Employee Engagement and 401(k) Success: Strategies for Administrators

Introduction: Why Employee Engagement is Key to 401(k) Success

Employee engagement is more than just a buzzword—it’s the cornerstone of a successful 401(k) plan. When employees are actively engaged in their retirement planning, they’re more likely to contribute regularly, make informed investment choices, and stay on track for retirement. For plan administrators, fostering this engagement is crucial. In this guide, we’ll cover strategies to drive employee participation in 401(k) plans, helping administrators build a financially secure and invested workforce.

1. Understand the Value of Employee Engagement in 401(k) Plans

An engaged employee is one who understands the benefits of a 401(k) plan and feels motivated to contribute. Here are a few ways engagement benefits both employees and the organization:

• Improved Retirement Readiness: When employees are well-informed and proactive about their retirement savings, they are better prepared for retirement.
• Enhanced Employee Satisfaction: A 401(k) plan that is easy to understand and navigate shows employees that their employer values their financial future.
• Reduced Turnover: Employees are more likely to stay with a company that prioritizes their financial well-being, which can reduce turnover and attract talent.

For administrators, creating a culture of engagement starts with clear communication, education, and accessibility.

2. Simplify Enrollment with Automatic Enrollment and Contribution Escalation

One of the easiest ways to boost engagement is to simplify the enrollment process. Automatic enrollment is a powerful tool for increasing participation rates, especially among employees who may be hesitant or unsure about signing up:

• Automatic Enrollment: This feature enrolls eligible employees in the 401(k) plan by default, typically at a pre-set contribution rate. It encourages participation by making it the default choice rather than an option employees have to opt into.
• Automatic Contribution Escalation: Contribution escalation automatically increases an employee’s contribution rate over time, often by 1% annually, up to a maximum limit. This helps employees gradually increase their retirement savings without requiring action on their part.

Using both automatic enrollment and escalation simplifies the decision-making process for employees, allowing them to save more without constant oversight.

3. Educate Employees on the Value of 401(k) Plans

Education is essential for creating an engaged and informed workforce. Many employees, especially younger workers, may not understand how retirement savings will impact their future. Plan administrators can foster engagement by:

• Hosting Informational Sessions: Regular workshops or webinars on the basics of 401(k) plans, investment options, and retirement readiness can make a big difference.
• Offering Financial Wellness Programs: Topics like budgeting, debt management, and retirement planning give employees a broader view of how their 401(k) fits into their financial health.
• Providing Online Resources: Many employees prefer self-directed learning. Offering access to articles, videos, and FAQs through a company portal makes it easy for employees to educate themselves on their own time.

A well-rounded education program enables employees to make informed decisions, maximizing the effectiveness of the 401(k) plan.

4. Communicate the Benefits of Employer Matching Contributions

Employer matching contributions are a major incentive for employees to contribute to their 401(k) plans. However, not all employees understand the value of “free money” from their employer, so it’s crucial to communicate this benefit clearly:

• Emphasize the Value of the Match: Use examples to show employees how an employer match can accelerate their savings. For instance, if you offer a 50% match on employee contributions up to 6% of their salary, demonstrate how much additional savings that match can generate over time.
• Encourage Employees to Maximize the Match: Remind employees that if they aren’t contributing enough to meet the match, they’re leaving money on the table. Regular reminders through email, workshops, or one-on-one sessions can reinforce this point.

Clearly communicating the benefits of employer matching encourages employees to take full advantage of their 401(k) plan, maximizing their retirement savings.

5. Use Digital Tools and Platforms for Seamless Access and Management

In today’s digital world, employees expect easy access to their financial information. Using an intuitive platform can significantly increase engagement by making it simple for employees to monitor and adjust their contributions. Consider the following:

• Online Access to Account Management: Employees should have easy access to check their balances, adjust contributions, and change investment allocations.
• Educational Calculators and Planning Tools: Many 401(k) providers offer retirement calculators and other tools that show employees how different contribution levels will impact their retirement savings.
• Mobile App Accessibility: With mobile access, employees can manage their accounts from anywhere, increasing the likelihood that they’ll stay engaged with their retirement planning.

A well-designed platform empowers employees to take control of their retirement savings, helping them make informed decisions about their contributions and investment choices.

6. Foster a Culture of Engagement with Regular Communication

Consistent communication can make a big difference in keeping employees engaged. By regularly sharing updates, tips, and reminders, administrators can help employees stay focused on their retirement goals:

• Quarterly Updates and Newsletters: These can provide employees with updates on plan performance, changes to contribution limits, and reminders to review their investment choices.
• Highlight Success Stories: Share anonymous success stories of employees who are making steady progress toward retirement. This can inspire others to take action.
• Encourage Regular Contribution Reviews: Remind employees to periodically review their contributions, especially after receiving a raise or bonus. Regular reviews keep retirement planning top of mind and ensure employees are maximizing their savings potential.

A consistent communication strategy helps employees understand the importance of 401(k) contributions and keeps them engaged in their retirement planning journey.

7. Encourage Personalized Advice Through Financial Advisors

Not all employees have the same financial goals or understanding of investment options. By offering access to personalized advice, administrators can help employees make decisions that align with their unique circumstances:

• One-on-One Financial Counseling: Many companies offer access to financial advisors who can work with employees to create tailored retirement plans.
• Educational Resources on Investment Options: Employees may feel overwhelmed by investment choices. Offering guidance on which funds best suit different retirement goals can reduce uncertainty and boost engagement.

Personalized advice makes it easier for employees to make informed choices and increases their confidence in the 401(k) plan.

Final Thoughts: Building a Successful 401(k) Program through Engagement

Engaging employees in their 401(k) plan is not only beneficial for them—it also enhances the overall success of the program. By simplifying enrollment, educating employees, emphasizing the importance of employer matches, and providing easy access through digital tools, administrators can foster a culture where employees feel empowered and motivated to save for retirement.

Implementing these engagement strategies enables plan administrators to meet fiduciary responsibilities, improve plan outcomes, and create a stronger, more financially prepared workforce.

Global View Capital Management (GVCM) is an affiliate of Global View Capital Advisors (GVCA). GVCM is a SEC Registered Investment Advisory firm headquartered at N14W23833 Stone Ridge Drive, Suite 350, Waukesha, WI 53188-1126. 262.650.1030. Ryan Peca is an Investment Adviser Representative (“Adviser”) with GVCM. Additional information can be found at www.adviserinfo.sec.gov Global View Capital Insurance Services (GVCI) is an affiliate of Global View Capital Advisors (GVCA). GVCI services offered through Experior Financial Group, ASH Brokerage, and/or PKS Financial. GVCI is headquartered at N14W23833 Stone Ridge Drive, Suite 350, Waukesha, WI 53188-1126. 262-650-1030. Ryan Peca is an Insurance Agent of GVCI.

These views do not necessarily represent the views of GVCM or any of its affiliates. Investment involves risk.