I love entrepreneurship. I love that someone can know how to do things differently, do things better, and be more cost-effective and bring it to the market. It can benefit society as a whole. But, you don't see many entrepreneurs that get into business just to carbon copy or be just like everyone else. They have something unique to offer, and just like any company, you have a culture that's part of your company, something that makes working for that company, cause, or mission different from your competitors. But, one thing overlooked is retirement plans.
There are many people that just carbon copy the retirement plans that their competition has. So, how do you make your retirement plan unique, different, and reflect your company culture? Here are four points to consider.
Number one is fees. Now, I know I just talked about making things different. But you must compare costs to the overall plan's size, amount of assets in your 401(k) plan, and the number of employees you have. If you ignore fees, every dollar spent on unnecessary costs is a dollar that your employees could invest in their retirement for the future. So, it's essential to take a look and make sure that you're not overpaying for the provided services.
Now the second thing is your plan design. It's essential to have a plan design that reflects your company culture and what you're trying to accomplish as a company. So, what type of retirement plan are you offering? What eligibility requirements are in place? What is the vesting schedule and match? Are you waiting for people to put a little more before you give more of an employer match? Are you going for a safe harbor plan? There are many things to consider when trying to view how you're structuring your 401(k) plan. So, that's the second thing.
The third thing is financial wellness. Financial wellness is a hot topic. It has increasingly become more important to plan sponsors and plan administrators—ensuring that you're putting something in place for people to save for their retirement and providing tools and education for people to make good solid financial decisions leading up to retirement throughout their life. It's about understanding how to save, budget, understand debts, and best approach these topics. Retirement readiness can be a part of that, but it's more than that; it's education, it's tools, it's part of the culture.
The fourth thing to take a look at is what about the investments themselves. Are the investments conducive to what you're trying to accomplish as a company? What is your mission? For example, if you are focused on heart health but invested in all these tobacco companies, are you furthering your mission and culture? In terms of you know what you're investing in in the first place? Now, you want to make sure you have a diverse selection of funds, but this is a secondary thing that you can consider in your company's retirement plan.
Once again, there are ways you can have a retirement plan that's unique and different, one that reflects your company culture. The four things I look at are:
- Make sure you're not overpaying on fees for the services rendered.
- Take a look at the plan design. Ensure that it is competitive and reflects what you are trying to accomplish as a company.
- Financial wellness is a huge differentiator. Try to make your plan different. Try to create a culture of general financial health.
- Look at the investments and make sure that they're not only diverse and that they meet your investment policy statement. But that they also meet the culture and the mission that you're trying to promote as a company.
These are ways you can be on your way to diversifying and making sure that your plan is more suitable for your company culture.