Your employees may be concerned about their current and future financial situations. They may worry whether their retirement money is safe, if they should make changes to their retirement allocations, if they should stop making contributions to their plans and whether you will continue to provide a company match.
This provides a great opportunity for you to educate employees about preparing for retirement and to the importance of saving, managing their accounts and not neglecting their future financial needs.
Why Concern Yourself with Your Employees' Retirement Worries?
You may not realize it, but it is in your best interest to help employees cope with their financial concerns. Troubled employees are not as productive, engaged or committed to their work; significant stress can also negatively affect job satisfaction and engagement in one's career. Therefore, it makes wise business sense to take a proactive role in educating your employees and helping to calm fears about their financial futures.
Here are some recommendations to address employee concerns:
- Do not leave responses about the economy to your retirement account vendors, or simply avoid discussing it completely. Ignoring the problem does not make it go away.
- Messages about the company's financial future and retirement should come from your business leaders and in their own words. If your CEO delivers a message that is clearly a script, it will not be as effective.
- Highlight the tools employees have to assist them in managing their accounts successfully. However, refrain from giving any financial advice. Consider providing financial seminars hosted by experts.
- Acknowledge your employees' concerns and showcase what the company is doing to move forward. For instance, if you need to decrease the company match to your 401(k) plan, identify the action steps that the organization is taking to recover.
In addition to addressing employee concerns, you should communicate the following messages:
- Employee 401(k) plans are separate from the company completely. Therefore, the success or downfall of the organization will not affect how each individual's retirement account fares.
- Avoid making rash decisions, as you have some control over your 401(k). Pulling money out of the account or halting contributions could prove costly in the future.
- Consider other retirement income sources.
- Re-evaluate your risk tolerance during this economic struggle. If you cannot take the turmoil, place your money in stocks or bonds that are less risky.
- Make sure your portfolio is balanced and in line with your risk tolerance, which is highly dependent on your age and other factors.
Beyond these messages, educate your employees on how the company governs your retirement plan. Your employees should know the governance process, how the board assesses whether you are charged fair fees, whether the plan is competitive, how you benchmark investment management and fund success, etc. If they understand how your retirement plan works, they may be more at ease and less likely to panic about their financial future.
For further questions, please feel free to contact Berends Hendricks Stuit here or by calling us at 616.531.1900 to speak with a specialist on financial planning.