VIDEO: 12 TYPES OF FINANCIAL EDUCATION YOUR EMPLOYEES NEED

Posted on by Jerome.Pfeffer

Each of your employees is unique with their own individual lifestyle path. That said, your employees need guidance to make smarter decisions about their money so they can learn not only how to save today but how to build wealth for the future!

Here are the 12 types of financial education your employees need to begin and continue building towards their future.

Jerome Pfeffer, CRC, AIF

Managing Director

INVESTMENT SOLUTIONS GROUP

6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax

Jerome.Pfeffer@lpl.com

www.investmentsolutionsgroup.com

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.

3 WAYS TO CONFRONT YOUR FINANCIAL FEARS

Posted on by Jerome.Pfeffer

30% of Americans don’t have a budget. In fact, 3 in 5 don’t know how much they spend last month, and the median household retirement account balance in America is $50,000.

One if not all of these statistics could exist in your workplace. Here are three ways your employees can take your control of their finances and give their savings a boost for a better future.

Jerome Pfeffer, CRC, AIF

Managing Director

INVESTMENT SOLUTIONS GROUP

6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax

Jerome.Pfeffer@lpl.com

www.investmentsolutionsgroup.com

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.

STOP RETIREMENT SAVINGS SETBACKS

Posted on by Jerome.Pfeffer

The global pandemic has had a staggering effect on the economic lives of millions, driving them to actions that could have long-lasting effects on their retirement savings.

Facing unprecedented strain caused by the COVID-19 crisis, individuals who lack adequate emergency savings are turning to retirement plans to address their financial shortfalls.

Additionally, hardship withdrawals have been made easier by the passage of the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Act expanded distribution options, offered favorable tax treatment for coronavirus-related distributions from eligible retirement plans and relaxed payback options for those who met specific criteria.[1]

A reported six percent of retirement plan holders took advantage of at least one CARES Act provision offered by the plan. Of these withdrawals, 21% took the maximum amount allowed under the Act ($100,000 or 100% of the vested balance).[2]

Plan leakage consequences

Overall, retirement plan leakage – which includes in-service withdrawals, cash-outs at job change and loans – can create savings repercussions and even a delay in retirement, even if the amounts are paid back.

In a single year, Employee Benefit Research Institute (EBRI) reported that $92.4 billion was lost due to leakages from cash-outs.[3] This is a serious problem as it can reduce aggregate 401(k)/IRA wealth at retirement. Essentially, money withdrawn early loses its potential for growth and interest accumulation, hindering its ability to produce adequate income replacement in retirement.

For those who still consider tapping into their retirement plan savings, they may be doing so as a result of a lack of emergency savings, something that is increasingly prevalent, according to a recent Bankrate study.[4]

These staggering facts point to the importance of having a robust financial wellness program in the workplace and by placing special emphasis on maintaining an emergency savings account, which employers can offer via payroll deduction.

Curbing savings damage

Separating emergency or “rainy day” savings and retirement savings accounts can have a practical impact, too. It can reduce the urge to give into short-term wants and separate long-run retirement savings needs.[5]

Participants should be aware of these financial factors when making retirement plan withdrawals:[6]

Benefits of financial education

Employers should work with retirement plan advisors to find ways to educate participants in today’s remote work environments; for example, an employer could host a virtual employee education meeting.

In these volatile economic times, it’s especially relevant to cover important topics that may help participants maintain a healthy retirement savings strategy including:

Despite the uncertainty brought on by the pandemic, employers can utilize key resources and get help from their plan advisors toward ensuring employees make sound retirement savings decisions today, and in the future.

Jerome Pfeffer, CRC, AIF

Managing Director

INVESTMENT SOLUTIONS GROUP

6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax

Jerome.Pfeffer@lpl.com

www.investmentsolutionsgroup.com

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.


[1]Internal Revenue Service “Coronavirus-related relief for retirement plans and IRAs questions and answers.” irs.gov. March 2020.

[2]T. Rowe Price. “How the coronavirus is affecting retirement saving.” Sept. 2020.

[3] Employee Benefit Research Institute. “The Impact of Auto Portability on Preserving Retirement Savings Currently Lost to 401(k) Cashout Leakage.” Aug 2019.

[4] Bankrate. “Survey: Nearly 3 times as many Americans say they have less emergency savings versus more since pandemic.” Aug. 2020.

[5]Harvard Business School. “Building Emergency Savings Through Employer-Sponsored Rainy-Day Savings Accounts.” Nov. 2019

[6] FINRA. “401(k) Loans, Hardship Withdrawals and Other Important Considerations.” 2020.

