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Check’s Retirement Go-to-Market Playbook

Check’s Retirement Go-to-Market Playbook

Explore effective strategies for selling retirement products alongside payroll services to enhance employee financial well-being.

Introduction

The strategic decision to incorporate a retirement offering like 401(k) requires a comprehensive Go-To-Market (GTM) strategy that not only aligns with the company's overarching payroll goals but also takes into account the intricate nuances of the financial planning realm. As organizations increasingly recognize the symbiotic relationship between efficient payroll management and robust retirement solutions, crafting a well-thought-out GTM approach becomes the cornerstone of success in ushering payroll companies into a new era of comprehensive employee financial well-being.

This playbook provides Check’s prescriptive guidance for selling retirement products along with payroll. We will cover several key GTM areas, including:

  1. A brief overview of the retirement landscape, including key stakeholders and customer types you will encounter
  1. Best practices on how to generate interest in your retirement offering
  1. An outline of how you should sell retirement in relation to your payroll sales motion and specific sales tactics to help your reps successfully take retirement prospects from interest to live

Overview of the Retirement Landscape

Background on Employer-Sponsored Retirement Plans

To set the table properly on Check’s Retirement GTM Playbook, it is important to understand what is and is not being discussed in this guide. This playbook will only be covering employee-sponsored retirement plans, which we are defining as employer-established benefit programs designed to help employees save and invest for their retirement years outside of Social Security. These plans are a critical part of an employee's overall compensation package and serve as a boost to employee satisfaction with their employment as well as an ability for an employer to attract and retain talent.

There are several types of employee-sponsored retirement plans in the U.S., each with its own features and benefits. Some of the most common types include:

  • 401(k) Plans: These are perhaps the most well-known type of retirement plans and the type of retirement plan that will be assumed is being discussed in this playbook. 401(k) plans allow employees to contribute a portion of their salary to a retirement account, which is invested in various investment options such as stocks, bonds, and mutual funds. One of the key advantages of 401(k) plans is their flexibility and the potential for tax-deferred growth.
  • 403(b) Plans: Similar to 401(k) plans, 403(b) plans are typically offered by non-profit organizations, schools, and certain government organizations. They allow employees to contribute a portion of their salary to a retirement account, often with tax advantages.
  • Defined Contribution Plans: These plans (including 401(k) plans, 403(b) plans, employee stock ownership plans, and profit-sharing plans) are characterized by the employer and/or employee contributing defined amounts into the retirement account. The eventual retirement benefit is determined by the contributions and the investment performance of the account over time.
  • Traditional Pension Plans (Defined Benefit Plans): These plans provide retirees with a specific monthly benefit based on factors such as salary history and years of service. The responsibility for funding and managing the investment risk lies with the employer. Defined benefit plans were more common in the past but have become less prevalent due to their cost and complexity.
  • IRA-Based Plans: Simplified Employee Pension (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE) IRAs are retirement plans that allow small businesses to provide retirement benefits to their employees. SEPs and SIMPLEs are funded primarily by employer contributions.
  • Profit-Sharing Plans: These plans allow employers to contribute a share of the company's profits to a retirement account for eligible employees. The contribution amount is discretionary and can vary from year to year.
  • Employee Stock Ownership Plans (ESOPs): ESOPs are retirement plans that invest primarily in the employer's company stock. Over time, employees accumulate ownership in the company, providing a potential source of wealth upon retirement.

These plans offer various tax advantages, such as tax-deferred growth or tax-free withdrawals in retirement, depending on the plan type and specific regulations. They play a crucial role in helping employees accumulate savings over their working years, fostering financial security in retirement.

Understanding the Key Health Stakeholders

Employee-sponsored retirement plans involve several key stakeholders, each with specific roles and responsibilities in managing and overseeing the plan. These stakeholders collaborate to ensure the effective administration and successful operation of the retirement plan. The main stakeholders include:

Employer / Plan Sponsor:

  • Role: The employer or plan sponsor is the entity that establishes and maintains the retirement plan for its employees. The employer sets the plan's structure, eligibility criteria, contribution policies, and investment options. They have a fiduciary duty to act in the best interests of plan participants.
  • Responsibilities: The employer is responsible for selecting and monitoring plan providers (such as recordkeepers and investment managers), ensuring compliance with legal regulations (e.g., ERISA), providing plan information to participants, and making contributions to the plan, if applicable.

