401k Employee Education

In an effort to keep clients and business partners up to date on 401k employee education trends and developments, Lawton Retirement Plan Consultants, LLC (LRPC) suggests the following resources.

401k Best Practices: Employee Education. Have you started planning your annual 401k employee education sessions? Generally, most plan sponsors conduct employee education sessions during the early part of the new year to explain changes that went into effect on January 1. As you think about your annual education sessions, keep the 401k education best practices in this post in mind.

401k Employee Education Tip – Helping Participants Make Better Decisions. Behavioral finance studies have shed new light on how investors make decisions. Study results recently shared by Fidelity Research have illustrated the concept of regret as it relates to decision making. Investors experience “action regret” when making a poor investment decision. In contrast, they experience “inaction regret” when choosing to do nothing when given an opportunity to make an investment that proves to be successful.

401k Employee Education Tip – Overcoming Ambiguity. Recent behavioral finance studies have shown that most participants invest too conservatively. As a result, most are not on the road to building an account balance large enough to fund the sort of retirement they expect. How can employers help plan participants become better investors? Helping employees understand and overcome ambiguity is a good first step.

401k Employee Education Tip – Overcoming Worry. We all worry. You might be surprised to learn that the worry we devote to our 401k plan investments has been studied. Worry is never constructive. It is even less helpful when it alters the way we manage our 401k plan investments. Behavioral finance studies have shown that the more we worry about our investments, the more conservatively we invest.

Adding A Leg To The Three-Legged Stool. The three-legged stool approach to retirement planning may have to change.

BlackRock Interview With Robert C. Lawton (PDF). Robert C. Lawton, President of Lawton Retirement Plan Consultants, is interviewed by former Wall Street Journal editor and BlackRock executive Kelly Greene on how to design the best 401k plan.

Educate Your Employees On Using HSAs In Retirement Planning. If you offer a High-Deductible Health Plan (HDHP) to your employees, they probably have the ability to contribute to Health Savings Accounts (HSAs). I believe that nearly everyone eligible to contribute to an HSA should max out their HSA contributions each year. Here’s why.

Employee Education Policy Statement Can Help Set Goals (PDF). Rather than just abandoning your 401k employee education program, or resigning yourself to mediocre results, consider taking a harder look at your process by constructing an Employee Education Policy Statement.

Five Items For 401k Participants To Review. Recently PLANSPONSOR put together a nice list of ten items 401k plan participants should review. Inspired by that list, this post contains five action items that you may wish to consider sharing with your employees in your annual employee education session.

Help Your 401k Participants Make Better Investment Decisions. Every time we experience volatility in the markets, some of your 401k plan participants decide to sell out of equities (locking in losses) because they get scared. Others know they need to increase their contribution rate to capture your maximum company match, but they never act. Why do participants do these things? Justin Goldstein has written about the behavioral finance concepts that underpin these actions. In this post, I have taken these concepts and added my thoughts on how you can help your 401k participants overcome these destructive behaviors.

Help Your 401k Participants Manage Risk. Helping your participants understand and manage risk is an important step on the journey to helping them become successful investors in your plan.

Help Your Employees Become Successful 401k Plan Investors. In order to invest successfully in their 401k plans, participants should be aware of the keys to being a good 401k plan investor. Consider sharing the strategies outlined in this post in your next employee education session.

Helping Your 401k Participants Cope With Volatile Markets. Volatility is often present in equity markets. During times of significant volatility, your 401k plan participants can become very nervous. Plan sponsors and their investment advisors should help participants remain calm during periods of intense market fluctuation by sharing the suggestions in this post.

Hottest Executive Benefit. Looking for an important new executive benefit to share with your leadership group? Something that can really make a difference? If you offer a High-Deductible Health Plan (HDHP) to your employees, all of your executives should be maxing out their contributions to their Health Savings Accounts (HSAs). Take a look at this post to learn why.

How 401k Participants Can Avoid Sabotaging Their Returns. Dalbar has reported that the average equity mutual fund investor experienced returns of 5.5% in 2014 compared with the S&P 500 Index return of 13.69% — more than 8% less. The folks at Dalbar conclude that the performance differences because they are so large, are attributable to bad investor decision-making.

How To Use Active Management In Your 401k Plan. A passive investment management approach is appropriate for many 401k plan participants. But indexing isn’t right for everyone. Many participants are not satisfied with market average returns. Nor do they feel it makes sense to lock-in 100% of every market decline. Those are only a few of the reasons to consider active investment management. This post lists many others.

