Advisors can help Employers prepare their Staff for Retirement

MC&A June Newsletter - Advisors can help Employers prepare their Staff for Retirement

Advisors can help Employers prepare their Staff for Retirement

Advisors can help Employers prepare their Staff for Retirement

Small business advisors say they’re seeing many employees who are not optimally prepared for retirement. It’s a trend that Drew Pritchard, senior vice-president of Reuter Benefits, blames on the education system. “Our system doesn’t allow people to learn the basics of financial planning,” he says.

Every few months it seems another think tank or financial institution releases a poll that shows people aren’t saving enough for their golden years – if they’re saving at all.
And even though the benefits and insurance industry has created retirement resources and tools for employees, such as calculators, planning assistance and even one-on-one counselling, Pritchard says the uptake of these tools has been “underwhelming.”

In small and medium sized companies, there is likely no pension or RRSP match in place for employees, making it even more difficult for them to prepare for retirement. Richard Dobing of Strategic Benefits & Insurance Services in Kingston, Ont., says in his experience, small and medium sized firms are more hesitant to offer retirement savings plans because of cash flow. “If a small company is looking at an incentive for their employees, they’ll usually lean more towards implementing or increasing health and dental benefits,” he says.

Dobing says part of the problem is a lack of education in financial planning. Plus he says employers often hear employees asking for health and dental benefits, and less about retirement plans. For him, it’s about educating employees about the benefits of an employer-sponsored plan so that they will advocate for it themselves. He highlights, for example, that in an RRSP match they are receiving a 100% return on their investment. But even when these RRSP match plans are established, Dobing says only about one in three employees take advantage of them.

RRSP matching can help employees boost savings

When Dobing does get employers on board with retirement savings plans, he says the employees that take advantage are happy with the outcome. “We’ve had employees come up to us after a few years and say they’ve been trying to save for years and years and setting up an RRSP matching plan was the only way they were able to set aside some money.”

Pritchard says strategic communications to different segments of employees can help them become more aware of the benefits of retirement planning and the services small business advisors can offer. This can mean targeting different age groups through their preferred method of communication (social media, e-newsletter, brochures) and also tailoring the information to their specific needs and situations. As a general rule, Pritchard targets employees based on how many years they are away from retirement. For example, those who are 10 years out from retirement may need one-on-one counselling and projections to show them the realities of their situation. For employees younger than 40, the strategy is to educate them on the benefits of starting savings early and compounding returns.

“People are overwhelmed. They have all this information coming at them and it’s not something that’s in the immediate future so it’s hard to get people to get a clear understanding and really take action,” says Pritchard. As professionals, Pritchard adds it’s important to always consider the perspective of the employees. “Listen to them and prepare to engage in what their goals and aspirations are and you can create a plan for them from that.”

excerpts provided by: small business advisor; L.Brown May 2017

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