As a retirement plan consulting and services provider, Financial Decisions welcomes small businesses looking to change service providers. That may be because they were dissatisfied with their last provider’s services and fees, prefer in-person consultations and guidance, or simply want to explore other options. Regardless, being informed on your small business’s retirement plan is essential to caring for your business and employees.
Here are five reasons why a small business should consider reevaluating an existing retirement plan.
You’ve had bad service in the past.
As a small business owner, you understand the importance of good service. You make your customers feel valued and expect the same in return from your financial advisor. Unfortunately, sometimes the service small businesses receive from their providers is sub-par, or an area of expertise is missing.
You have probably heard this one before, but you get what you pay for. If you are looking to set up a retirement plan through an online platform, it’s going to be more affordable than direct contact with a person, but you’re not going to get the same level of direct service from an expert. On the other hand, consulting with a financial advisor is much more personal and your business will literally have a seat at the table, but you will be paying a higher price for those in-person services. This is when you should ask yourself: Does my business need consultation and advice when considering a retirement plan, or am I just checking boxes for my employees?
You’re probably paying more than you think you are.
Even when fees seem minimal, you may actually be paying a lot — you just don’t know it. Even though you’ve chosen a low-cost option, you are likely not getting the bargain deal you thought you were. There are built-in fees on investments, called expense ratios, that can add up quickly and do more harm to your small business than good. Recordkeeping fees + administrative fees + outside advisor fees = not a good deal for the service your small business gets in return.
Providers may say they are charging you a monthly fee per person, but there are expense ratios on the investment, so the company shaves off 1 percent of your investment, which gets divided amongst the people behind the scenes. Employees end up paying for it with their retirement dollars, which is exactly what you don’t want. So, while you might think you are saving money for your small business by paying less for financial advice, you are likely to be charged hidden fees that hurt your business in the long run.
You want to see if there are better options to optimize what you are putting in.
While running a small business, you should often ask yourself: is what I have still met my needs? Have my needs changed? If so, always explore your options because having a good workplace retirement plan can make your business more enticing to new employees, and you might even get tax breaks in some cases.
A good place to start is to reach out to your financial advisor (if you have one) for a consultation. This way, you can have an in-person or video conversation about your small businesses’ long-term goals and hand-pick the retirement plan right for you and your employees. However, if you don’t have a financial advisor, you can start with research. Find out what has changed since the last time you updated your retirement program, gauge your employees’ satisfaction with it, and investigate what businesses similar to yours are doing.
You picked your retirement plan years ago when your business was in a different place.
As we all know, life changes. Sometimes change is good. Sometimes change is bad. Regardless of what kind of change we are facing in life, it is important to keep adapting. The same goes for small businesses — as your business grows and you learn from past mistakes, it is important to continue looking to the future and setting yourself up for success.
Many businesses can’t afford to set up a retirement plan for many years while trying to get their business off the ground. Or, those that can choose an inexpensive plan that hardly benefits their employees. Hopefully, you have gained enough momentum along the way that your business is steady and you can afford to provide your employees with a better retirement plan. This will instill a sense of security in employees and set them up for a successful future. And successful employees who feel secure are typically going to be more productive and loyal.
As your business evolves, so should the platforms you use.
New technologies are created every day to help you and your business succeed. It is in your best interest to explore the different financial provider platforms out there and find out which resonates best with your business. The best place to start is by finding out whether you prefer online or in-person services. From there, do your research and either sign up on a platform or reach out to the financial advisory firm of your choice.
Having a good retirement plan for your small businesses shows your employees that you care about them and value their hard work. Additionally, in states like California, Oregon, and Connecticut, if you do not have a retirement plan set up, you may be forced to sign your business up for a state-sponsored retirement plan depending on the size of your business. This will not be in your employee’s best interest, so you want to avoid this if possible. Having a good retirement plan will help your business and its employees thrive in the long run.
Tolen Teigen is Chief Investment Officer of Fred M. Lee Corp d/b/a Financial Decisions and Financial Decisions, Inc.
Financial Decisions, Inc., is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability.
Financial Decisions, Inc and Fred Lee Corp d/b/a Financial Decisions are related entities. Fred Lee Corp d/b/a Financial Decisions is not a registered investment adviser and does not provide investment advice.