Recently, we wrote about what we consider best practice for our clients in terms of 401(k) plan design, such as offering a Roth 401(k), the advantages of a Safe Harbor design, and more.

For small businesses, however, there is another important consideration: whether or not to seek investment advice.

Many business owners have no financial advisor partnering with them on their 401(k) plan. 

Rebalance serves as a fiduciary financial advisor to business owners. We believe that a financial advisor is important to the success of any retirement plan, both for business owners and for their employees.

Vanguard agrees. According to their research, having an advisor adds up to 3% to annualized 401(k) returns vs. going at it alone. That is a massive difference.

Those gains come from a few places, including rebalancing and using lower-cost index funds. A lot of it comes down to helping retirement investors stay the course in rough markets through coaching.

A fiduciary retirement plan advisor lowers risk for business owners by helping them make better investment decisions through steady investment monitoring. This is done by offering employee education and advice, overseeing the 401(k) plan recordkeeper, and by consulting on improved retirement plan designs.

Beyond that is the fun stuff: helping employees individually be more confident in their own futures. 

Attracting and Retaining Talent Through Your 401(k) Benefit

The biggest competitive advantage a small business has is committed, long-term employees. This often becomes the biggest business challenge, that is, how to attract and retain valued team members.

To that end, there is plenty of recent research which shows that:

  • 401(k) plans with an advisor are more attractive to employees and spur higher enrollment rates — leading to greater employee retention
  • 401(k) plans with an advisor have employees that are more likely to stay the course in down or choppy markets — leading to superior results for their retirement nest eggs

Confident employee investors value the advice they get from an employer 401(k) plan, and they identify that guidance with their employer.

Having good advice at the plan level and at the employee level is what differentiates a basic, cookie-cutter 401(k) plan from a plan that performs. 

At Rebalance, we believe our job is to take that retirement planning stress off of the plate of both business owners and employees, and our clients are better off for it.

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