Still, 93 Percent of Small Businesses Are Unprepared to Make Benefit Decisions
May 08, 2019 — RADNOR, Pa.–(BUSINESS WIRE)–Exceptional employees help support a small-business owner’s success. With low unemployment rates and fierce competition for workers, steady work and compensation are not always enough to attract and retain the best talent. New research released today from Lincoln Financial Group (NYSE: LNC) reveals that more than half of small business owners see retirement benefits as a “must-have” to retain employees and set them up for long-term success; but as they consider adding new benefits, 93 percent feel unprepared to make decisions.1
Seven in ten small business employees are concerned about planning for their retirement. 2 And a workplace savings plan is the most effective way to get people to start to save for retirement.3 That means workers across America are looking to small business owners to provide the benefits they need to secure their financial futures – yet only 42 percent of small businesses offer retirement benefits.4
“The good news is that small business owners recognize the importance of offering retirement benefits, but there are still some barriers preventing them from taking action,” said Jamie Ohl, executive vice president, president of Retirement Plan Services, Lincoln Financial Group. “Offering a comprehensive plan doesn’t have to be complicated — it only takes a conversation with a financial advisor and a few simple decisions for a small business owner to set up a new plan or enhance the one they offer today.”
The following tips can help small business owners feel more prepared as they approach decisions about retirement benefits and help their employee secure their financial futures.
Tip 1: Gain Advantage with Financial Professionals
Many small business owners feel unqualified to choose the best-fit and best-cost benefits and providers for their employees.5 And they often lack the resources — both financial and personnel — that larger competitors may have available to select and administer benefits. Lincoln Financial’s study revealed that when they consider offering a new benefit, 69 percent of small business owners are concerned about not having the resources to administer additional benefits.
Meeting with a financial professional can be a simple yet impactful step in the benefits decision-making process. A financial advisor can ask the right questions and find the right answers to help small business owners identify the best-fit solutions and partners in the marketplace. Small business owners can lean on their financial professionals or plan providers for their expertise on how benefits work, tax implications and plan design, as well as tools to help evaluate their current benefits and assign value to new benefits. Financial professionals or plan providers can also assist small business owners with administrative capabilities and robust employee education.
“Financial advisors and plan providers like Lincoln can help by serving as a consultative partner to small business owners — helping them understand solutions, make the right selections based on employees’ needs and helping them educate their employees,” said Ohl.
Tip 2: Education Drives Employee Engagement
Employee retention and preparing employees for the future are the two most important reasons to employers when it comes to why they offer retirement benefits.6 However, small business owners identified that employee participation is among their biggest challenge when it comes to managing their retirement benefits.
The key to employee engagement and participation is outcome-focused education that encourages employees to understand the benefits of the plan and take appropriate action. Seventy-nine percent of retirement plan participants wish they had a better understanding of the elements of saving for retirement in their workplace retirement plans.7 And only 42 percent of participants say they are saving as much as they think they should.8 Lincoln Financial has several calculators available on its website that can help savers understand the impact that a small change today can have a big impact tomorrow.
Another way that Lincoln Financial is making it easier for participants to save is through YourPath® — a series of customized target date portfolios managed along multiple risk-based paths. This supports a more personalized investment approach based on an individual’s financial circumstances and risk tolerance. YourPath is available to employers of all sizes, making it easy for small business owners to help their employees reach their retirement goals.
- For more information, please visit Lincoln’s Small Business Retirement Plans page.
- For more information about National Small Business Week, visit http://www.sba.gov/nsbw.
Methodology for 2018 Small Business Owners’ Retirement and Benefits Decision-Making Study
Results were collected by Collage Group on behalf of Lincoln Financial Group. Information for this study was gathered through online interviews with a total of 675 respondents who are small business owners (defined as 5-100 employees). Online interviews took place 8/15/2018 to 8/27/2018. Results were weighted to be nationally representative of small business owners by gender and ethnicity.
About Lincoln Financial Group
Lincoln Financial Group provides advice and solutions that help empower people to take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, as well as to guard against long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. The company had $253 billion in assets under management as of March 31, 2019. Lincoln Financial Group is a committed corporate citizen included on major sustainability indices including the Dow Jones Sustainability Index North America and FTSE4Good. Additionally, Lincoln is dedicated to upholding a diverse and inclusive organization and was recognized by Forbes as one of the Best Large Employers, Best Employers for Diversity, and Best Employers for Women and received a perfect score of 100 percent in on both the Corporate Equality Index and Disability Equality Index. Learn more at: www.LincolnFinancial.com. Follow us on Facebook, Twitter, LinkedIn, and Instagram. Sign up for email alerts at http://newsroom.lfg.com.
1 2018 Lincoln Small Business Owners’ Retirement and Benefits Decision-Making Study
2 2017 Lincoln Employee Benefits Study
3 2019 LIMRA Small Business and Retirement report
4 2019 LIMRA Small Business and Retirement report
5 2018 Lincoln Small Business Owners’ Retirement and Benefits Decision-Making Study
6 2018 Lincoln Small Business Owners’ Retirement and Benefits Decision-Making Study
7 2019 Lincoln Retirement Power® Participant Study
8 2019 Lincoln Retirement Power® Participant Study