Employers, don’t send departing employees out the door with a match they might use to burn bridges and torch your company’s reputation. Offboard them instead—and for God’s sake make sure you discuss what to do with their 401k in that meeting!
New research from New York-based fintech Capitalize, a company specializing in managing 401k rollovers, shows that having an “offboarding” process can significantly impact an employee’s opinion of the workplace, how they review the experience online, and even the way remaining and prospective employees perceive the company.
Interestingly, the research found that offering assistance with transferring a 401k might be the best way to solidify a positive relationship with the departing employee (see chart below). Only one in three employees discussed retirement planning with their employers during offboarding. Of these employees, an overwhelming nine in 10 said they would work for that employer again if asked.
“When looking at the topics discussed during the offboarding process, it’s clear that retirement conversations leave a good impression,” the study states. “Perhaps a company focusing on a onetime employee’s future helps instill a bit of lasting loyalty—a loyalty that often segues into a positive review.”
The study found that 54% of employees who have quit a job left a company review on a site such as Glassdoor, and employees who were offboarded are twice as likely to leave a positive company review.
While many companies offering 401k plans are more than happy to keep departing employee retirement assets in their plan to help them achieve the better pricing that comes along with more assets under management, Capitalize not surprisingly advocates for going the other direction.
“Discussing retirement isn’t just good for employee relations—it’s also financially beneficial for employers,” the research claims. “By the simple act of encouraging outgoing employees to roll their 401ks over into their next endeavors, companies can start to avoid the nearly $700M in extra administrative costs they’re currently losing. When employees fail to take their 401ks with them, the company retains both the extra administrative fees and increased legal risks associated with maintained ownership. Moreover, these situations equate to valuable administrative and HR time lost.”
Capitalize surveyed 1,251 current employees to learn how the offboarding process can impact an employee’s eventual relationship with a company, with an eye toward learning more about how positive exits can turn former employees into loyal alumni as well as how company reviews influence prospective applicants.
SEE ALSO:
• More Than a Trillion Dollars Stuck in ‘Forgotten’ 401ks
• How Fees Factor in 401k-to-IRA Rollover Decisions
• What 401k Advisors Need to Know About Auto Portability
• Bankrate Users Gain Access to Capitalize 401k Rollover Platform
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
I found it interesting when you said that it is beneficial to fix every employee’s retirement plan for their life. My best friend informed me yesterday that he wants to start putting together his retirement plan so that he can have a peaceful and safe retirement, and he asked if I had any suggestions for him. I appreciate your instructive article, I’ll tell him that consulting a retirement planner is a far better option because they can answer all of his questions.