NASHVILLE—How can employers attract, retain, and “gracefullyexit” employees? EBRI head Harry Conaway, Fidelity Vice PresidentJeanne Thompson, and American Retirement Association Communicationschief Nevin Adams weighed in at the NAPA 401(k) Summit.

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Here is where employers are in 2016--Harry Conaway started itoff by “setting the table”:

  • Boomers are aging and beginning to retire, though not as fast assome employers might want.

  • Millennials are now the largest workforce.

  • Salaries are flat.

  • The Great Recession and other challenges are backgrounditems.

  • There’s a move to more contractors and gig workers.

  • There’s a shift from DB to DC plans.

  • Workers are facing new work issues such as financial stress,higher credit card debt, higher student loan debt, and aresuffering, coincidentally (or not so coincidentally), from a lackof sleep as well.

To help employers, new products and services are created weekly.And as many pitches for these new products. It almost requires aConsumer Reports of benefits solutions to sort through all of them.EBRI trustees did briefly wonder if they should do this, Conawaysaid. “They didn’t do it, but it’s an opportunity.”

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“Don’t be too attracted to all these shiny objects. It’s takingyou away from your business and focusing on the new products andservices.” Instead, as you try to sort through the market noise,focus on these four things:

  1. What you need to do to achieve success

  2. What are current and future workforce needs

  3. Who are your current workers

  4. Who should be your future workers

And the task of advisors? “To sort through the noise to helpemployers.”

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Employers must not assume, he said. “Don’t assume: that thingsare going well, that what worked yesterday worked as well as youthought it did, that what worked yesterday will work tomorrow, thatthings will remain the same or change will come slowly, thatworkers in any group are the same, that general claims about compor benefit approaches will have the desired affect for yourworkers, that what works for one employee will work for all.”

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“Be specific about what’s important to you as an employer. Askquestions: what’s working, what’s not, where’s the pain, do allworkers need to be ambitious? Do they need to be career oriented?Should you try to meet the needs and wants of your key workers?

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“Zero base your programs—what’s the comp you need to pay, whatcan you afford to pay? What justifies providing some portion ofthat total comp in another form, such as tax benefits, grouppurchasing.”

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He also reminded the audience not to overlook HR and noncomp/benefit drivers: recognition, stress reduction, flexibility,creativity, job challenges. These less tangible features can beused to attract and retain employees as well.

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“Look at the gig economy. These are workers who want flexibilityand control. That learning you can apply to your employees, to helptheir appreciation and desire to stay. Though you don’t want to betoo good and make them reluctant to leave later on.”

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To that end, use benefits in a strategic way, he said:

  • Use the long-term, relatively stable HR comp and benefitsprograms for broad groups of workers.

  • Use specific HR comp and benefit items linked to specific rolesor employees.

For example, he said, “You might create a general retirementprogram that has an effect on the larger workforce—say a desire toleave or a desire to stay—then you have to identify the employeesyou want to behave contrary to the general broad program.”

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Do you take what employees say they want into consideration? Notnecessarily. “HR is dying for ways to measure ROI. They’re becomingmuch more skeptical of workers saying they want things. It doesn’ttranslate into more productivity necessarily. Any advisor of anemployer needs to take more of an ROI view. Which is harder withthe new benefits such as wellness.”

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He asked the audience, a roomful of between 1000 to 1700 people,to raise their hands if they were doing financial wellness programsfor clients. At least two thirds of the audience raised theirhands.

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When asked “Who sees employers understanding their workforce?”as they create and make decisions about these wellness plans, nohands went up.

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Employers need to be asking these questions, Conaway said. Andif not employers? “Maybe the advisor has to do the collection andthe analysis, depending on the employer. I think it’s essential. Itsets some general parameters as to what’s likely to work or notwork for employees.”

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An important point Conaway stressed is the importance of workerchoice. “The millennials want flexibility and choice, but too muchchoice is not necessarily the answer.” With too many choices, aprogram becomes overly personalized. “It can be a pseudomarketplace and you eliminate some of the group purchasing and costbenefits.”

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Millennials, especially, like the notion of researching, havingchoices, and getting recommendations, he said. “That’s what choicearchitecture is about these days—helping them make betterchoices.”

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You can offer choices but it’s not always either/or, he said.“You could marry a student debt repayment program with an educationassistance program. You can shift transportation assistance topaying workers more to live near the home office.”

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Personalization of benefits is a growing trend, said Fidelity’sJeanne Thompson. Advisors can help employers dig a little deeper,she said. “Use data and analysis. Just as Amazon uses data, so weshould in the financial space.”

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She went on to talk about the shift from defined benefit plansto defined contribution plans: “It’s an old problem that needs newstrategies.”

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Part of that strategy involves crunching new numbers andeducating employers about them. Displaying a new “retirement map”Fidelity created, she covered some age-based milestones thatemployers need to be aware of. For example, at age 30, an employeeshould be saving 1X his or her income at that point in time. At age50, it’s 6X their income. She said as a rule of thumb, employeesshould spend 50 percent of income on essential expenses, 15 percenton retirement saving, and 5 percent on short term saving.

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Retiring workers is a goal. But what drives an employee’sdecision to retire?

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Fidelity worked with a partner to survey 12,000 people, of which9500 were pre-retirees. What they found, Thompson said, were fivefactors influencing an individual’s decision to retire:

  1. Financial: assets, debt, cost of health care

  2. Health: stress, physical stamina, mental sharpness

  3. Family: grandchildren, a partner to take care of

  4. Lifestyle: importance of leisure, whether employees find meaningand identity through work or not, and their relationships atwork

Forty-four percent said financial was their top consideration toretire, Thompson said. That is, they felt they had the wherewithalfinancially to retire. The other 56 percent ranked something elsethey consider when retiring.

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Fidelity identified three phases pre-retirees go through beforeretirement. These phases are not necessarily age based, as some 60year olds have college-aged children and some 40 year olds havegrandchildren. Still, they’re useful for planning, she said. Thephases correspond to conquering a mountain (think Everest):

  1. Climbing: 10 plus years from retirement. They’re happy with job,their finances outweigh all factors. They have debt, they havedependents. You wouldn’t see someone quit because they had agrandchild. In this phase the financial factors outweigh allfactors.

  2. Base camp: 2 to 9 years from retirement. Things are clearer.They’re reducing debt. They’re not necessarily looking for newopportunities. Their health may be waning but is manageable.

  3. Summit: 2 years out from retirement. No financial dependents.Reduced debt. They aren’t updating their resume. This is where theymight up and quit if they had a bad day or bad weather or otherfactors.

Fidelity figured out what employees in each phase need as far ashelp:

  1. Climbing: want to create financial plan, want to work part timewith benefits, needs to understand Social Security.

  2. Base camp: want a financial plan, want to understand health carein retirement, what retirement options are there, more about SocialSecurity.

  3. Summit: “A big barrier to exiting the workforce is a lack ofcomfort with the retirement benefits accrued,” Thompson said. “Ifthey do have a significant balance, you can help them understandthe issues affecting their retirement and help them feel morecomfortable retiring.”

The challenge is to engage with people in whatever phase they’rein, Thompson said. “You have to ask about more than finances. It’sgoing a little deeper.”

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