Plan Administrator:

  • Role: The plan administrator is responsible for the day-to-day operation of the retirement plan, including recordkeeping, reporting, and ensuring compliance with regulations. In some cases, the employer may take on this role, or it may be outsourced to a third-party administrator (TPA).
  • Responsibilities: The plan administrator manages participant accounts, processes contributions and distributions, provides account statements, assists with regulatory filings, and handles communication between participants, the employer, and other service providers.

Participants / Employees:

  • Role: Participants are the employees who are eligible to enroll in the retirement plan. Their role involves actively participating in the plan by making contributions, selecting investment options, and staying informed about the plan's features and benefits.
  • Responsibilities: Participants contribute a portion of their salary to the retirement plan, choose how their contributions are invested from available options, and make decisions about distributions upon retirement or separation from the company.

Investment Fiduciaries:

  • Role: Investment fiduciaries are responsible for selecting, monitoring, and managing the investment options offered within the plan. They must act in the best interests of participants and provide prudent investment options.
  • Responsibilities: Fiduciaries ensure the plan offers a diverse range of investment options, monitors the performance of those options, and makes adjustments as necessary to maintain a well-balanced and appropriate investment lineup.

Recordkeepers:

  • Role: Recordkeepers are responsible for maintaining accurate participant account records, processing contributions and distributions, and providing regular statements to participants.
  • Responsibilities: Recordkeepers handle administrative tasks related to participants' accounts, such as tracking contributions, investment allocations, and account balances. They also provide online tools and resources for participants to manage their accounts.:

Third-Party Administrators (TPAs):

  • Role: TPAs are external organizations that provide administrative support to retirement plans. They assist with plan design, compliance testing, reporting, and other administrative tasks.
  • Responsibilities: TPAs help ensure the plan meets regulatory requirements, perform compliance testing, assist with plan document maintenance, and provide expert guidance to the employer in managing the plan.

Regulatory Authorities (e.g., IRS, DOL):

  • Role: Regulatory authorities, such as the Internal Revenue Service (IRS) and the Department of Labor (DOL), oversee retirement plans to ensure compliance with tax and labor regulations.
  • Responsibilities: These authorities establish rules and guidelines for retirement plans, monitor plan compliance, and may conduct audits or investigations to ensure that plans operate within legal parameters.

Collaboration among these key stakeholders is essential to create and maintain a retirement plan that effectively supports employees' long-term financial well-being while adhering to legal requirements and industry best practices.

Customer Sales Types

There are 5 common customer scenarios your sales team will encounter when an employer needs to discuss an employee-sponsored retirement plan:

  • New to Retirement: An employer is not currently offering an employer-sponsored retirement plan to their employees and is looking to begin offering one to their employees. The main drivers of an employer adding a plan are 1.) Wanting to become a more competitive employer for top talent, 2.) Retaining current talent who have expressed the need for a retirement plan to stay at their current employer, or 3.) Meeting regulatory requirements for states that mandate an offering.
  • Retirement is through Payroll: Many legacy payroll providers made the decision to partner on retirement rather than offering in-house; however, ADP and Paychex both have very strong retirement teams. Fortunately, there are a number of retirement startups and traditional retirement vendors who sell against legacy payroll provided retirement plans and by partnering with a strong retirement vendor your sales team will be able to easily transition any employer off their payroll-provided retirement plan.
  • Benefits are through State Retirement Plan: Over the past few years, various states throughout the nation have implemented retirement savings initiatives aimed at assisting individuals in building their retirement nest eggs. As of June 2024, 20 states have successfully introduced and launched such programs, while many more states are actively contemplating similar legislative measures. These retirement initiatives are often required by law and can be satisfied with non-state-backed retirement plans
  • Benefits are through Independent Financial Planner: A Financial Planner will select from over 100 retirement platforms to place their client in but you will find your industry and client demographic will naturally have a select grouping of retirement platforms your base utilizes. For example, some retirement platforms focus on SMB (Accrue, HumanInterest, Lincoln Financial) while others focus on mid-market/enterprise businesses (Fidelity, Vanguard, Voya).
  • Benefits were through a Professional Employer Organizations (PEO): Transitioning an employer away from a PEO retirement plan to an independent retirement plan involves careful planning and coordination. It is unlikely that the employer will be able to keep their plan type or know the expenses they are being charged for their retirement plan as the costs are being hidden in the overall PEO price. It is critical that you partner with a retirement vendor who has significant experience in PEO takeaways so they can help break down the costs to be comparable, create a plan option that is equivalent to their current plan, and ensure all compliance requirements are addressed during the transition.