A CFO’S GUIDE TO FINANCIAL WELLNESS

Posted on by Jerome.Pfeffer

When employees are financially stressed, they spend three or more hours a week – approximately 150 hours per year – worrying about personal finances or dealing with them at work.[1]

A financial wellness program is a soft benefit, so if you feel anxious about offering this benefit, you’re not alone. There are a lot of questions to consider:

Here’s your CFOs Guide to Financial Wellness


[1] Mercer LLC, “Inside Employees’ Minds™: Financial Wellness.” 2017, 2, PDF. https://www.mercer.com/content/dam/mercer/attachments/global/inside-employees-minds/gl-2017-inside-employees-minds-financial-wellness.pdf.

NORMALIZE RETIREMENT SAVINGS

Posted on by Jerome.Pfeffer

Many American workers struggled financially before the COVID-19 pandemic. Therefore, it isn’t surprising that this crisis could greatly hinder their ability to reach their retirement income goals.

Indeed, more than three-quarters of employees (77%) say they have been concerned about their financial well-being since the COVID-19 outbreak[1] and 82% will rely on their workplace retirement plan as a primary income source in their post-working years. That is, if they can get there — four in five employees expect to continue working for pay after “retiring.”[2]

In addition, many simply can’t afford to retire; the median household retirement savings is just $50,000.[3] That’s nowhere near the 60-80% replacement income financial experts say most people need to maintain their pre-retirement standard of living.

What does all this say about retirement readiness in America? More importantly, what does it indicate about the effectiveness of workplace retirement plans?

The data above clearly demonstrates that for far too long and far too many Americans, reaching a successful replacement retirement income has been the exception, not the norm. So, it stands to reason that employers must reimagine the function of their company’s retirement plan to help “normalize” saving for the future.

Employers should evaluate their plan’s value through the lens of helping more employees retire on time and with dignity. That means getting employees to recognize that saving for retirement isn’t “optional” if they want to stop working someday. It also means providing them with the right tools toward helping them save enough to replace their income for 10, 20, 30 or more years.

The case for automatic features

How can employers more effectively help employees build adequate retirement savings? It isn’t complicated.

Employers have a ready-made tool in their arsenal that vastly simplifies retirement savings: automatic plan design features. These include auto enrollment, auto escalation and auto-diversification through qualified default investments, such as target date funds.

Auto features have become a best practice in retirement plan design to help improve employee participation and savings rates. In fact, two-thirds of employers who have adopted auto features have experienced a direct benefit to plan outcomes.[4]

Is it better for employers to use auto features to help employees make sound financial decisions for the future? The short answer is yes. Let us show you how.

Help your employees start

With automatic enrollment, employees are enrolled into the plan without needing to take any action — unless they opt out. One obvious benefit of automatic enrollment is that it drives higher participation rates; in fact, plans with this feature have an average participation rate of 87%.[5]

In most cases, employees are enrolled at a default deferral rate of between 3-6%[6], and their contributions are directed to a diversified qualified default investment alternative, such as a target date fund.

Help them save more

In addition, employers can use auto escalation, another plan design feature, to help improve employees’ savings rates over time. The typical default increase is 1% per year. While automatic enrollment improves savings rates, adding auto escalation boosts the impact.

In plans with neither automatic enrollment nor auto escalation, only 44% have savings rates above 10% (including both employee deferrals and employer matching contributions). In plans that implement automatic enrollment only, the percentage of participants with savings rates above 10% increases to 67%. However, where plan sponsors have implemented both automatic enrollment and auto escalation, that percentage rises to 70%.[7]

Help them diversify

Finally, auto-diversification rounds out the auto feature trifecta. Often, this looks like automatically investing participant contributions into a qualified default investment alternative (QDIA) like a target date fund (TDF) or managed account.

This typically occurs when a participant has not made an investment election on their own. Automatically directing contributions to a target date fund or similar investment that is appropriately diversified for a participants’ age and stage of life enables them to appropriately invest for retirement, even though they haven’t actively selected their own investments.

Most TDFs also have an automatic rebalancing feature, so the participant’s portfolio remains properly invested based on their anticipated retirement date, regardless of market performance.

Plan effectiveness is measured by outcomes

Automatic features are a helpful plan design tool that employers can implement to assist employees in getting on track toward having the income they need to retire in comfort. In addition, it’s important for employers to evaluate their plan’s effectiveness based on retirement readiness — because outcomes are what truly matter.

Once auto features are in place, employers should also pay careful attention to plan health metrics, such as projected monthly income (PMI) – an illustration of a participant’s estimated monthly income stream in retirement based on their current savings. Participants with low PMIs may be at greater risk of not adequately replacing their income in retirement.

Another metric, the income replacement ratio (IRR), provides a glimpse of retirement readiness based on a specific income replacement percentage, such as 70%, using current and projected savings. Participants with low IRRs may be at greater risk of running out of money in retirement.

