When you live in an economy with historically low unemployment rates, the competition for top talent can be fierce. From student loan repayment programs to onsite day care to enhanced retirement benefits, employers are becoming more creative when offering incentive plans that persuade quality employees to choose them. It’s an employee’s market. Therefore, employers need to know what employees’ value and retirement plan advisors can help by knowing the important trends and keeping their retirement plan client’s informed.

Here are three ways retirement plan advisors can discuss competitive total rewards practices that recruit, reward, and keep great employees.

Offering an employer match

The average employer match is 4.7% of salary, which is a record high, according to Fidelity.^[1] As an advisor, this could be an opportunity to discuss your clients’ current match formula and compare it to the national average and/or industry specific averages. When smart employees are comparing benefits, the retirement plan match can add up to meaningful dollars towards achieving retirement success.

From a prospecting approach, search the Form 5500 database and look for plans that do not offer a company match. Then contact the plan sponsor to discuss how offering a match could help to recruit great employees.

For prospects and clients, if employers are hesitant because of increased costs, guide them through a plan design benchmarking analysis to learn the possible scenarios and cost impacts.

This exercise could be valuable as a way to evaluate the employer’s current plan offering, and at the same time, discuss the effectiveness of their overall plan.

Applying a vesting schedule

In an employee-driven economy where there is a sense that everyone needs to cater to employee wants, often times vesting schedules are overlooked. Remind your employers that they can still have control.

To help employers feel more comfortable about increasing the match or providing enhanced benefits, share with them that they can use a vesting schedule to reward tenured employees. Whether the vesting schedule is a defined percentage every year or a 3-year cliff, the employer has options.

Common vesting schedules

• Option A: Year 1 = 20%, Year 2 = 40%, Year 3 = 60%, Year 4 = 80%, and Year 5 = 100% Vested
• Option B: Year 1 = 0%, Year 2 = 0%, Year 3 = 100%,
• Option C: Talk with a TPA for more vesting schedule options

One last comment about vesting schedules, if an employee leaves before they are fully vested, the non-vested employer dollars go back into the plan’s forfeiture account. From the forfeiture account, the employer can usually use that money to pay plan administrative expenses, off-set company contributions, or allocate as additional company contributions.

In other words, your plan sponsors are not losing the contribution, rather, they are rewarding loyal employees by reallocating those contributions or putting them towards future plan expenses.

Establishing goals

Set up a communication and implementation plan with the retirement plan committee to establish plan goals. Not only will this help the employees find the track to retirement, it will also help with the company’s bottom line results. It has been proven that “financially well” employees have lower health insurance premiums, lower absenteeism/presentism, and have higher productivity.^[2]

Advisors have the ability to keep their clients informed by discussing these three ideas to better help them recruit and retain employees. Then by tailoring a retirement plan that aligns with employee wants and the employers’ budget, this creates a winning total rewards program.

Use these ideas when sitting down with employer prospects and clients. With this bull market, many employers are facing different challenges. By thinking about alternatives, you are presenting solutions that they might not even be aware of. Take this knowledge to your prospects who don’t offer a match, only used a Safe Harbor, have a straight profit sharing formula, and then partner with a TPA to educate them on additional options.

As employers struggle to find quality employees, teach them how offering retirement plan benefits can help them to recruit, reward, and keep the best employees.

[1] https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/press-release/quarterly-retirement-trends-050919.pdf

[2] https://www.forbes.com/sites/nazbeheshti/2019/01/16/10-timely-statistics-about-the-connection-between-employee-engagement-and-wellness/#4ac7a83a22a0