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Nov
12
Use Retirement Benefit Education as a Marketing Entry Point
November 12, 2006 | Anita Campbell
A survey released today by ShareBuilder401K (conducted by Harris) says that more than half of U.S. small business owners plan to retire AFTER age 65 — or never.
And it’s a good thing, because almost half (47%) say they are not confident they are saving enough for retirement. And even more (63%) offer no retirement benefits for employees.
According to the press release:
When asked why they plan to never offer retirement benefits, the majority of survey respondents cited not having enough employees to make it worthwhile (54 percent), followed by the inability to afford a company match (28 percent), unstable business circumstances (26 percent), lack of employee interest (15 percent) and a short-term employee base (15 percent). While costs appears to be a hindrance for some, 63 percent of respondents said they had no idea what a 401(k) plan would cost to administer.
Sole proprietor businesses with no employees are the least likely to have a 401(k) plan in place. Just 6 percent utilize a 401(k) product compared with 52 percent of companies that have between 26-50 employees. In fact, the larger the business, the more likely they are to say they will offer a 401(k) plan in the future if they do not currently offer one. Among those not already offering a 401(k), 65 percent of sole-proprietors say they will never utilize a 401(k) while just 17 percent of businesses with between 26-50 employees say they will never enact a 401(k) plan.
“We are concerned that there are misperceptions among America’s small business owners about 401(k)s. Too many believe that you have to be a much larger company to afford a sophisticated retirement plan – or even that you have to offer a company match, when that’s just not the case,” said Stephan Roche, vice president and general manager, ShareBuilder Small Business Group. “There seems to be a critical lack of knowledge here. Even sole proprietors can, and should, consider a 401(k) for retirement savings.”
Somehow this does not surprise me. A lot of small businesses live “hand to mouth.” It’s hard to think for the long term when you’re consumed with figuring out how to make payroll next month.
I also agree that it is partly a knowledge issue, too. I’ve seen something similar with health insurance benefits, with small business owners not being aware of the ability to write off 100% of self-insured medical insurance premiums against Federal income taxes. Small business owners are so used to hearing the “woe is me” bad news about how expensive health insurance is, that we just tune out any mentions of health insurance, automatically assuming any message is more bad news.
What’s the solution on the knowledge issue? Vendors that sell retirement-related products have to carry the load on education, if they wish to sell more retirement plan products.
But then, consider this an opportunity. Education and advice gives you, as the vendor, a perfect foot in the door to market and sell products. We all want to read and listen to content in the form of helpful advice and tips — whereas none of us really wants to read or listen to sales pitches. Get business owners interested in tips and advice and information, and after that they will be receptive to hearing about your products.
