Five Ways To Get Young Clients Interested in 401(k)s – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Health/Employee Benefits News
Topics
    • Life Insurance
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Content
    • Webinars
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
Sign in or register to be an INNsider.
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
  • Insider
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Advisor News
Health/Employee Benefits News RSS Get our newsletter
Order Prints
February 17, 2017 Health/Employee Benefits News No comments
Share
Share
Tweet
Email

Five Ways To Get Young Clients Interested in 401(k)s

By John Hilton

Despite widespread satisfaction with 401(k) plans from older participants, younger people, especially millennials, say plans are cumbersome, archaic, and confusing, new studies find.

Betterment and The TransAmerica Center For Retirement Studies surveyed participants as both firms seek ways to get the 401(k) option back on track for Americans aged 35 and under.

Millennials want to embrace their 401(k) plans – most consider them to be the surest path towards a decent retirement, according to the TransAmerica study.

But there is plenty the financial services industry can do to upgrade the retirement plan experience for the under-35 set.

InsuranceNewsNet.com contacted several retirement experts and asked them what they would do to improve the 401(k) retirement plan experience for younger career professionals. Here’s what they said:

1. It starts with plan security. In a September 2016 study, Willis Towers Watson reported that the number of millennials “willing to pay a higher amount for a guaranteed retirement” from their employer was on the rise. That number increased from 42 percent in 2009 to 59 percent in 2016. Employees of all generations, including millennials, are feeling vulnerable about their long-term security.

“Employees young and old actually have a strong desire for more retirement security and are willing to give up pay to get more guarantees or a larger retirement benefit. Interestingly, employees seem to be saying they have enough health coverage now and are reluctant to pay more,” said Steve Nyce, senior economist at Willis Towers Watson, located in Arlington, Va.

“Employees young and old actually have a strong desire for more retirement security and are willing to give up pay to get more guarantees or a larger retirement benefit. Interestingly, employees seem to be saying they have enough health coverage now and are reluctant to pay more.”

2. Offer more investment options. The best way to improve the 401(k) is to have more offers besides mutual funds, experts say. “Take the example of self-directed IRAs. They offer real estate, precious metals. real estate loans, the ability to purchase individual stocks or bonds, and many more attractive offers,” said Collin Plume, president of Noble Gold Investments in Pasadena, Calif.

“There’s no reason that today's consumer should be limited to the mutual funds that their employer has available. In today's inflated paper markets investors want the flexibility to control their investments and not be tied down to the conventional stock market options.”

3. Customize plan offerings. 401(k) plan providers would do well to “nudge” employee behavior toward their best interests, especially toward the default investment plan selection.

“I had a client whose employer had defaulted her into a very low-yield bond fund, and since she didn't have the employee education mentioned above, it had been four years. The problem? The employee was just 26 when this started.

She missed out on a great period of returns in the equities markets because of the default option,” noted Ryan Frailich, a financial coach and planner with Deliberate Finances, a financial planning firm based in New Orleans.

While target date funds aren't perfect, they're a great solution as a default option to get a diversified portfolio with an appropriate measure of risk based on retirement age.

“Had my client been defaulted into a target date fund, her money would've grown at three-to-four times the rate it did in the bond fund during that period,” Frailich added.

4. Embrace technology. In the Willis Towers Watson study, six in 10 millennials wanted digital access to their 401(k) plans, including the ability to change their investments. That’s just one of many examples of why technology is a game changer for younger investors, and plan sponsors should be quick to climb on board, analysts say. Start with a live, internal FAQ session for plan participants.

“This is where employees can post questions and the experts can answer via a televised live session on the employee’s computer,” advised Winnie Sun, founder of Sun Group WP, in Irvine, Calif. “More than likely, many employees have similar questions so this allows them to ask efficiently, and the answers will likely help others.”

Since some staffers may be offsite or tied up in a meeting, the idea is to make the advice and accessibility as easy as Facebook.

