March 10, 2025 | By Theresa Conti, Industry Consultant
As a plan sponsor, you have a critical responsibility to educate your employees about their retirement plan. While some communications are legally required, others simply support your employees in making informed financial decisions. By offering a retirement plan, you empower employees to take control of their financial future. Here are five key tips for effectively communicating the benefits of your 401(k) plan.
Every retirement plan should have a financial advisor. A skilled advisor plays a vital role in guiding both plan sponsors and participants. They assist employees in understanding investment options, making informed decisions, and recognizing the long-term benefits of consistent contributions. Additionally, financial advisors collaborate with plan sponsors to establish and monitor appropriate investment offerings, ensuring the plan remains competitive and beneficial for all participants.
Many financial advisory firms offer resources to promote financial wellness, which is crucial for employee productivity. Studies show that employees distracted by financial stress can lose up to three hours of work time per week, and nearly 40% of employees experience such distractions. Providing financial education—through workshops, budgeting tools, debt management strategies, or one-on-one coaching—can improve employees’ financial well-being, ultimately benefiting both them and the organization.
Many employees may not realize how valuable it is to have access to a retirement plan. Only about one in three small employers offer a 401(k) plan, making it an important benefit that sets your company apart. If your organization provides employer matching or other contributions, be sure to emphasize this advantage—it’s essentially free money for employees’ futures.
Finally, don’t hesitate to remind employees that the plan exists for their benefit. A well-communicated 401(k) plan not only helps employees build retirement savings but also enhances employee morale, retention, and recruitment. Employees who understand the value of their retirement plan are more likely to participate, setting themselves up for long-term financial security. As a plan sponsor, celebrating your commitment to their future can lead to higher engagement and appreciation.
By implementing these strategies, you can ensure employees fully understand and take advantage of their 401(k) plan—leading to better financial outcomes for them and a stronger workforce for your company.
