Robert Brokamp, The Motley Fool
When I first began working at The Motley Fool, a financial multimedia company, the 401(k) plan was… well, underwhelming. This was back in 1999, and the company was just a few years old. As can still be the case with young companies, the Fool couldn’t afford a match or to cover much of the cost of the plan. Also, the market serving small businesses was not as robust as it is today. So we employees paid via annual fees and not-cheap mutual expense ratios. Fast-forward a few years later, when we began to recover from the dot-com crash: Two other employees and I asked the company for a better plan. And since the Fool is a very employee-centered company that appreciates a measure of moxie, the powers-that-wearjester- caps said, “Sounds great! Form a committee and help improve our plan.” Which is what we did. More than 15 years later, the core of this committee still meets quarterly, evaluating our investment choices, monitoring employee behavior, and looking for ways to increase participation and savings rates. Today, 97% of employees contribute to their accounts, and most are contributing enough to take full advantage of a match that the company eventually implemented (and then increased, thanks in part to some additional nudging from the committee). The high participation rate has been aided by the committee deciding to implement auto-enrollment for new employees, and auto-escalation that moves employees to the fully matched amount (9%) by their third anniversary. Yes, the Fools who formed this committee are more financially savvy than the average worker. (I used to be a financial advisor, still maintain my CFP® practitioner designation, and spend my working days writing and podcasting about retirement.) But the real lesson here is that employees can band together to advocate for more features, lower costs, better investment choices, or a new plan. This must be done respectfully and with appreciation that they even have a plan; approximately a third of private employees don’t have such a benefit, according to the Department of Labor. But many people who are responsible for choosing a company’s plan may not be fully aware of all the possibilities. With a little education and collaboration, employees might be able to take control of their retirements by helping craft a better 401(k) for themselves and their colleagues.
What actions have you taken to inspire non-participants to participate in the 401(k)? Please explain, being as specific and detailed as possible.
Each month, I teach a class about our 401(k) to new employees; current employees are welcome to attend as a “refresher.” Also, in 2010 I helped launch our first Financial Health Day, which is now a Financial Health Week. These events feature classes (led by internal and external teachers), one-on-one time with experts (again, both internal and external), and the Fool encouraging employees to use company time to tackle personal financial tasks. (Each employee is given a checklist in case they need ideas.) Each year, Financial Health Week includes a class about retirement planning, of which our 401(k) is the foundation. Also, in some years, our 401(k) provider has taught a class.