401k Employee Education Best Practices

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PSI Newsletter and Website Header 10.2.15
By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

Have you started planning for this year’s employee education sessions? Make sure you implement the employee education best practices shown below.

Employee education best practices:

  • Start by constructing an Employee Education Policy Statement outlining your goals and objectives for your employee education sessions. Most plan sponsors never put together this document and as a result, have no idea if they are achieving any worthwhile education objectives.
  • Include behavioral finance elements in your sessions. Worry, regret and confusion surround employee plan decision-making. Helping employees understand how to manage the emotions behind their fears will give them a better shot at reaching retirement readiness.
  • Incorporate retirement readiness concepts into your curriculum. Plan participants should understand your responsibilities as an employer and theirs as plan participants.
  • Employee education best practices include the use of short, fast-paced, fun employee education sessions. No session should be longer than a half hour. Most should be closer to 15 minutes. Consider leveraging technology to provide on-demand employee education.

And you should also consider…

  • Plan misperceptions. Many 401k plans were created with generous loan and withdrawal features and sold to employees as good places to save for a down payment on a home, a child’s college education, etc. Research has shown that participants aren’t contributing nearly enough to fund their retirements, much less down payments on homes, kids college educations, etc. Your employee education sessions should strongly discourage use of your 401k plan for anything other than retirement savings.
  • Loans and withdraws. It is never a good financial decision for a participant to take a plan loan or withdrawal. Make sure your employee education sessions explain why.
  • Company match. Most 401k plans have a sizeable employee population that still does not contribute enough to receive the maximum employer matching contribution. Your employee education sessions should stress that this is the best investment any participant can make. If they do nothing else, participants should contribute enough to receive the maximum company match.

Review your employee education strategy today and implement these employee education best practices!

________________

About the Author
Robert C. Lawton, AIF, CRPS is the founder and President of Lawton Retirement Plan Consultants, LLC. Mr. Lawton has over 30 years of retirement plan consulting and administration experience and has provided consulting services to many Fortune 500 companies including: Aon Hewitt, Apple Inc., AT&T, First Interstate Bank, Florida Power & Light, General Dynamics, Houghton Mifflin Harcourt, IBM, John Deere, Mazda Motor Car Company, Northwestern Mutual, Northern Trust Company, Trek Bikes, Tribune Company, Underwriters Labs and many others. Mr. Lawton may be contacted at (414) 828-4015 or bob@lawtonrpc.com.

About Lawton Retirement Plan Consultants, LLC
Lawton Retirement Plan Consultants, LLC is a Milwaukee, Wisconsin-based independent, objective Registered Investment Advisory (RIA) firm providing investment advisory, fiduciary compliance, employee education, vendor management and plan design services to 401(k) plan sponsors. The firm currently has contracts in place to provide consulting services on more than $400 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or bob@lawtonrpc.com or visit the firm’s website at: http://www.lawtonrpc.com. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.

Important Disclosures
This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.