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3 Ways to Jumpstart your Employees’ Retirement Savings

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Chad Parks is Founder, President, and CEO of Ubiquity Retirement + Savings, formerly The Online 401(k), has helped savers contribute over $1.4 billion towards their retirement since 1999. As one of the first flat-fee-for-service small business plan providers in the nation, Ubiquity delivers peace-of-mind with zero hidden-fees in the fine print. The company is headquartered in San Francisco with satellite offices from coast-to-coast. Read More...

Parks started out as a broker in the financial services industry by growing a portfolio of individual clients at San Francisco’s Piper Jaffray. Driven by a desire to better serve his clients while anticipating the phasing out of the traditional broker model, Parks left Piper Jaffray in 1997 to obtain his CFP designation and start his own fee-for-service, independent financial planning practice, Retirement & Education Group, Inc.

In his financial planning practice, Parks came across many small business owners looking for cost-effective and quality retirement plans. Finding the small business market highly neglected and underserved, Parks saw the opportunity and took it by launching The Online 401(k). Today, Ubiquity serves more than 7,000 small business customers in 50 states, providing solutions both directly and through partners, such as Zenefits, Charles Schwab & Co. and Morningstar, as well as payroll companies, financial planners and CPAs.

Parks has been quoted in many financial services as well as national publications such as The Wall Street Journal, The New York Times, Fox Business, Yahoo! Finance, USA Today, CNN Money, Bloomberg Wealth Manager, Business Week, Entrepreneur and Plan Sponsor for his considerable work performed in the space of small business retirement as well as his foray into documentaries with his independently produced Broken Eggs Film, released in 2014.

With his extensive work in Washington DC in getting legislation passed in order to stop the practice of hiding fees in the fine print, Parks has become the go-to expert on public policy as it relates to 401(k), as well as the looming retirement crisis in America, and what we can do to fix it.

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December 9, 2015 at 10:47 am
Institutional Retirement Plans

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Having a retirement plan in place is a great way for your business to attract and retain talent while allowing your employees to save for the future, while paying less to the IRS.

However, there are a lot of misconceptions about retirement plans that may keep employees from enrolling. Here are some ways to help businesses navigate these often jargon-heavy waters.

1) Automatically enroll employees

I regularly encounter business owners that want their employees to save, yet see a low adoption rate. As the saying goes, “You can lead a horse to water, but you can’t make it drink.” Offering a retirement plan is not always enough to get people saving. However, if you automatically enroll your employees in a plan, you are empowering them and removing barriers to entry.

The Employee Benefit Research Institute published its 2015 retirement confidence survey (PDF), which offered some enlightening statistics. When an employer automatically enrolled employees in a retirement plan, deferring 3 percent or 6 percent of their salary, at 3 percent, 50 percent reported they would raise their contribution while 39 percent would remain at 3 percent. Just 4 percent would reduce the contribution or stop the contribution altogether. At a 6 percent deferral rate, three in 10 would raise the contribution and 44 percent would continue the contribution. Astoundingly, only two in 10 would reduce the contribution and only 3 percent would stop it altogether. That’s a strong argument in favor of automatic enrollment, to say the least.

2) Consider a match

Even a small amount of a match encourages employees to save. Free money for your employees also means a greater tax savings for you. The major bonus in the employer match is attracting and retaining talent. According to 401khelpcenter.com, the average company provides 2.7 percent of pay, with the most common type being a fixed match. A match is basically a free raise that goes toward your employees’ future and is an easy sell, benefiting everyone.

3) Remove the scary from the conversation

There is a significant distrust of Wall Street these days and with good reason. The collapse of the market that threw us into a recession is still fresh in the minds of most people.

However, saving rates for millennials are higher than any other generation, which is counter to what one would think, when confidence continues to be at an all-time low. The good news is that the Financial Technology (FinTech) revolution is emerging in a significant way, offering transparent online saving vehicles that lack the stiff jargon that used to be present with big banks and financial institutions across the board.

Whomever you choose as a provider, it’s important to ask questions to ensure you are making the best decision for your business, while also ensuring that you and your employees are retaining the majority of your hard-earned and compounding dollars. Make sure you are in a “fine-print-free-zone”. Providers that are worthy of your money will offer you and your employees exceptional tools and information to ensure you are making sound decisions for your future. In today’s FinTech world, you and your employees should experience retirement savings as simple as point, click, save – no paper, no fuss, no jargon.

Establishing a retirement plan in the workplace doesn’t have to and should not break the bank. Make sure you do your homework and ask the hard questions. Increasing participation and getting the free tools to do so should be included in any plan you engage with.