Key Ways To Help Your 401k Participants Become Better Investors. Your 401k plan participants have developed bad habits and make many investing mistakes. Dalbar calculates that for 2016 the average equity investor earned a little more than 7% while the S&P returned nearly 12%. Many of those investors are 401k plan participants. This post outlines some of the investing errors your participants often make and suggestions on what you can do to help them avoid the most common investing mistakes.

Most U.S. Workers Not On Road To Retirement Readiness. Believe it or not, one-third of all people between the ages of 55 and 64 haven’t saved anything for retirement. The average amount saved by those individuals 10 years from retirement: $12,000. What can these individuals do so they can retire someday?

Retirement Readiness: Employee Responsibilities. In order to achieve retirement readiness, employees need to take the actions outlined in this post.

Retirement Readiness: Employer Responsibilities. The plan attributes outlined in this post have become associated with a 401k plan that is designed to help participants achieve retirement readiness.

Retirement Readiness: Resetting Expectations. Most of us are not on track to fund an adequate retirement for ourselves. What can we do?

Six Important 401k Education Tips. When I lead 401k employee education sessions, employees often ask me what they should be doing in their 401k plan. I share with them the six items contained in this post.

Study Gives Edge To Roth 401k Contributions Over Pre-Tax 401k.  A frequent question I get from 401k plan participants is “What type of contributions should I make Bob, Roth 401k contributions or traditional pre-tax 401k contributions?” After reading the results of a study that was published in The Wall Street Journal, my answer has changed. Making Roth 401k contributions appears to be better for everyone!

This Is How Much Money You Need To Retire. How much do your 401k plan participants need to accumulate in their accounts in order to retire without making significant lifestyle adjustments? The experts disagree. Learn about the items that impact participant financial needs.

Using Behavioral Economics To Help 401k Participants. 401k participants need to overcome the obstacles listed in this post in order to achieve retirement readiness. Find out how you can help them master these challenges.

Using Behavioral Finance To Help With 401k Decision-Making (PDF). Recent behavioral finance studies have shed new light on how investors cope with the challenges of making financial decisions. Study results shared by Fidelity illustrate why many 401k plan participants make such poor decisions. Learn what is keeping your participants from making better decisions and what you can do to help.

Using Neuroeconomics To Improve Employee 401k Decision-Making. A white paper titled “The Silent Value: Advice for the 21st Century” describes the challenges most of us face when attempting to make good financial decisions. Using the science of neuroeconomics (a combination of economics, neuroscience, and psychology) the authors state that many of us hamstring ourselves by maintaining various biases and emotional connections that end up resulting in bad investment decision-making. The white-paper shared the neuroeconomic tendencies that lead to poor individual financial decisions. I have included suggestions on how to overcome these biases with your 401k participants.

What’s The Right 401k Contribution Rate? T. Rowe Price, the mutual fund giant, recently completed a study which recommended the percentage of gross income that participants should add to their 401k plan accounts each year to achieve retirement readiness.

What Retirees Wish They Would Have Known. Your employees have hopes and dreams about what their retirements will look like. Right now they are following a retirement planning path they hope will lead to a better way of life when they are no longer working. Unfortunately, there are many stumbling blocks and wrong turns they can experience on their journey. Recent studies have uncovered some important retiree regrets that you can share with your employees in your 401k education sessions to help make their paths to retirement more successful.

Wider Use Of Online 401k Education Expected. Many experts believe that 401k employee education, in its current form, does not work. This post outlines why I believe it is just a matter of time until all employee education migrates to the Internet.

Additional Resources

Understanding Retirement Plan Fees and Expenses, from the DoL

Consider downloading this 28-page booklet from the Department of Labor (DoL) if you are looking for information on 401k plan fees to share with your employees or your leadership group.

Retirement Toolkit, from the DoL

Your employees who are close to retiring should consider reviewing this fact-filled pre-retirement piece published by the Department of Labor (DoL).

Unsure if the fees you’re paying your 401k providers are reasonable?


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12 Low-Cost Ways to Improve Your 401k Plan

After working with hundreds of 401k plans for more than 30 years, I have compiled a list of low-cost quick fixes that can make a big difference in your 401k plan. Click the button below and complete the form to download the list.