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What is the point of a retirement plan?

Benefits used to be a way to attract fantastic talent and work ethic. Now so many are mandated/so highly regulated they bleed negativity from the "owners" level. 

Therefore let's get to the bottom of the purpose of a retirement plan. First and foremost, to attract and retain good employees. Why is it that we've forgotten that? Pricing pressure has put these retirement plans in a near-free situation for the employee if the employer is willing to put in a few bucks on the front end. Yet, these plans are overlooked with a penny-wise, pound-foolish lens of a bean counter with zero understanding of an employee's mindset. Even with the employer paying zero into the plan, no match, no nothing, most of the time, we can get those plans to a sub 1% all-in pricing. 

The problem is some business owners, too, do not understand the mindset or the behavior of their employees. If a business is successful enough to attract high-end employees, that business owner has shown some success and has "outperformed" any asset class available in a retirement plan. Therefore pushes the envelope of risk downstream on their employees, often "advising" even if in small nudges, to invest elsewhere. With reluctance, these successful startups open an insurance-driven retirement plan, which should be illegal. The reason for these as a go-to plan is that they can hide more than the standard plan, thus offering the employer a "free" plan, pushing an abusive fee structure onto the participants. Ironically, these poor participants were getting nudges against index investing and charged upwards of 2-3%. That means the market or index, in this case, needs to make 2-3% just to break even; how wildly difficult to do if you are starting the race so far in the rears. No wonder these so-called "financial advisors" get such a strong grip on their prey. "See, I've outperformed your retirement plan, and you are in the S&P500" Lemmons hears this as "my advisor outperforms the S&P 500." When in fact, they underperformed by 1 or 2% and are charging you 1%.

Let's get back to the point, why have a retirement plan to attract and retain good employees? Therefore, put a little time and effort into your retirement plan. How much do these employers pay for their "recruitment" or their HR managers that spend most of their days recruiting? How much does it cost to have a plan that wow's the employee, pennies on the dollar! Not only that, but the behavior of the workforce is changing rapidly, and the plans are not. 

Fundamentally retirement plans have become sales pools for whomever the provider is. A conflict of interest. And the poor sap that signed the paperwork as the fiduciary, aka plan administrator, will be held accountable for the decision to hire said thieves. 

Take a good look at your retirement plan. Is its first and foremost goal to benefit your employees? Does your so-called advisor put your employees first? Does your third-party administrator put your employees first? Or are they both cross-selling and just waiting for your "whales" to retire?! 

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