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401(k) Game Changer

andrew_bluestoneIn the early days, passenger comfort was not a chief concern in commercial airline travel. Bumping along at 450 miles an hour at 28,000 feet can be a bit unnerving for most passengers. It took decades for airlines to understand that passengers are more at ease when food is present. But food is not served simply because passengers might be hungry - it plays an important psychological and physiological role. Food is a welcome distraction on a long flight, but it also calms a reluctant flyer. By drawing blood from stress areas - white knuckles gripping an armrest, for instance - to the stomach for digestion, a warm meal reduces tension in other parts of the body.

Consider your 401(k) participant meetings. Do you spend your time appealing to all the senses of your participants? Do they show up? Are they engaged in the process? Is it a bumpy, white-knuckle ride?

The process to gain greater participation in companies' 401(k) programs vary from industry, company and class of employee. When dealing in the closely held corporate market, the goal of most employers is to maximize their contributions. Greater participation ensures that your plan will pass its annual discrimination testing and avoids the tax burden of a plan refund. Although studies have shown that participation is greatest when there's a company match, a salary increase, or automatic enrollment, there are less costly methods to gain greater participation.... it's about education in an environment of safety and comfort.

So let's change the paradigm for participant meetings from stress and discomfort to pleasure and trust. Appeal to all participants by engaging all the senses.

First, establish a proper meeting room. Gathering everyone around your desk or in a sloppy lunch room doesn't cut it. Relax your employees by making sure everyone has a chair and is comfortably seated. Creating an appealing setting with balloons, posters and other decorations will make the meeting seem more like a special event; something out of the ordinary that will interest your employees.

Think like an airline. Welcome your employees with the aroma of freshly baked cookies or bring in a popcorn machine. Play soft music while the group is gathering. Greet each person individually. Make eye contact. Shake hands. You want your employees to know they are welcome and an important part of the enrollment meeting. The success of your plan depends on it.

Then, begin the meeting by loosening the group with trivia, jokes and prizes (everyone loves to win something even its just a t-shirt or cap). Engage and promote involvement among the employees, but keep the conversation generic in scope. When you get to the part of the meeting that focuses on the plan, be sure to focus on the specific aspects of the plan and how it relates to the individuals' various stages in life. As you know, a person's age, marital status, education and income level all play an important part in their interest in enrolling in a plan.

Handouts should be clear, concise and easy to understand. No one likes to read anything from the IRS. Be sure that all documents are available and that nothing has been overlooked. Your meeting can be further personalized by offering one on one investment consultations. A long term bond is created when an employee has a firm understanding of the plan features and knows how they will benefit by participating. Each person should have an opportunity to privately discuss how much to save and how to invest, making them more inclined to stay in the plan.

At the end of the day, a 401(k) contribution is a very personal experience while using a group experience as the conduit. Comfort, safety and trust go a long way to help those feel investing for the future is the right thing to do.

Securities and investment advisory services offered through Ameritas Investment Corp. (AIC), Member FINRA/SIPC. Selective Benefit Group and AIC are not affiliated.

Andy Bluestone, CFP, President
Selective Benefits Group
This email address is being protected from spambots. You need JavaScript enabled to view it.  973-417-6880
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Monday, 17 June 2024

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