In partnership with SHRM-Long Island, we had Alan Pfeffer and James Bremis discuss how to help your participants manage their assets both inside and outside of their qualified plans.

This webinar was part of a three-part series, with two more coming up. SHRM credits can be received for attending the webinars live. For the full conversation of Alan and James, you can watch the webinar recording here.

This article summarizes their insights.

An Employer’s Responsibility to Participants

As a fiduciary to retirement plans, employers have a number of different duties of which they must be aware.

Diversification of Investments

Employers are responsible for ensuring the investments offered under the retirement plan are diversified. Offering a broad menu of fund options will satisfy this responsibility. However, it does not make sense to offer too many funds – consider a range of 20-25 funds that hit the major asset categories.

Overseeing Investment Performance

Employers must monitor the performance of the investments offered and keep participants informed of their status. During times of volatility in the market, employers may want to consider meeting with their employees on a more regular basis to ensure everyone is up to date.

Fees Related to Investments 

A primary obligation of any ERISA fiduciary is to look at fees related to the investments. It is the duty of an employer to ensure they are offering the least expensive share class possible. Be sensitive to the share class being bought – is there a less expensive way to buy this fund?

Employee Education

Through offering employee education through an ERISA plan, employers can really help their employees. Further, offering this education satisfies DOL 404(c) which is beneficial for the Plan Sponsor. Without education, the participant doesn’t know how to utilize the investments in the plan. Employee education is a win-win in an ERISA plan.

Financial Wellness and Financial Literacy

Financial wellness is achieved with the knowledge and skills financial literacy provides. As an employer, you can provide the resources to help your employees reach financial wellness.

Rich vs. Wealthy

Being rich and being wealthy are not synonymous with each other. There are a number of stories of people who make large sums of money quickly but then proceed to blow through their funds relatively quickly. In contrast, there are people who maintain wealth because they practice budgeting, living below their means and investing more than 20% of their household income each year.

In regard to estate planning and passing on wealth, certain factors come into play. In some instances, one can pass wealth onto the next generation. In preparation for this possibility, children should be prepared for that role from a young age. As an employer, it’s crucial to be offering this education to employees so they are more prepared for their future from a financial standpoint.

Helping Employees Achieve Financial Wellness

There are different strategies for helping employees become financially literate.

• Bring in knowledgeable professionals who specialize in financial planning
• Engage with employees in a range of different ways: group meetings, tailored education, virtual lessons, mobile app. 1:1 meetings
• Offer financial planning at work: Many employers won’t engage a planner, and employers can do a lot of good by offering this as a benefit.

Resources

For more insights on financial wellness, contact us.