their accounts. While vendors should be held
accountable for educating participants, HR
professionals can add a personal touch. After
all, they have a closer relationship to employees than any outside consultant and can take
advantage of that connection to drive home the
importance of retirement planning.
“Nothing in vendor e-mails is going to prompt
changes in [employees’] behavior,” Gardner says,
but the “avenues of personal relationships” available to HR practitioners might. Have face-to-face
conversations and utilize other internal communication channels as much as possible.
In addition, keep in mind the importance
of personal context. Each worker’s financial
situation and goals are unique, and 401(k)s
are just one component of financial wellness.
Health care spending, student debt payments,
mortgages and the like all impact employees’
retirement contributions. Ultimately, your
aim is to “get people to come and participate
in the process of managing their investments,”
“The best-laid plans are useless unless you
can explain them,” says Gregg Levinson, a
Philadelphia-based senior consultant for Willis
Towers Watson. “Education isn’t a panacea, but
DON’T WORK IN A VACUUM W hile you might have to spend time in the weeds, never lose sight of the bigger pic- ture. “Retirement savings have to be seen
in the context of everything else that’s going on,”
Levinson says. Besides considering the impact of
health care expenses and other fnancial obligations on retirement contributions, keep an eye on
wider economic issues, too.
“Employers need to be aware of how the econ-
omy impacts individual behavior,” Reynolds says.
After a downturn, for example, “are [employees]
taking out more loans? Are they taking money
out of their plans?”
Regularly monitor investments and participant
activity for behavior that jeopardizes retirement
security. When you sense that people aren’t mak-
ing the right decisions for their futures, consider
ofering more-detailed guidance.
“Are employees investing too conservatively than
their time horizon should allow for?” Saradella asks.
“Are deferral rates [employee contributions] low?”
Such warning signs, which can be found in the aggregate data record keepers provide, could indicate
that it’s time to make adjustments.
“You may need to change your communications
or plan design,” Reynolds says.
AN ONGOING PROCESS M any employers view their duty to manage their 401(k)s as an annual event: Once a year, HR and other company ofcials—
and any consultants hired for the purpose—
review the plan’s setup, and then its operation
is left to the record keepers and other vendors
until the following year. But the job’s not that
simple. “You have to monitor things regularly,”
Saradella says. “Once a year isn’t enough.”
Track changing demographics. If your work-
force is fairly young, your investment strategy will
difer from that of a company whose employees
are, on average, well into middle age.
Review investment managers every quarter,
Reynolds recommends. This typically includes
monitoring performance against metrics defned
in the investment policy, such as comparisons
against benchmarks and peer groups, she says.
Most benefts professionals suggest conducting a full review of your provider every three to
fve years. Determine whether you can perform
an adequate assessment on your own or if you
should hire a consultant to cover all the
details. Your decision will depend
on your capacity. “I’d say it’s
certainly easier to bring
in some outside help
when going out to
the market to evaluate 401(k) record
keepers, but it’s not
impossible to do
this work in-house,”
Saradella says. Whatever resources you use,
most experts believe issuing
a request for proposal is the best
way to compare providers.
It takes a lot of work to oversee a 401(k), but it’s
manageable. It “is all about process, and there’s no
perfect,” Bremen says. “Sponsors need to know about
tools, practices and sufcient governance process.”
And if the job seems thankless at times, take
comfort in knowing your work is helping your
company’s bottom line and shaping employees’
Mark Feffer is a freelance business writer
based in Philadelphia.
Managing a 401(k) ‘is
all about process, and
there’s no perfect.’