Retirement planning from the employer's perspective
Many employee benefit advisers focus on the needs of the employees they work with when they design, implement and monitor retirement plans. Even though it’s important to keep employees happy and understand their viewpoint, it is also crucial to get into the mindset of your primary clients – employers.
If you can work with an employer to understand their comprehensive retirement program needs, you will be able to create a plan that is ideal for both the employer and its employees. With this you establish your ability to contribute to retirement and general business initiatives.
The best plan is one that meets the owners’ objectives and priorities, but many advisers begin to design a company’s retirement plan before they engage in an important conversation with the business owner about their primary motivations. Business owners may establish a retirement program to receive a tax benefit for themselves, attract top talent, retain current employees or a combination of those reasons. Advisers should help business owners determine the right plan according to their unique set of needs.
It is also important for advisers to consider factors such as the cost of administering the plan, the turnover rate of the company, the age of the owner compared to the average age of employees and the compensation of the owner and the employees. Approach the plan design with the knowledge of these attributes in addition to the overall business value the plan provides from the owner’s perspective.
Many owners default to a 401(k) plan, but you can help them add an element of creativity to their group plans which match their business objectives. For example, you could add a profit sharing component to save taxes for the owner and provide additional benefits for the employees. Defined benefit plans and cash balance plans can also provide tax deferral for the owner. These additions to traditional retirement plans will help employers differentiate themselves from similar companies.
Implementation and ongoing monitoring
Once you determine the plan, understand what an employer wants in terms of implementation and monitoring. Set aside any of their current visions for the plan and instead approach the implementation with the desired end result in mind. If you reverse engineer the plan, you will see a clear path to accomplish the employer’s plan objectives.
Employers want high participation so their plan can benefit all parties involved with lower plan costs and increased employer matching opportunities. In a society in which instant gratification is a priority for individuals, it can be difficult for employers to motivate their employees to contribute to retirement. If you can help them see the results that a plan will produce through communication and education, they are more likely to take action. For instance, if you tell employees that they can take an additional amount out of their paycheck for retirement now so they can retire a year earlier, they will be motivated to act on that concept.
Visit the employees you work with in person, hold webinars and always be accessible for any questions and concerns. Leverage technology, such as frequent email communication, to always stay in front of them and motivate employees to prioritize their retirement plans. Help business owners provide their employees with the tools and resources to financially educate themselves and fulfill business objectives. If employees are content with their benefits, they will contribute to the positive workplace environment and reputation of their company within their specific industry.
Challenges to attract and retain top talent
The positive state of the economy and low unemployment trends increase the value that employee benefit advisers can provide to businesses. A strong economy translates into more profit for businesses. As a result, owners are willing to invest more in their employees. Advisers can encourage them to use additional profit to create defined benefit, cash balance and profit sharing plans on top of their traditional 401(k) programs.
Differentiated plans also help businesses appeal to employees while unemployment is low and there is a competitive environment among talented candidates. If you can help your employer clients create a unique benefit for themselves and their employees, they will be able to engage top talent and continue to profit. Retirement plans with vesting schedules can also serve as incentives for long-term employment. Businesses are only as good as their weakest link, and owners that provide great benefits in addition to fair compensation will attract and retain top talent and grow their businesses. Once you help business owners achieve their objectives, you will become a trusted advisor that can provide significant benefits to businesses and address their underlying needs.