Selling Retirement

This section will enable you to develop a GTM strategy that effectively communicates your retirement value proposition and sell to customers who want retirement plans while remaining in compliance in a regulated market.

Your payroll prospects may request that you “integrate” with their Financial Planner’s retirement platform of choice but what they are asking for are three areas of data transfer; 1.) New hires employee information gets added to the retirement plan, 2.) Employee contribution adjustments get updated in payroll, 3.) Terminated employees are terminated on their retirement platform. If your payroll prospect is coming from a payroll provider that does integrate with their retirement platform you can inform them that your payroll generates the employee new hire and deduction reporting that they can send to their retirement platform for them to make the proper adjustments. If your payroll prospect's current platform does not integrate with their retirement plan, they will simply do the same steps they are doing now.

How to generate interest in your retirement offering

What should our messaging be?

The reasons an employer offers a retirement plan to their employees fall into three buckets; Attracting and Retaining Talent, Compliance Requirements, and Tax Savings. Aligning these value-positions to your core products will help your customers understand how adding more of your products amplifies their employer differentiation.

  1. Attracting & Retaining Talent - Offering a competitive retirement plan can help employers attract skilled and talented employees. In today's competitive job market, retirement benefits play a significant role in an employee's decision to join or stay with a company. A robust retirement plan can enhance employee loyalty and reduce turnover. In a tight labor market, 62% seriously consider the availability of a retirement plan when deciding whether to accept or remain in a job. Furthermore, 76% of employees are likely to be attracted to another company that cares more about their financial well-being. Offering these plans can set an employer apart from competitors.
  1. Compliance Requirements - State-mandated retirement plans are the result of legislation requiring small businesses to provide retirement benefits to their employees. These employers now have the added responsibility of choosing a plan that’s right for their business and performing various administrative tasks to comply with the laws. As of June 2024, 20 states have enacted or created programs, with dozens of others considering legislation.
  1. Tax Savings - The Internal Revenue Service (IRS) highlights three tax advantages a 401(k) plan sponsored by employers:
    1. Employers can deduct contributions on the company's federal income tax return to the extent that the contributions don't exceed certain limitations.
    2. Elective deferrals and investment gains are not currently taxed and enjoy tax deferral until distribution.
    3. Additionally, retirement plan benefits such as a 401(k) can be more affordable with a federal tax credit. This credit of up to $16,500 for the first three years of the plan that includes $500 each year for implementing auto-enrollment can be applied to plan startup expenses.

How should we raise the visibility of our retirement offering in conversation?

For payroll prospects: For employers in state-mandated retirement plan states, staying compliant with the regulations will be top of mind for employers of all sizes. In those 20 states, it is critical that a payroll sales representative asks “Do you currently have a retirement plan and if not, have you seen options for a plan?”. Each employer will have a definitive answer to these questions and will show your payroll sales representatives are well educated on the regulations that impact their business.

For employers not in state-mandated locations, asking the employer “Do you currently offer your employees a retirement plan?” opens the conversation. If yes, ask which provider they use; if not, “A number of employer studies show offering a retirement plan can significantly improve your ability to attract and retain talent and even see employer tax savings. Would you like to see a retirement plan option?”. It is likely that the employer has already considered offering a retirement plan and will provide you with that objection quickly. Log that objection into your CRM and consult with your retirement vendor to craft objection-specific marketing campaigns.

