Addressing Employee 401(k) Concerns in Face of Economic Turbulence

With the market roller coaster ride we've all been enjoying recently, people (including you and me) are rightfully concerned about their retirement nest eggs - specifically, their 401(k) plans.  Given that, and as I posted here last week, it is disappointing to learn that employers are lagging in responding to this concern with information and support.  According to a recent Economic Anxiety Poll (October 1) conducted by Elliot Masie, only 7% of workers indicate that their employers have held workshops or briefings on 401(k) management.  One can only hope that this situation has been remedied a bit in the intervening days.

But.

For those organizations that have not yet responded - or are still mulling their response - to employee 401(k) fears, Capital Associated Industries, an East Coast employers association, shares a few tips for responding to the situation:

1. Don't give financial advice. Employers can give employees the resources they need to make decisions, but CAI advises against giving employees advice on selecting stocks and where they should invest their money.

2. Educate employees on their options. CAI recommends companies talk with their employees on restrictions and penalties if they want to withdraw money from their 401(k). Employees need to be educated on the mechanics of their plan.

3. Bring in investment advisors. Companies should enlist their plan vendor to work with employees on their individual investment strategies. Employers need to make sure their employees are engaged in a conversation with financial and investment advisors about their 401(k).

4. Urge a long-range perspective. Employers need to reinforce to employees that a 401(k) is a long-term investment and help them understand they are investing for retirement.

5. Release benefits statements. Employees often underestimate the value in their hidden paycheck. CAI recommends employers share with their employees all the benefits they offer to help them learn the value of their paycheck and what vacation and holidays are worth.

6. Reassure employees of safeguards. Make sure employees know their 401(k) is audited and heavily regulated by the Department of Labor and the IRS. Employees need to be reassured the money they are investing is segregated from the company's general operating funds.

Readers:  Those of you who have already taken steps to address employee retirement concerns, what advice can you add to this?

Image: Creative Commons Photo: "Thunderbolt Roller Coaster" by Jamie Lantzy

Comments

[almostgotit]

Advice? Um -- "Drink heavily and recycle?"
http://www.korrektiv.org/2008/10/401-keg-plan.html

[Totally Consumed]

I've struggled a bit with the first one, "Don't give financial advice". What do you do when an employee is overly insistence and feels offended when you won't share any financial gems of wisdom?

Or when an employee is about to do something REALLY STUPID like pull his/her life savings and bury it in their yard?

Or when an employee wants to take out a rather substantial loan from their 401k to invest in a time-travel company their nephew told them about?

There's got to be some situations in which it's ok to give out some sound words of caution ... right?

[Ann Bares]

Almost:

What a great link. At times like these, sometimes all you can do is laugh. (and drink. and recycle.)

TC:

Words of caution, maybe. Financial advice (particularly little gems of investment wisdom), I'm thinking no. Because, I would guess (and I am not the expert here, merely sharing advice from those who allegedly are), of a little something called liability. That's my take.

Thanks, both, for sharing your thoughts on the post.