Retirement Gateway from Equitable Launches for Small Business

401(k) program seeks to serve small and startup plans by easing demands on plan administrators.

Equitable, the financial services organization and principal franchise of Equitable Holdings, Inc., has launched a new 401(k) program for small businesses, including those with startup plans and plans with account values of up to $500,000.

Retirement Gateway for Small Business, as the program is named, seeks to bring a simplified onboarding and administrative experience to the micro 401(k) market. Connecting plan sponsors and advisers to a third-party administrator, who can assist with plan design, implementation and ongoing administration, will help cut the time spent on getting plans up and running, a company press release says.

Get more!  Sign up for PLANSPONSOR newsletters.

All new Equitable 401(k) clients with plan account values of up to $500,000 have access to Retirement Gateway for Small Business. The program offers packages of services—some of which are made available through partnerships with unaffiliated third-party providers—to help ease demands on plan administrators and improve participant outcomes. These services include:

  • 3(16) administrative fiduciary: Compass Retirement Consulting Group, Inc., a retirement plan consulting firm, will serve as plans’ TPA and 3(16) administrative fiduciary for the Retirement Gateway for Small Business program;
  • 3(38) investment fiduciary;
  • Auto-enrollment; 
  • Stadion managed accounts as the qualified default investment alternative; and
  • 360-degree payroll integration.

Financial Stress Increases the Need for Participant Communications

Knowledge of the challenges participants are facing creates opportunities for advisers to connect.

Market volatility, the rising cost of living, fears of not having saved enough for retirement and concern about Social Security are among the financial topics weighing on the minds of retirement plan participants.

Knowing this can help retirement plan advisers connect with participants and provide valuable insights, according to speakers at the 2022 PLANADVISER National Conference in Scottsdale, Arizona.

Get more!  Sign up for PLANSPONSOR newsletters.

Retirement plan advisers may find themselves acting more as financial psychologists than financial advisers, because participants are stressed about the rising cost of living and market volatility, said Sean Kelly, vice president and financial adviser at Heffernan Financial Services, during a panel session titled “Participant Mindsets and Communication Strategies.”

Another panelist, Kelley Palmer, senior director of participant marketing at John Hancock, emphasized that U.S. households are feeling pinched. Even among households earning more than $250,000, 30% are living paycheck to paycheck and “stresses are across the board.”

As a result of growing fiscal stresses, retirement plan participants are looking for help making the most of their retirement savings, and advisers can use that information to increase and improve communications.

Palmer presented data showing that the share of employees seeking help with financial planning has risen consistently since John Hancock started tracking the topic in 2018 and is now at the highest level ever. Within this year alone, the share of employees that would like help with financial planning rose to 75% from 73%. Nearly 80% of people surveyed said they could use help choosing investments in the period between May and August, up from 76% in the first four months of the year, her data showed.

Kelly said when the stock market is volatile, it is important to encourage participants to stay the course with their investments. He recommended communicating with participants about the proximity in time of the worst days in the stock market to the best days. Sharing data from the early part of the COVID-19 pandemic, Kelly showed that some of the worst trading days of 2020 happened in February and March, while some of the best days were in March and April.

He said it is important to show that selling out in reaction to a bad day can cost an investor the opportunity to be in the market when it goes up.

“Time in the market is better than timing the market,” Kelly said, adding that it important to communicate to participants that “with market timing you have to be right twice,” when you sell and when you buy.

In addition to advice about markets, both Kelly and Palmer said that Social Security is an important topic to communicate about with plan participants.

Palmer said it is also important to provide participants help forecasting what their income will look like in retirement. Other topics she suggested for communication with participants included accessing expertise on estate planning, assessing financial wellness and identifying gaps, opening an emergency savings account and understanding educational savings tools.

The panelists also suggested that the topic of investing in a Roth, or after-tax, retirement account is a good one to engage younger participants, because their longer time to retirement means they could benefit from decades of tax-free growth on their investments.

«

Thank you so much for your interest in our content. Please register to access this complimentary archived content. By registering, you will receive our newsletter which can be opted out of at any time.

 

 

Already Registered? Click here to confirm.