Empowering Employees Through Retirement Education: A Win-Win Approach

Providing investment and retirement plan education for employees is essential—not just for helping them reach their financial goals but also for reducing your organization’s liability and fulfilling fiduciary obligations. In today’s complex retirement landscape, plan sponsors often feel overwhelmed by the myriad decisions related to running the plan, let alone ensuring that employees are adequately educated and empowered to make informed choices about their financial futures. 

In our discussions with plan sponsors, we find they are often asking questions such as: 

• What resources do we have in place to support employees in making informed investment decisions? 
• How can we ensure that all employees, regardless of their financial literacy, understand their retirement options? 
• What steps can we take to protect our organization from potential liability while empowering our employees? 

By equipping employees with the knowledge and resources to navigate their retirement plans, you not only enhance their financial literacy but also foster a sense of security and confidence in their ability to achieve long-term financial stability. 

Many misconceptions exist regarding ERISA §404(c) plans. For example, merely offering a mutual fund lineup along with some Morningstar profiles does not equate to meaningful retirement plan education. ERISA §404(c) protection is about adhering to a structured process, and many plans fall short in this regard. Below are some effective steps and strategies to take in bringing your plan into alignment with requirements while fostering a more informed and confident workforce. 

Steps to Compliance with ERISA §404(c) 

Enhancing Employee Understanding of Investment Options 

Enrollment Meetings:

• Provide a comprehensive overview of the plan’s features.
• Help employees understand how to effectively utilize the investment options available to them

Broad Financial Education

Offer foundational insights into how a retirement plan fits into an individual’s broader financial landscape, including how it supports overall retirement planning. 

One-on-One Financial Counseling 

While some advisors may be reluctant to engage in one-on-one meetings without the potential for a product sale, employers should prioritize finding advisors who offer personal counseling to employees. This support can encompass everything from assisting with investment selections on the recordkeeper’s website to broader financial planning. 

The Role of Advisors in Minimizing Liability 

As a plan sponsor, you can rely on your advisors for comprehensive and unbiased retirement plan education. This partnership not only helps minimize liability under ERISA §404(c) but also cultivates a supportive atmosphere where employees can truly understand and optimize the options available within the plan. 

Engaging group sessions and personalized one-on-one meetings can provide participants with the guidance they need to feel confident in navigating their retirement plans. This support helps employees make informed decisions about their financial futures, ultimately leading to greater peace of mind and enhanced retirement readiness. 

As the landscape of retirement planning continues to evolve, so does the way we approach education. Emerging trends, such as digital learning platforms and gamification strategies, are transforming how we engage with financial education. These innovative methods make learning more interactive and accessible, nurturing a culture of continuous growth and understanding among employees. 

If you’re looking for personalized advice that fits your plan’s unique situation and your participants’ specific needs, we invite you to connect with our team of retirement plan advisors. We’re dedicated to helping you and your employees make the most of your retirement planning journey, ensuring you feel supported every step of the way. 

The information contained in this document is provided for informational purposes only and should not be construed as individualized advice. For individualized advice, please consult with your adviser.