Financial Advisors: Do Your Clients’ Employees Know Their Enrollment Status?

Did you know that some employees aren’t aware that they are not contributing to a company-sponsored retirement plan? This could be due to many factors, including unclear enrollment information from their current employer or confusion when changing employers. As a financial advisor, you have a prime opportunity to help your business-owner clients properly prepare and inform their employees of the necessary steps to take to participate in the company-sponsored retirement plan.

Key Takeaways:

• There may be confusion regarding auto-enrollment or moving from plan to plan
• Ensure your clients are keeping their employees informed of their retirement plan options, participation status, and updates.

Factors that could cause confusion:

You may be wondering, how could an employee not know if they’re participating in a company-sponsored retirement plan? Believe it or not, it’s a pretty common occurrence. A survey conducted by Principal found that 59% of workers believed that they were contributing to a plan when they were not. Additionally, 49% believed they were automatically enrolled; and 41% thought they signed up for it themselves during the on-boarding process. Lastly, 77% said they started saving as soon as they became eligible to do so.

So, what leads to these mistaken beliefs? It could come down to issues such as:

• Unclear plan design–Some retirement plans offer non-elective contributions which mean participants don’t have to contribute in order to receive the employer contribution. This could cause employees to think they are participating in the plan when they actually are not.
• Confusion based on past participation–Employees may be used to working for companies that automatically enrolled them in their plan. They may also think that their previous deferral election to their employer’s plan was automatically continued in their new employer’s plan.

How to ensure your clients keep their employees informed:

Communication is key when it comes to ensuring your clients’ employees are aware of their retirement savings option. As a best practice, make sure they set aside time to educate new employees as well as their seasoned employees on their retirement plan options and answer any questions that may arise.

Encourage your clients to reach out to their employees in a variety of ways including emails, mailings, and more, to ensure that they know their participation status and are aware of any important plan information.

Working with a plan provider that offers helpful tools and education can also help prevent miscommunications. For instance, ePlan Services provides participants with a participant dashboard which allows them to make adjustments to their contributions and helps them determine how much they might need for retirement.

Conclusion:

It may seem hard to believe, but many employees are simply not aware of their plan participation status. Don’t let this happen to your clients’ employees. Ensure that they are set up for success by helping them keep their employees informed.