Okay, well, it’s not JUST about the money. I think one of the biggest misconceptions about offering a 401(k) plan is that it is a money thing. Clear your ears out and listen to me here, your 401(k) is worth way more than money to you and to your employees. As an employee and employer, you have to stop limiting your view of the 401(k) plan and start considering its true impact.
As a firm, one of our beliefs is that to truly succeed with money, you have to understand that it is a tool, nothing more, nothing less. A 401(k) plan is simply a tool in the toolboxes of your employees and those tools are there to help them feel fulfilled and make memories. When we analyze people who we think are ready for retirement, we often talk in terms of money like, “I have X in saving and I need to take out Y per month so I am 100% funded for retirement.” What that equation really means is that in order to make memories, it will cost a certain amount which must be in savings to make retirement work. The 401(k) is a memory making tool for your workforce. If you can show employees that your intention in offering this benefit is not only to allow on-time retirement, but also to validate their need for security and ability to make memories, it will start to change your company’s culture.
One of our biggest concerns when working with new plans is when we see the leadership of the company approach the 401(k) as a necessary evil. “I know we have to have it but it’s costly and a liability”. Okay, thank you for that synopsis, Mrs. Glasshalfempty. Yes, it is all of those things, but it is so much more than that, too. The 401(k) is a platform for you to offer education to your employees on financial topics such as budgeting and debt reduction.
Nothing “big brotherish” about it. Employers have expressed to us that they fear they are going to overreach their place in their employees’ lives by offering financial education beyond the 401(k) Plan. In our experience, this is not true. Think about it, your employees spend the better part of their non-sleeping life at work. For the mass population, personal finance isn’t the topic of discussion around the dinner table or on date night, so expecting employees to find time to educate themselves is expecting a lot. However, if you give them the opportunity to discover that knowledge at work, doors open to whole new world! We have lots of data that shows that financially stressed employees have a lag in production and are generally less engaged at work than those who are not. By offering the 401(k) plan complete with a customized financial education and resources to help them learn, your employees start to get the sense that you care. It becomes apparent that you have offered the 401(k) plan because you truly want it to affect their outcomes and not just be a checked box.
Bottom line is this, the 401(k) is a tool and if used correctly, it can build a culture and relationships of value and trust. For the employee, it can offer resources needed to truly get their financial life in order and for the employer, it can create a workforce of financially stable, loyal employees who feel valued and engaged. If you have more questions about the success we have seen with properly run plans, feel free to reach out.
Caleb Bagwell/Employee Education Specialist
John Maxwell Certified Leadership Coach
Grinkmeyer Leonard Financial
Toll-Free: 866.695.5162 / Office: 205.970.9088
1950 Stonegate Drive / Suite 275 / Birmingham, AL 35242