Advisers Can Help Plan Sponsors Set Goals for Their Plans

When plan sponsors set goals to improve their plan, they should tap their partnerships with the retirement plan recordkeeper and adviser, according to industry experts. 

It’s typical for a plan sponsor to set two or three goals in a calendar year, although this varies, says Richard Tatum, president of retirement services at Vestwell.

Whereas plan sponsors “traditionally” concentrated on overall average participant savings rates and overall average participant rates, a broader set of goals are being examined, Tatum says. “We are starting to see that a lot of [plan] sponsors and advisers are looking [at] plans more in-depth with different populations because a lot of companies have a very diverse workforce,” he says.

Dissecting and examining workplace demographics helps them set achievable goals, he explains. “They want to see is the plan working for each different demographic group in their company,” and also for workers across the income spectrum, Tatum says.

Plan sponsors want to know more about the employee population, and want information on lower-paid employees, he adds. “Making sure that you look at the participation and savings rates of lower-income workers—coupled with the saving rates of higher income workers—and making sure that you don’t take a one-size-fits-all approach,” is important, Tatum says.

He suggests that the plan sponsor partner with an entity that understands their plan-specific needs, knows the retirement space, and can provide benchmarking and other measurement plan tools.

As goal setting has changed, plan sponsors have also broadened their focus to helping participants with myriad financial challenges, not only saving for retirement, but also including resources for financial wellness and emergency savings. Plan sponsors have increased interest in providing participant solutions for other financial events that workers need to close the savings gap, Tatum says.

Plan sponsors can also improve the plan to align the eligibility dates for benefits to help increase retirement savings, particularly for plans that use auto-enrollment, he adds. “When workers see all their benefits go live at the same time, they’re more apt to continue to participate as opposed to if you have one that’s lagging that kicks in at a later date,” Tatum says.

Considerations for the plan sponsor setting the goals are that the programs and improvements are communicated clearly, are simple and easy to understand, Tatum adds.

Ultimately, plan sponsors must also ensure that the nuts and bolts of the payroll operations system can handle any change that is made, he notes. 

Plan sponsors also must consider timelines, says Greg Adams, consultant at Fiducient Advisors.

Most plans he works with will pursue an annual goal that is targeted and specific, he says. “It could be something along the lines of a financial wellness education campaign, that we would talk to our clients about in the third quarter of 2021 with a target to deploying calendar year 2022,” Adams explains. “Looking at Roth features, auto-enroll, auto escalate—depending on when they’re trying to accomplish things— we’d see that with a specific timeline out 12 months previous or something like beneficiary designation.”

He adds, “some things fall into that annual target ‘we want to try to get this done in calendar year 2022, or 2023,’ but the goals of improving participant outcomes should be pretty consistent.”

Plan sponsors are better off depending on their recordkeeping partner and retirement plan adviser vs. going it alone, suggests Adams. “We work in concert with the client and the recordkeeper to see what we can do to try to move the needle as far as the participant outcomes go,” Adams says. “The recordkeeper is going to be able to give us a bunch of reporting on topics like website utilization and interaction, call center utilization and interaction, [and] when somebody goes online, what are they doing?”

During quarterly meetings each year, the plan sponsor will meet with Fiducient representatives, “as well as with the relationship manager representative from their recordkeeper to talk about what tools and resources they have to deploy,” Adams explains.  

He adds, that there’s a lot of participant level-data that the recordkeeper is going to have and can produce co-branded materials relative to anything that’s going to move the needle from the participant experience.

When the plan sponsor has set its goals, tracking progress to the goal is key. One tool is a plan health scorecard to manage the plan’s features. These compile features that have been turned on and off to conduct an ongoing review of each aspect of the plan, Adams says.

“It’s great to put together these campaigns, but if you’re not keeping score, how do you know if you’re winning or not?” he says.