Sometimes the very thing you overlook can offer the opportunity you seek. That's why we have such phrases as “think outside the box” and “zig when everyone else zags.” Such platitudes adorn conference room walls, but for all their wisdom, they often fall on deaf ears as busy executives find themselves caught up in the hectic maelstrom of the day-to-day.

Thus, opportunities go unanswered. Solutions go unsolved. Earnings go unearned. All because competing priorities steal the time from corporate decision makers.

Nowhere do we see this more than when it comes to the lowly 401(k) plan (see “Top 5 Challenges Too Many 401k Plan Sponsors Aren't Aware of,” FiduciaryNews.com, December 4, 2018). It's not neglect. It's really just capacity limitations.

This isn't necessary. No matter how small the company, how inadequate the time, how busy the CEO, there's nothing about best practice 401(k) plans that can't be easily duplicated.

Now, I realize all service providers tout their package as the “best,” and that can send mixed messages to hard-working (on something else) plan sponsors. Nonetheless, there are objective organizations that aren't looking for profits. These are the groups companies in search of solid retirement plans should rely on.

The goal, however, isn't merely to install a great plan. The real measure of success is the retirement confidence of the employee. The plan is merely a means to an end. And the end is a comfortable retirement for each and every employee.

But getting to that goal can be worrisome for employees, causing a loathsome distraction. Distracted employees are not productive employees. That's bad news for the companies they work for.

Plan sponsors shouldn't view retirement plans as just another employee benefit. Plans can represent a key cornerstone to profitability – if done right. And by “done right” I mean in a holistic standpoint. This depends less on the investment menu (beyond the generic “long-term” option), and more on presentation menu.

How do plan sponsors frame their company's 401(k) plan to employees? Is it seen as a reason why take-home pay is less than what it should be? Or is it the creation – piece by piece – of that beautiful jigsaw puzzle picture we call “retirement”? Employees can be made to see how their engagement with their 401(k) plan fills in those puzzle pieces. In doing so, they'll grow more confident in their prospects of a comfortable retirement.

Where is this accomplished? In every communication to the employee. Whether a regularly scheduled education meeting or, more likely, in the quarterly recordkeeping statement or the on-line portal employees use to access their account.

At every chance, each plan engagement should be associated with believable – and achievable – images of a comfortable retirement.

Subliminal advertising? Perhaps. But the idea is to associate the plan with positive ideas and positive outcomes, then reaffirm those ideas and outcomes with a record of completed milestones employees can easily keep track of. These milestones are nothing more than baby steps.

Positive reinforcement.

Why is this important? Because if employees feel they're on course for a comfortable retirement, it gives them one less thing to worry about. One less distraction. More space of mind to think about other things.

And that makes them happy. And a happy employee is a productive employee.

And companies with productive employees tend to be more profitable.

Instant Insights /

Build a better 401(k), get a better company – Carosa

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