Why Offer Varied Investment Choices in Your Small Business 401(k)

Author: Siân Killingsworth / 14 Apr 2023 / 401(k) Plan Information

If you’re a small business owner, offering a 401(k) plan can be a great way to attract and retain top talent while saving for your retirement. But simply offering a 401(k) plan isn’t enough; you need to ensure that your plan offers varied investment choices to meet the diverse needs of your employees.

The Benefits of Offering Varied Investment Choices

Diversification

One of the main benefits of offering varied investment choices in your small business 401(k) is diversification. By offering a range of investment options, you allow your employees to spread their investments across different asset classes and reduce their overall risk. This can help protect their savings during market downturns and provide more stable returns over the long term.

Customization

Everyone has different financial goals and risk tolerances, and by offering a range of investment options, you allow your employees to customize their investment strategy to meet their individual needs. This can help them achieve their financial goals more effectively and make them more satisfied with their 401(k) plan.

Attracting and Retaining Top Talent

Many employees (or potential employees) value a robust retirement plan and may choose to work for a company that offers one over one that doesn’t. Additionally, employees who are satisfied with their retirement plan are more likely to stay with their employer long-term, reducing turnover and saving you money on recruitment and training.

Improved Employee Engagement

Employees who feel empowered to make choices regarding their 401(k) plan are more engaged with their retirement savings. By offering a range of investment options, you give your employees a greater sense of control over their financial futures, which can help boost their overall engagement with their work and their commitment to your company.

Increased Retirement Savings

Offering varied investment choices can also lead to increased employee retirement savings. Providing a range of investment options allows your employees to find the right mix of investments that aligns with their financial goals and risk tolerance. This can help them achieve their retirement savings goals more quickly.

Competitive Advantage

A robust retirement plan can be a valuable perk for potential employees in today’s competitive job market–and offering one can give you the edge over a company that doesn’t have a comprehensive benefits package. By offering a range of investment options, you can make your 401(k) plan more attractive to job seekers and help retain your current employees.

Increased Financial Wellness

By providing a retirement plan with a range of investment options, you give your employees the tools they need to make informed investment decisions that align with their financial goals. This can help them feel more in control of their finances, leading to greater overall financial wellness.

 

Ubiquity is not a registered investment advisor and no portion of the material herein should be construed as legal or tax advice. Please consult with your financial planner, attorney and/or tax advisor for advice.