For existing payroll customers: Your payroll customers will have retirement deduction codes in their payroll report if they have a plan, so create a report to identify two customer types. The first group, Has-Retirement, will need to understand why your retirement vendor is superior to theirs. Work with your retirement vendor to create a battle card of their specific platform that outlines 2 - 3 key sales points.

Further separate the second group, No-Retirement, into employers that are in state-mandated locations vs those that are not. For the No-Retirement-State-Mandated group they have either not reached the minimum threshold for requiring to have a retirement plan or they are out of compliance. This group must make a decision so advise your payroll sales representatives to always bring up retirement with “Would you like to see a retirement plan option?” on every sales conversation.

The No-Retirement-No-Mandated group will need to be educated on why they should add a retirement plan. Leverage the three themes mentioned above, and collaborate with your retirement vendor to create an effective marketing campaign to this group to provide a continuous education message on adding retirement benefits. Additionally with this group, your payroll sales representatives should ask “A number of employer studies show offering a retirement plan can significantly improve your ability to attract and retain talent and even see employer tax savings. Would you like to see a retirement plan option?” and log any objections in your CRM.

How should we raise visibility of our retirement offering in our product?

For payroll prospects: We do not recommend proactively raising retirement products to payroll prospects. Payroll prospects' initial question around retirement is more often than not “Do you integrate with my retirement platform?”. If they are window shopping your payroll platform they will be focused on those value-adding points and when they get to consider their retirement plan they are in “checking boxes” mode. If you have a retirement vendor, include communication around how you work with that vendor to both add retirement plans to employers compensation offerings as well as manage current retirement packages. A second question that will need to be answered often is if your payroll prospect is using their payroll platform for their retirement. This question is “Can I move over my ADP/Paychex/etc. retirement plan to your payroll platform?“ Your retirement vendor may have ADP/Paychex/payroll provided retirement plan sales offerings/talk tracks and coordinate with that vendor to provide a templated response.

For existing payroll customers: The most effective positioning is creating 3 separate in-product prompts that utilizes the breakout of your 3 existing payroll customers types (Has-Retirement, No-Retirement-State-Mandated, No-Retirement-No-Mandated). For each group include a specific action to drive the customer to the landing page with more information about your retirement vendor.

What campaigns and lead generation strategies should we build around retirement?

There are seasonal considerations to a 401k plan when employers are more aware of their need to review their employer-sponsored retirement plan that involve all 4 Quarters; Year-End Reporting (Q1), Tax Considerations (Q2), Safe Harbor Deadlines (Q3), and Compliance Reviews/Yearly Budgeting (Q4). Given the even distribution of those key seasonal events, we recommend that you run campaigns with those events as themes.

Additionally, we recommend that you include touch-points for both Inception (new to retirement plan) and Switcher (have a retirement plan) 401k prospects.

For Inception employers focusing on the reasons why they should offer a 401k plan is the primary focus. These value-points include:

  1. Employee Attraction and Retention: Providing a 401(k) plan is an attractive benefit that can help employers attract top talent and retain valuable employees. Job seekers often consider retirement benefits when evaluating job offers.
  1. Tax Advantages: Employers may receive tax benefits for offering 401(k) plans. Contributions to employees' 401(k) accounts are typically tax-deductible for the business, and there may be tax credits available for small businesses that establish retirement plans.
  1. Employee Engagement and Satisfaction: When employees have access to a retirement savings plan, they tend to feel more financially secure and valued by their employer. This can lead to increased job satisfaction and productivity.
  1. Competitive Advantage: Offering a 401(k) plan can make a business more competitive within its industry. It can set a company apart from competitors who do not provide similar retirement benefits.
  1. Reduced Turnover Costs: High employee turnover can be costly in terms of recruitment, training, and lost productivity. Providing a 401(k) plan can reduce turnover by fostering loyalty and commitment among employees.
  1. Employee Financial Wellness: Supporting employees' retirement savings goals contributes to their overall financial wellness. Financially secure employees are less likely to experience stress related to money issues, which can improve workplace morale.

