401K Insights and 5 Ways to Improve Participant Engagement

July 09, 2021
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What’s interesting to see with Defined Contribution plans today is the continued time and expense dedicated to these benefit arrangements, typically by an executive or the business owner, and very little, if any, time is dedicated to educating the participants about their options within the plan itself. According to a report released by Fidelity in Q1 of 2021, Baby Boomers have a tremendous amount of exposure to market volatility, putting them at risk so close to their retirement years. I see this scenario all too frequently and reminisce on the commonly told stories about how shortly after the 2008 Financial Crisis, someone’s mom or dad had to keep working and delay retirement due to the market volatility. The reality is that if your advisor isn’t made available to your retirement plan participants, or if they aren’t regularly communicating with the participants, you may be held liable for failing as a fiduciary to the plan.

Per the Department of Labor, a plan sponsor must provide their participants with sufficient information to make an informed decision (Footnote the DOL Meeting Your Fiduciary Responsibilities). “Have you provided sufficient information for them to exercise control in making investment decisions?” Ask yourself, when’s the last time you held an education meeting or disseminated information to the participants to help them further understand their risk tolerance, benefits of Roth versus Traditional 401k contributions, and so on? If you as a plan sponsor or administrator get face time with the advisor or recordkeeper on an annual basis and your participants do not, how is that perceived in the court of law where you are defending against a conflict of interest? According to a recent post from Benefits Pro (Footnote Here), plan lawsuits are on the rise and I maintain that the sponsor’s exposure is not limited to the typical bullseye pattern of Fees, Timely Contributions, and Privacy concerns.

The reality is there are a lot of resources available to plan sponsors and participants at little to no cost. Here are 5 things you can implement to button up your retirement plan from a participant engagement standpoint:


  1. Ask your plan advisor if they are a 3(21). This will determine whether the advisor on your plan has the legal ability to provide advice or guidance to your participants. To learn more about the difference of a 3(21) versus 3(38), click here: https://www.nipa.org/blogpost/1011572/169845/3-21-Versus-3-38-ERISA-Investment-Fiduciaries--Decoding-the-Numbers
  2. Create a Financial Wellness campaign. Hopefully, you already have an Investment Committee that helps keep things in check from an expense and performance standpoint, but if you aren’t asking for feedback from your participants on how to improve your plan, you are opening yourself up for potential exposure. Per the DOL, you have a responsibility to provide resources to your participants in order for them to educate themselves on their choices.
  3. Hold routine education meetings. This should be done at least once per year, typically around open enrollment. However, I find it is best to hold as a standalone meeting where participants aren’t distracted by other important decisions that need to be made during enrollment periods.
  4. Provide access to content. Monthly or quarterly newsletters about market trends, areas of financial planning, and other tools are great resource to your team members. We send our participants monthly emails and they also have access to our YouTube page where we post content about trending financial planning topics. Check out an example of our newsletter here (LINK TO NEWSLETTER) and give our YouTube Channel a follow here (YOUTUBE LINK)
  5. Adopt Technology into your platform. Studies have shown that participant contributions have increased with plans that have technology-based tools versus not. As an example and depending on your recordkeeper, a solution such as SmartPlan may be included in the platform fee. This is another tool where your participants can engage content on-demand and go through exercises such as “Determining Your Risk Tolerance “ and what your “Retirement Needs” might be. You can access a brief video about SmartPlan here: https://dd33b00f548bd0e5b174-34c7c123ef625aaf0a2f3fe1a0ca2572.ssl.cf1.rackcdn.com/Amertias_SmartPlan_Overview.mp4

Fidelity Link https://sponsor.fidelity.com/bin-public/06_PSW_Website/documents/Building_Financial_Futures.pdf

DOL Link https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/publications/meeting-your-fiduciary-responsibilities.pdf (Maybe Warehouse the PDF version on the Website?)

Benefits Pro Link https://www.benefitspro.com/2021/01/21/401k-lawsuits-on-the-rise-as-participants-target-fees-conflicts-of-interest-and-data-privacy/