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PLANADVISER - January/February 2022

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