How questions can guide plan participants to their best results
Retirement investing is never one-size-fits-all. Yet in the
employee benefits space, it’s often difficult to carve out a plan that fits
both the millennial investor and the 30-year employee looking toward
That’s where objective-based investment plans can help
employees at all career levels create plan options that best suit their
When helping plan participants choose the right investment
plan and mix, advisors can help lead them to the right solutions by asking some
What’s the goal?
Is your participant looking for growth, for a retirement
income source, or for a financial safety net? Go over your participant’s
assets, income, and needs to come to the right goal with them.
Also, make sure their goals align with the amount they’re
willing/able to invest. Too often investors don’t consider how much they can
afford to invest, nor do they see how their investment levels can impact the
goal they’ve set.
How long is the investment period?
If your participant is age 45 and looking to increase their
investment portfolio by age 60, that’s going to take a much different strategy
than the 25-year-old investor looking to begin an income-based retirement plan.
How much can your participant set aside in one year? How does that correspond
with the amount of time allotted to meet that goal? Is your investor committed
to sticking with the investment plan over the long term?
What’s the participant’s risk tolerance?
Objective-based planning requires a bit more risk tolerance,
depending on the participant’s age and objectives. If your plan participant is
risk averse, an objective-based investment plan may not be a good fit.
How else will this goal, and the participant’s retirement, be funded?
Is there an employer match? Does the participant intend to make a lump-sum investment followed by monthly or annual investments? What other streams of income will your participant have available at retirement time? Advisors should also understand the investor’s liquidity – what need the investor has for the income and from what other sources will that investor be able to find easily liquidated funds.
That includes getting a comprehensive view of the
participant’s entire financial portfolio – real estate, savings accounts, rents
collected, and more.
When does the participant intend to draw on the account?
Setting a goal of having an additional $200,000 saved by
that 45-year-old once he or she reaches age 60 may not be necessary if the
investor doesn’t intend to start using the investment until age 65 or 70. Ask
your participant where they’re envisioning their retirement dollars coming
from, and go over their accounts with them to see if that vision is realistic.
By getting your plan participants focusing on their goals
from a more comprehensive perspective, you can help them get the most from
their employer-sponsored retirement plan. Questions that get participants thinking
longer term will help them become more actively engaged in their own retirement
Need help developing an objective-based retirement planning process? Give us a call.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.get xpress proposal