Understanding these metrics and the positive impact of auto features can help you evaluate your participants’ retirement readiness — and your plan’s effectiveness. With these insights, you can intelligently architect your plan to “normalize” retirement savings and help your employees work towards successfully achieving their retirement goals.

Jerome Pfeffer, CRC, AIF

Managing Director

INVESTMENT SOLUTIONS GROUP

6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax

Jerome.Pfeffer@lpl.com

www.investmentsolutionsgroup.com

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.


[1] National Endowment for Financial Education (NEFE)/Harris Poll Survey. April 2020.

[2] Employee Benefit Research Institute (EBRI). “2019 Retirement Confidence Survey.” April 2019.

[3] Transamerica Center for Retirement Studies. “19th Annual Transamerica Retirement Survey: A Compendium of Findings About U.S. Workers.” December 2019.

[4] DCIIA. Plan Sponsor Survey, 5th edition. April 2020.

[5] Alight. 2020 Universe Benchmarks Report. June 2020.

[6] Correia, Margarida. “PSCA: 401(k) participants hike deferral rates again.” Pensions & Investments. Dec. 18, 2019.

[7] DCIIA Fourth Biennial Plan Sponsor Survey “Auto Features Continue to Grow in Popularity.” December 2017.

5 REASONS TO RETHINK FINANCIAL WELLNESS

Posted on by Jerome.Pfeffer

Employees are worried about their finances. They worry about them in the evenings, on weekends and during working hours. Plus, with the increased stress caused by the pandemic, it’s no secret your workforce could use some help.

More than meets the eye

Many employees struggle with cash for emergencies. In a recent 2020 study, they found that 47% of respondents had difficulty finding $250 for emergencies[1] and had to resort to credit instead. While millennials are saddled with loan debt, members of the “sandwich generation” are burdened with dividing their limited resources between themselves, their children and their parents, while still trying to prepare for their own retirement.

Each employee demographic is struggling with their own financial challenges, which is why a dynamic financial wellness program needs to span the generations and provide potential solutions for each unique situation.

How can employers help?

Oftentimes, one of the major problems is a lack of access to financial literacy resources. And it’s a problem that employers can help solve by providing financial wellness programs for their employees. Here are five advantages of a financial wellness program:

  1. Engagement. Are your employees going through the motions or are they creating and sticking to their financial plans? Financial worries can increase employee stress which leads to distraction at work. It has been shown that offering a financial wellness program breeds loyalty and focus. Six in 10 workers say they are more committed to their employer and more productive at work when they have a financial wellness program.[2]
  2. Lower health care costs. Financially unhealthy, stressed employees frequently have higher health care costs. Financially stressed employees may increase corporate health care budgets, as their health care costs run 46% higher than non-stressed employees.[3] Lowering overall health care expenses tend to lead to lower employer costs.
  3. Fewer incidents of “presenteeism.” “Presenteeism” is a term that describes lost productivity by employees who are physically present, but not working. They are distracted by outside work stressors. This stagnant time costs employers in lost wages, lost productivity and reduced job performance.
  4. Retention and attraction. As stated, employees say financial wellness programs demonstrate that their employers care about them, encouraging commitment to the company. Losing employees costs money in recruitment efforts and the training of new hires. Turnover can cost employers 120-200% of the salary of the positions affected.[4] The presence of this program in your employee benefits package may also help attract new talent.
  5. Retirement saving. Employees who have their budgets and debts under control are much more likely to save via their 401(k) plan and increase their contributions as their financial situation improves. These employees are also less likely to take a loan from their 401(k) plan.

Becoming an employer of choice

Joining the employers that offer a financial wellness program can help you demonstrate your understanding that happy, healthy employees are vital for a highly productive company. But keep in mind, helping your employees become financially healthy is a little more complex than it might seem at first glance.

Here are three tips for increasing employee financial literacy:

The ultimate goal is financial well-being. It’s not enough for employees to learn about what constitutes financial well-being; they must put it into action to achieve success.

Having a financial wellness program can benefit your employees in the form of improved employee morale and boost their productivity at the same time. It’s a win-win situation for all.

Jerome Pfeffer, CRC, AIF

Managing Director

INVESTMENT SOLUTIONS GROUP

6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax

Jerome.Pfeffer@lpl.com

www.investmentsolutionsgroup.com

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.


[1] C. J. Marwitz. “Employee Financial Wellness: Looking Ahead to 2021.” BenefitsPro. December 4, 2020.

[2] Prudential. “Wellness Programs Earn Their Place in Human Capital Strategy.” June 2019.

[3] Jane Clark. “Offering financial wellness education could improve employee productivity.” January 29, 2019.

[4] Umass Lowell. “Financial Costs of Job Stress.” 2019..

NEWS AND INFORMATION FOR EMPLOYERS Q2 2021

Posted on by Jerome.Pfeffer

We are excited to welcome Q2 with the theme of Financial Wellness! This quarter, we are going to touch on some important topics that impact your bottom line and the financial health of your employees.

