They could be your clients. They work with retirement advisors. But besides that -- what do these three retirement plan sponsors have in common?

Matthew is a plan sponsor for a nonprofit medical association with 110 employees.
Katie is a plan sponsor for a beverage retailer with 8,000 employees.
Gloria is a plan sponsor for a nonprofit association for specialist nurses.

The answer is, all three want to give employees more flexibility with their benefits and make it easy for them to take advantage of retirement plan offerings.

And on one day in March, they sat in front of a packed audience of advisors at the 2017 NAPA 401(k) Summit and offered their view from the 401(k) trenches.

Trends

What’s really happening with employees and retirement plans? Here are some trends they're seeing:

What’s in it for me? Increasingly more common is a “what’s-in-it-for-me” mentality among employees of all ages, said Matthew Gertzog, Deputy Exec. Director of the American Society of Hematology. “Which means we need to figure out what exactly IS in it for them.”
The mixing of generations. “We have four generations working at AORN,” said Gloria McCamley, Director Human Resources, Association of Perioperative Registered Nurses (AORN). “We have to cater to millennials who want games and 70-year-olds who want to pick up the phone and talk. Then we have the sandwich generation with kids going to college and parents who are ailing. We have a broad spectrum of wages too.”
Decision-making based on stories. Perhaps because of the rise of the sharing culture on Facebook and other social media, employees are making decisions based on their coworkers’ and friends’ opinions and stories, rather than accepting experts’ advice outright. “The power of word of mouth has just exploded,” Gertzog said. “You hear that Steve had a meeting with his advisor and he told a friend over lunch and that friend wants it too now.”
How retirement information is presented. The increasing creativity of vendors, as well as the influence of video games and social media, has raised employee expectations about benefits and retirement tools being interactive and fun. And they want their retirement information packaged and presented in a variety of ways, Gertzog added: “Multiple learning formats, one on one, group meetings, online, gamification, employee challenges.”
A plethora of plans. The changing merger-and-acquisition scene brings benefits baggage, creating a patchwork of plans to deal with (“we have 3 separate 401(k) plans and 2 pension plans,” said Katie Drayo, Director of Benefits, Cott Corporation).

Benefits philosophy

Challenges and trends are similar from organization to organization. But how employers view their retirement “obligation” or philosophy can be very different.

Holistic. Gertzog’s nonprofit medical society is in the most competitive of nonprofit markets – Washington, D.C. “So we need to have a strong benefits package.”

The society takes a holistic strategy to retirement benefits. “I’ve realized that financial planning is for everyone. It just becomes a question of when they realize they need to do it,” he said. “The whole life concept is important as employees make decisions from factors you haven’t even thought about.”

Still, he said, some employees feel that an employer offering help or oversight with finances is “a conflict of interest, ‘why does my employer care about my retirement?’”

Hands-off. Drayo’s 8,000-employee beverage retailing company has moved in a more hands-off direction. “We have stopped auto-enroll and auto-increase. Our philosophy is, we’ll tell you what to do but you have to do it.”

Paternalistic. McCamley’s nonprofit nursing association is hiring a big chunk of its workforce from for-profit companies, “so we have to make benefits top notch.” The association “didn’t want to have a paternalistic view” at first. But it has moved in that direction, setting goals to increase participation and deferral rates, and adding auto-enrollment and a monthly deferral change period. “Our committee had a hard time taking 3 percent out of someone’s paycheck who’s making 12 dollars an hour. But I’ve been working with our investment advisor and they’ve been instrumental in convincing the committee that we need to do this,” she said, adding that the advisor’s persistence over a period of two years finally resulted in the committee deciding to do that. And of course, employee opt-out is still an option.

Financial literacy is key

Another thing all three plan sponsors have in common is their organizations offer financial literacy programs to employees.

“Our biggest struggle is we have employees who have to choose between retirement savings or gas in the car,” Drayo said. Her employer realized employees needed tools to help them figure out their finances.

Still, there are missing pieces of information, she says. “Do our associates understand finances? I don’t know. We don’t have the data. I have 401(k) data, I know what the balances are, but I don’t know if it’s all of one person’s savings or just a part of it.”

Financial literacy is a way “to help our employees balance the need to plan for retirement with the way they want to live,” Gertzog said. “You help them understand that there are very few choices in life that are either A or B. There’s a gradation.”

Offering a financial literacy program seemed a bit too paternalistic at first, McCamley said. “But we’ve come around. In fact we just launched a smart dollar program through Dave Ramsey. It’s been widely received.” The organization offers small monetary incentives to employees for such things as logging on to the program. “We are going to continue to give incentives for engagement in that program. We feel it rounds out retirement. It helps them create a budget, they can look at it on their smartphones.”

Instant Insights /

View from the 401(k) trenches: 3 plan sponsors on trends, financial literacy

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