The video is an interview with Kathleen Kelly from Compass Financial, conducted by 401k Specialist, during a meeting of the Nuveen Retirement Outcomes Leadership Committee in Chicago.
Key Points:
- Participant Outcomes: Kathleen discusses the importance of focusing on participant outcomes as an ongoing process rather than a one-time effort. It’s compared to a marathon rather than a sprint.
- Auto Features: She emphasizes the effectiveness of auto-enrollment and auto-increase features in retirement plans, noting that these features, while beneficial, come with their own challenges and require careful management.
- Financial Wellness: Kelly highlights the importance of addressing participants’ overall financial wellness. She notes that even well-designed plans may fail if participants are struggling with other financial issues that prevent them from staying in the plan or deferring contributions.
- Plan Design: She advocates for auto-enrollment at a higher rate (6% rather than 3%) and supports a “Noah’s Ark approach” of increasing contributions by 2% rather than 1%. This approach helps participants reach their savings goals faster and ensures they maximize their employer’s match.
The interview concludes with a discussion about how some clients may only implement auto-enrollment on a prospective basis or add auto-increase features for participants already in the plan.
For more details, you can view the full video here.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
The 401k although a very important component of financial long term health, is only one part. The need for financial wellness must include education on spending, budgeting, banking, debt and much more. Sad to say most people are just clueless.