Embed financial wellbeing principles within retirement plan design. There are wide discrepancies in the amount of emergency savings between races and ethnicities. According to the Survey of Consumer Finances, white families typically have more than four times the amount of emergency savings as families of color.

Employers can help workers build savings for non-retirement needs. For some, this could be an out-of-plan dedicated program aimed at helping workers establish emergency savings. For others, it may entail adding plan features such as after-tax contributions that allow workers to access their savings without as many penalties and restrictions as before-tax accounts.

Consider diversity, equity and inclusion in the investment selection process. Only a handful of companies have examined the culture and diversity of the asset managers in their 401(k) plans, but nearly 40 percent of employers said they were very likely to do so in 2022. There could be increased interest in funds that invest in companies with DEI initiatives. In 2020, one out of every three dollars under professional management in the United States was managed according to ESG investing strategies.

Have a diverse savings communication strategy Benefits such as a 401(k) plan or financial wellbeing tools are worthwhile only if workers use them, so having a robust communication strategy is critical to their success. Successful strategies include:

• Speak to an audience of one by tailoring communication strategies to the individual. 
• Establish standards for inclusive language. 
• Use visual storytelling. 
• Be authentic. 
• Go mobile. 
• Ensure that all content is accessible to all users.

Provide benefits equity in the retirement plan. Employers can take actionable steps to diminish the differences. For example, employers can provide workers with a contribution that is not tied to a match. Currently, about one-quarter of large plans have a non-elective feature such as this. Employers can tweak the matching formula to help keep the costs consistent with the current program. 

Align retirement plan design with DEI research. Although automatic enrollment is good at getting workers into the plan, data show that people who are subject to automatic enrollment save less than those who are not. To help combat this, employers have changed plan provisions to increase the initial default rate, add contribution escalation and raise the escalation ceiling.

Facilitate financial stability during employment change. The impact is most profound for marginalized groups. Although data show race and ethnicity don't play a meaningful difference in the number of jobs someone has, there is a difference in what people do with their 401(k) balances when they leave an employer. While less than one-third of all defined contribution participants cash out small balances, 57 percent of Hispanics or Latinx and 63 percent of Black people or African Americans do so.

Research shows that companies that prioritize DE&I see significant benefits, the report says. "According to McKinsey & Company, employers in the top quartile of diversity among their executive teams achieved profitability that was 36 percent higher than those in the bottom quartile. Perhaps because of this, employers are turning their attention to reviewing their diversity and inclusion efforts."