Jerome Pfeffer, CRC, AIF

Managing Director

INVESTMENT SOLUTIONS GROUP

6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax

Jerome.Pfeffer@lpl.com

www.investmentsolutionsgroup.com

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.

VIDEO: 4 ACTIONS TO HELP REDUCE RETIREMENT PLAN LITIGATION

Posted on by Jerome.Pfeffer

Your company retirement plan should be a valued benefit, not an open door for lawsuits!

How can you reduce your fiduciary liability, protect yourself and your participants? Here are four straightforward actions to take to help reduce plan litigation.

THREE PILLARS OF WELLNESS

Posted on by Jerome.Pfeffer

As the seasons change, employees may need a check-up from their employers to make sure they are in good health!

Wellness and self-care during the winter months are especially important. The mental, physical and financial wellness of your employees can directly affect their productivity and the workplace culture. Here is a roundup of action items they can take to improve their overall wellness as the seasons change!

Jerome Pfeffer, CRC, AIF

Managing Director

INVESTMENT SOLUTIONS GROUP

6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax

Jerome.Pfeffer@lpl.com

www.investmentsolutionsgroup.com

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.

THE IMPORTANCE OF A RETIREMENT PLAN COMMITTEE & ANNUAL REVIEWS

Posted on by Jerome.Pfeffer

Retirement plans are complex and have many moving parts; as such, many plan sponsors create retirement plan committees to help keep them running smoothly. They may be called “investment” or “administrative” committees and can range in size.  Regardless of the name or number of people involved, the committee’s organization, process and documentation are key to success.   

One important function of a retirement plan committee is regular, ongoing reviews of the plan’s performance with regard to investments, fees and company goals. Here is an overview of what a retirement plan committee does and the type of information it should review at least once a year. 

What does a retirement plan committee do?

A retirement plan committee is responsible for making operational and investment decisions for the company’s retirement plan in the best interest of the plan, its participants and beneficiaries. Specifically, the committee’s duties typically include:

As such, committee members’ fiduciary responsibility is significant. 

Charter

The retirement plan committee should review the charter each year to ensure it remains relevant to the committee’s membership and how it functions. A retirement committee charter generally details: 

Committee members don’t have to be financial or investing experts. Keep in mind, however, that they are plan fiduciaries, with rare exception.

Investment Policy Statement (IPS)

A primary duty of the committee includes selecting, managing and monitoring of the plan’s investments. The committee should carry out this process according to a specific investment philosophy and strategy outlined in the plan’s Investment Policy Statement (IPS), which typically includes:

However, retirement plan committees must be cautious not to use the IPS as a “catch-all” for plan-related policies. This document is called an IPS because it should focus solely on the management and monitoring of the plan’s investments. Anything else potentially exposes the committee to unnecessary fiduciary risks and liabilities, because once included, fiduciaries must fulfill all the duties set forth in an IPS. Having to uphold those additional, unrelated promises could put the committee in worse shape than having no IPS at all.[1] The committee should review the IPS on an ongoing basis, at least once a year, and revise it as necessary.

Service Providers

The committee should also follow specific criteria for hiring plan service providers, and evaluate their fees and value each year. In short, the committee should determine if the fees are reasonable for the quality of service provided. In addition, the committee should carefully document its decision-making process regarding fee evaluations and the hiring and firing of service providers.

Fee benchmarking

Similarly, the retirement plan committee is responsible for regularly evaluating the plan’s investment fees. A retirement plan advisor can provide the committee with detailed documentation regarding the plan’s fees and expenses. Given the potential fiduciary risks, the committee should ensure that the advisor provides comprehensive information related to investment fees, as well as relevant disclosures concerning revenue sharing and other fees.

Retirement Plan Goals

Annually, retirement plan committee reviews may reveal whether or not a plan is performing in line with its goals. Retirement plan goals should align with corporate objectives. As such, the committee should seek to determine if the plan meets expectations regarding:

If the plan falls short in any area, the committee may elect to change the plan or its design to work towards achieving these goals. 

By reviewing the plan regularly, a retirement plan committee can keep tabs on plan and investment performance and relevant fees, while making adjustments as necessary. A well-informed retirement plan advisor can help the committee stay apprised of the latest and greatest offerings available and assist in making critical decisions about which features and services may benefit the plan and its participants at a reasonable cost.   

Jerome Pfeffer, CRC, AIF

Managing Director

INVESTMENT SOLUTIONS GROUP

6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax

Jerome.Pfeffer@lpl.com

www.investmentsolutionsgroup.com

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.


[1] Chalk, Steff. “Investment Policy Statement Must Stop Short of Promises.” 401kTV.com. September 23, 2020.

← Older posts