Building Retirement Participation Through Hands-On Advisory Services
With six locations and a staff of over 200 doctors, nurses and support personnel, the client is a leading provider of oncology services in Washington State. Although their retirement plan offered a high-quality array of Vanguard funds, diversified risk-based models, Vanguard target-date funds and a brokerage link option, employee participation was far below expectations.
Because a retirement plan is only as good as its rate of participation, it failed to pass the 2015 ERISA nondiscrimination testing and forced highly-compensated employees who made maximum 401(k) payments to reduce their contribution amount. The plan needed to overcome a number of challenges, and lack of employee education and motivation were chief among them. As of December 31st, 2015 the participant contribution rate was below four percent and the average deferral rate was below 60 percent.
By applying the Garde Approach, our Retirement Services team sought to understand the underlying vision and goals of the client and expand them into a customized strategy. First, we coordinated a plan “reset” between the employer and a third-party administrator to take place on the first day of 2017. All nonparticipating employees would begin the year at an automatic six percent enrollment (unless they actively opted out or chose a different deferral rate). To prepare, Garde representatives spent half of the previous November at each office providing open informational sessions and one-on-one advice. Over a 14-day period, 163 employees were taught to navigate and understand the often confusing retirement landscape as well as discuss their goals, review their current investments and create a saving and investing strategy to assist them moving forward.
On November 1st, 2016, the participation rate was 62 percent and the average deferral rate was 5.42 percent. As of November 2017, the participation rate had increased to 87 percent and the average deferral rate had jumped to 6.5 percent. Leveraging the success of this solution, Garde advisors continued to collaborate with HR to further improve employee engagement by developing 401(k) onboarding solutions for new employees and a regular schedule of onsite meetings with employees to review accounts and goal alignment.