Simple changes advisors suggest can make a hug difference to the success a participant’s retirement plan
Even in the best of scenarios, retirement plan participants
could be doing everything right and still be missing their retirement income
targets. Yet employer-sponsored retirement plans often accommodate a
generalized portrait of its plan participants.
That becomes apparent when advisors are choosing plan options that speak to both millennials and Baby Boomers. The needs of each group can have some overlap, but the goals may be vastly different. Many advisors address these differences by offering tried-and-true investment options that can help all employee groups grow decent retirement reserves.
Still, there are ways for retirement advisors to help plan
participants boost their portfolios within the confines of a group plan
offering menu. Here are a few methods advisors can bring to the table:
Retirement income is what matters to your plan participants, not so much a
wealth of menu options. Fund ratings and reputations are important, but only in
the context of how fund performance translates into retirement income. That’s
where advisors can create real value for their clients. Help them think about
retirement savings from an income perspective. Work with participants to get
them planning for how much they want to have in monthly or annual income
post-retirement, and they’ll be better positioned to choose their menu options
participants identify their investment profile: There’s no such thing as
one-size-fits-all in any facet of life. The same holds true for retirement
investments. When putting together plan options, create each one with specific
participant segments in mind – those who want a hands-off, advisor-driven
approach; those who want a collaborative effort, and; those who want to go it
Bring tips and tricks
to the table: Even your go-it-alone plan participants may not realize all
the money they’re leaving on the table. Advisors can go beyond the “maximize
your company match” advice by educating plan participants on such things as
saver credits, Roth 401(k)s, 403 (b) and 457 plans, if applicable, and
retirement income fund strategies.
Push for automatic
escalation: Most plan participants don’t realize their 401(k) may come with
an auto-escalation option. Educate participants in how to best increase their
annual investment rate in a way that is barely noticeable, such as tying the
increased investment to events such as the annual raise. By framing the
incremental increases alongside raises in income, advisors can alleviate any
fear the participants may have about affording the savings increase.
take advantage of new tax regulations: When the Treasury Department in 2014
created the tax framework by which investors could convert retirement funds
into longevity income annuities, it became possible for investors to lock into
a guaranteed, lifetime income stream. For some participants, an LIA could
improve their retirement cash flow picture.
non-work-related investments: To help employees be better prepared for
retirement, advisors should review plan participants’ entire investment
portfolio, not just those that are part of an employer-sponsored plan.
Everything from time shares to partnerships to real estate purchases impact
retirement savings. Knowing where
participants are putting their money helps advisors get a clearer picture of
each participants’ needs, and allows for more confidence that plan participants
will be able to avoid financial shortcomings.
Retirement readiness goes beyond menu options, single-source providers, and traditional advice. The retirement advisor can help plan participants build a comprehensive plan that supercharges their retirement potential.
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