“This doesn’t include investment advice questions which should be handled on a one-on-one basis,” Sun added. “A representative assigned to the company should be able to field ongoing questions post meeting. This also gives the employer an idea of how engaged their employees are and whether or not the 401k provider/advisor is providing adequate value.”

5. “Personalize” the 401k Experience. Along with any good investment account is good advice, retirement experts say.

“Millennials want advice that is personalized to them, not canned advice that feels like calling a 1-900 number for intimacy,” said Daniel Grote, a financial planner with Latitude Financial Group in Denver.

Consequently, a greater number of companies are offering self-directed brokerage windows on their plans. An unintended bi-product of this is that many large company plans allow participants to have their financial advisor added to the plan for direct supervision of the assets and personalized advice.

“Unfortunately, this is a slow evolution in part because it's not necessarily been done by design and the financial advice industry is still largely unaware of the intricacies of setting these up,” Grote said.

By and large, younger career professions are okay with their 401k plans, but they do see plenty of room for improvement. For plan sponsors, and the companies that partner with them on 401(k) programs, that should be a wake-up call from the next of retirement savers – who expect a better plan experience, and aren’t shy about saying so.

Brian O'Connell is a former Wall Street bond trader, and author of the best-selling books, The 401k Millionaire and CNBC's Guide to Creating Wealth. He's a regular contributor to major media business platforms, including CBS News, The Street.com, and Bloomberg. Brian may be contacted at [email protected]

© Entire contents copyright 2017 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

VA Product Lines See A Wave Of Changes

Newer

New Labor Secretary Nominee Brings Legal Mind to Fiduciary Debate

Advisor News

  • Teach your clients effective strategies for today’s retirement
  • Consumers are pulling back on spending. They're also tapping savings and taking on debt.
  • Banks announce dividend plansTruist, Wells Fargo, Bank of America announce dividend hike plans
  • Jerry Shenk: Social Security demagoguery
  • Rick Kahler: My state flunked financial literacy. How about yours?
More Advisor News

Annuity News

  • Winning $300 million Powerball ticket purchased in Middlebury
  • Sammons names Kevin Mechtley to newly created product innovation role
  • Athene completes pension group annuity deal with Lockheed Martin
  • Integrity expands annuity, life insurance distribution with Annuity Agents Alliance
  • Nationwide increases roll-up rate, payout percentage on L.inc+ suite
Sponsor
More Annuity News

Life Insurance

  • Wisconsin seeks policyholders of insolvent Time Insurance Co. products
  • 4 things to know about the return of premium life insurance
  • Murdaugh, Curtis Smith hit with new SC grand jury indictments
  • Foresters Financial boosts UL crediting rate to 4.75%
  • Protective Life releases 2021 sustainability report
More Life Insurance

Property and Casualty News

  • Tropical Storm Bonnie expected in Caribbean, while another system churns in Gulf
  • Cigna completes $5.4 billion transaction with Chubb
  • Insurance hikes just first hit for Surfside, Florida condo owners
  • Own your home in Idaho? You may soon pay more for insurance. A lot more.
  • Editorial: Citizens lawsuit numbers ridiculous burden for Florida residents
More Property and Casualty News

- Presented By -

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

FEATURED OFFERS

It’s time for John Hancock Insurance • See how our cutting-edge solutions can help you grow your life insurance business. Get to know us.
Grow your life insurance business with John Hancock • It’s time to see how our cutting-edge solutions can help you and your clients get to know us.

Press ReleasesAll press releases

  • iPipeline® Provides Advisors Excel with Unified Path Toward Accessing Core Data Analytics in Financial Services
  • iPipeline® Adds Speed of Underwriting to Quote Engine with Ethos to Deliver Insurance to Agents in Minutes
  • National Life Will Host Annual Investor Call
  • RFP #T01622
  • OneAmerica Commits $1 Million Toward Financial Literacy
Add your Press Release >

Topics

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Content
  • Webinars
  • Monthly Focus

Top Sections

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2022 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your INNsider Account

Not registered? Become an INNsider.