Employers could be squandering a huge recruiting opportunity with their 401(k) plans
- Most of the respondents (67%) in a Betterment for Business survey described a good 401(k) plan as an "important" or "very important" consideration in evaluating a job offer. But despite the plans' favorable standing among job seekers, 30% of respondents said details about their employers' 401(k)s never surfaced during the job search. Betterment polled 845 employees who work at client employers.
- Other survey results showed 78% of respondents whose employers match their contributions were able to put enough money into their accounts to meet the maximum amount allowed, 46% said a match factored into their decision to take their current job, and 10% of respondents who don't participate in a 401(k) attributed the decision to their employers' lack of a match.
- The percentage of respondents who said they didn't understand their rights when it comes to financial advice remained the same as 2017's survey, Betterment said, but those who did understand (49%) said their plan provider should be a fiduciary. Respondents who were were automatically enrolled in a plan, with set rates and managed accounts, had less need for advice than those who signed up for a plan, Betterment said.
Employers have a two-pronged challenge when offering a retirement plan, as with other benefits: employees should understand what the plan is, and how it works. With 401(k)s and similar retirement vehicles, this means communicating how investing works and the tax benefits that apply and clarifying terms such as "fiduciary," which 28% of Betterment survey respondents couldn't identify.
The results of this and other retirement benefits research demonstrates the need for comprehensive benefits communication strategies. Small group sessions with plan experts, one-on-one meetings for personal advice, teleconferences, and town hall meetings and tech-driven communication (i.e., email, instant messaging, intranet, social media and email) for general information are just some of the ways employers can explain benefits and encourage worker feedback.
A Willis Towers Watson study released in February found that more employers are offering automatic enrollment in 401(k) plans, which resulted in higher their contributions, lowering the number of investment choices and disclosing record-keeping fees.
Valued benefits can be effective tools for attracting and retaining talent, and never more so than in a tight labor market, as Betterment concluded in the survey findings. Although money remains the top incentive for job seekers, benefits hold sway over prospective workers' decisions. HR managers and recruiters have an opportunity to promote their retirement plans and other benefit offerings in ads, interviews and in their employee engagement and retention efforts.