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The Values/Finances Nexus: The Impact(k) Plan and Employee Motivation

The Values/Finances Nexus: The Impact(k) Plan and Employee Motivation

| June 23, 2018

Companies have often been mystified by their well-intentioned 401(k) plans that remain underutilized, orphaned elements of what could be the base of a secure retirement for their employees.

So, what's missing?

We have found there are two main elements that are lacking: 1. Personalized investing education and 2. A real connection to their investments.

We're setting out to fix this, with the Impact(k) Plan.


This can be remedied with real, face-to-face counseling (but participants are seldom offered this.) Instead, employees are directed to a website or handed a brochure. They are expected to master a task that used to be handled, behind the scenes, by a professional. As a result, their savings rates, risk levels and asset allocation are woefully inadequate for the long term task of wealth building.

We try to fix this by meeting directly with the plan participants and setting them in the right direction, getting them to think like a pension manager.


As bad as the current self-directed system is, we'd argue that a more important factor missing from the equation is a real connection to their investments. Let's face it: For many participants, the investment options in their plan are a bunch of gobbledygook for much of their careers. What DO these words in this fund's name mean? How do these investment vehicles differ? (when they sound SO similar!) And how do these investments fit with MY values?

Without this understanding, and without any emotional connection to the underlying investments, many participants simply lack the motivation to properly plan for their future. Meanwhile, numerous studies have shown that employees want to work for a company that shares their values. They want to be connected to a greater purpose. Yet, their values (and those of their company) are seldom reflected in their 401(k) plan options. This is also a disconnect that can be remedied.

A company retirement plan that offers social investment options can connect with a variety of human values. These investment vehicles can simultaneously provide competitive performance at reasonable cost, meeting the fiduciary duty of the plan sponsor. Promoting this benefit to employees helps to position the employer as being in sync with its employees' needs and wishes. And it doesn't cost more to provide this added value.


Especially among younger generation employees, companies who ignore this factor do so at their peril. (In fact, recent studies show that some 90% of millennials have expressed a desire to have sustainable investment options in their plan.) It is this nexus of an employee's finances and their values that connects them to your company. There is no reason to leave this factor to chance. With an unemployment rate of 3.8%, competition for talent fierce. One can put their best terms on the table, while including a retirement plan that reinforces your brand identity, motivating employees and attracting new ones.

Click to learn about The Impact(k) Plan: Personal counseling and values-based investment options. Customized to your corporate identity and objectives.