Traditional retirement plan education has failed to move the needle in helping participants achieve a successful retirement outcome. Too much effort is being spent trying to convince participants to become enlightened savers and expert investors. Group education focuses primarily on the benefits of participating in an employer-sponsored plan but does little to address employees’ broader financial challenges that serve as a barrier to saving for retirement. While targeting new participants, group education fails to engage with active participants in a way that helps them stay on track for retirement through their working years and transition effectively into their retirement stage. Similarly, individual participant advice is underutilized by the participants and too focused only on the investing piece of the equation when broader retirement planning is what is needed for most participants.
A successful employee engagement program focuses on helping participants achieve sufficient income in retirement. Multnomah Group supports better retirement outcomes by designing plans that are:
Easy to start – Participants shouldn’t require a 60-minute enrollment meeting and 30-page enrollment manual to be able to start saving for retirement. We believe plans should utilize proven behavioral finance techniques such as automatic enrollment, auto-escalation, and limited choice architecture to eliminate barriers to entry for retirement savers.
Leak-proof – Retirement plans are designed for just that – retirement. Early withdrawals in the form of cash out distribution, loans, and hardship distributions inhibit participants’ success because they pay early withdrawal penalties and taxes, as well as miss out on compound earnings growth and delay future savings. We believe plans should be designed to limit the opportunities for assets to leak out of participants’ retirement savings, enabling participants to stay on track for a successful retirement.
Safe to leave – Since their launch, defined contribution plans have almost exclusively focused on the accumulation of assets for retirement. A generation of employees is now approaching that retirement date with little support provided to them in leaving the workforce. We believe plans should be designed with thought given to distribution, not just accumulation.
Once we have a successful plan design in place, we work with clients and their vendors to develop customized employee engagement strategies. While each plan is unique, our philosophy is to invert the traditional educational model, focusing less time and resources on educating people to enroll in the plan and more on those needing the greatest help: people nearing retirement.