Barbara Williams, CFA
Bridgebay Financial, Inc.
Every plan sponsor wants to provide a well-managed, competitive employee benefits and retirement plan that delivers a secure retirement for its employees. A key challenge for plan sponsors that have expended a great deal of effort in striving to deliver a high quality, highly valued retirement plan is determining how to measure the success of the plan.
An ideal way to develop goals to measure a plan is to benchmark the plan and compare it to comparable employers or those that it considers to be in its peer group. This peer group is typically defined as the other employers with which the plan sponsor competes for talent. Comparative plan surveys can provide benchmarking information that can offer insights as to how the plan is performing and serving the needs of its participants.
Comparing the survey information with the plan's statistics enables the plan sponsor to identify, quantify and establish measurable goals to improve their plan. By setting goals and timetables to achieve those objectives, plan fiduciaries can better monitor the overall health of their plan to meet participant satisfaction.
Role of the Recordkeeper
Recordkeepers have extensive statistical information on the plan that can be used to set up metrics and to monitor success. Maintaining and compiling plan statistics is an important service that the plan's recordkeeper can provide. It is well worth using a recordkeeper with robust systems that can record and track key plan metrics necessary to measure and monitor trends in the plan and progress toward meeting its goals.
Role of a Retirement Plan Advisor
The retirement plan advisor can work with plan sponsor and the recordkeeper to establish metrics, set goals and evaluate results. They can advise the plan sponsor in developing objectives, milestones and an implementation schedule. These metrics can be specific, quantifiable goals to be achieved according to a timeline and used to measure the improvement in their plan's success.
The retirement plan advisor should introduce best practices for promoting plan success:
- Monitor trends in participation rates
- Seek to improve contribution rates
- Prudently offer a menu of investments that promote asset allocation and diversification
- Educate participants with the goal of achieving financial literacy
- Promote retirement readiness
- Identify and monitor trends
- Innovate with plan design
- Benchmark against peers and innovative plans
Following a consistent process for implementing and measuring success enables plan sponsors to see positive trends that are both rewarding to the participants and the employer.