At Kaizen, we understand that providing education to your employees is where the rubber meets the road. The best 401k plan in the world is lousy if participation is low. A plan will only be considered a great plan if your employees think it is great and thus participate at a meaningful level.
Many vendors in the retirement market space limit their employee education to their website with a standard retirement calculator and risk-based questionnaire and access to the fund fact sheets and prospectuses. Others will provide participant education virtually in order to reduce their travel costs and improve their profit margins. That’s all fine and good. But ask yourself, have these methods of education inspired your employees to take their retirement savings to the next level? Probably not.
At Kaizen, we conduct in person group enrollment and one on one meetings knowing that this approach will drive better participation for your organization. With an engaging presentation with easy-to-understand language, we can take your participation rate and deferral rates to the next level. Furthermore, we will meet with your employees one on one for the personal attention they may need. For so many Americans, the 401k is often their biggest personal asset. Should they be directed to a website or logon to a WebEx or virtual meeting to discuss their biggest asset? We don’t think so.
Additionally, there is a domino effect with employee participation rates and deferral rates that impact the cost of your plan that you might want to consider. Higher participation rates produce higher average deferral rates. Higher average deferral rates translate to highly paid employees (defined as 150k in total compensation in 2023) saving more as well due to non-discrimination testing limits. In addition, this has an impact on vendor pricing as many vendors price a plan based on average participant balances and annual cash flow from employee and employer contributions. Plans with higher average participant balances and higher annual cash flows get better pricing.