Employers who will need to switch their 401k plan from their current provider to your selected 401k vendor will need reasons to change a service they offer their employees. Using Check’s selected 401k vendor, Accrue, as an example, the reasons an employer would switch from an ADP 401k plan to Accrue are:

  • Cost Savings: Employers may find that Accrue offers a more competitive fee structure or a transparent pricing model that aligns better with their budget.
  • Transparency and Fees: Accrue is known for its transparent fee structure, which can be appealing to employers looking to understand the costs associated with their 401(k) plan more clearly. If an employer is concerned about hidden fees or unclear pricing with their current provider, Accrue's transparency could be a compelling reason to switch.
  • Ease of Use: Accrue's platform is designed to be user-friendly and straightforward, both for employers and employees. If an employer finds that ADP's platform is difficult to navigate or not user-friendly, they may consider switching to a more intuitive platform like Accrue.
  • Single System: Accrue offers modern technology solutions and integration capabilities that will be more in line with an employer's technological needs. In particular, benefits & deductions in your payroll offering will automatically sync with Accrue, but will not with ADP.
  • Customer Service and Support: Employers with issues with ADP's 401k plan are tossed between ADP’s different teams of customer service, payroll, billing, compliance, and more. Selecting a 401k-specific vendor provides your clients with a greater and simpler service model.

How should my strategy change during seasonal considerations?

There is no major seasonal event in the retirement business, but there are some times when retirement is more top of mind than others. When an employer is considering adding a retirement benefit plan to their employee compensation package, they should take into account various seasonal considerations that can impact the implementation and administration of the plan. Here are some important seasonal factors to consider:

  • Safe Harbor - A safe harbor 401(k) plan is designed to ensure that all eligible participants receive an employer contribution, while also providing benefits to employers. By offering a fixed employer contribution, employers can avoid key 401(k) nondiscrimination tests, which are used by the IRS to ensure that the plan is fair and equitable for all employees. One example of the deadlines for a safe harbor match design in the initial year:
    • September 1: Deadline to send out safe harbor notice to employees
    • October 1: Deadline to include safe harbor match provision
    • Any deadline set by service provider to prepare plan documents in advance of other mandatory deadlines
  • Open Enrollment Periods - Many retirement plans have designated open enrollment periods during which employees can enroll, change their contribution amounts, or adjust investment choices. The timing of these periods should align with the company's overall benefits enrollment timeline.
  • Fiscal Year End - Companies often base their financial reporting and budgeting on fiscal years. Employers may want to consider the fiscal year-end when implementing a retirement plan, as contributions and deductions can impact financial statements.
  • Tax Deadlines - Employer contributions to retirement plans, such as 401(k) plans, need to be made by certain tax deadlines to be deductible for the current tax year. Employers should ensure that contributions are timely made to meet these deadlines.
  • Year-End Reporting - Some retirement plans require year-end reporting to participants, regulatory agencies, and the Internal Revenue Service (IRS). Planning for this reporting and ensuring accuracy is important as it aligns with the year-end timeline.

It's crucial for employers to carefully plan the introduction of a retirement benefit plan, taking into account these seasonal considerations to ensure that the implementation is smooth, effective, and aligned with the overall goals and operations of the company.

What fields should I add to my CRM to capture relevant retirement information?

Adding new fields to your CRM is a core infrastructure task to address whenever launching a new product. Adding these select fields to your CRM will allow you to target customers with data-driven outreach campaigns, keeping your messaging relevant and moving clients through the sales funnel more effectively.

Fields to add:

  • Do you offer a retirement plan to your employees today?
    • Yes
    • No
  • If no, why?
    • Too expensive
    • No employees / all contractors
    • Not enough admin capacity to take on managing plan
    • Below state-mandated requirement

The rest of the fields assume they answered YES to the first question

  • Open Enrollment Date: [Calendar selection]
  • How did you buy your retirement plan?
    • Through the State Mandated Plan portal
    • Through my independent financial advisor
    • Through my payroll provider
    • Through a PEO
  • (Optional) Which retirement platform do you use? [There are over 100 platforms your employers could be using, so Check presents a couple of options in how to address this field]
    • Option 1: List the top 5 - 10 platforms that target your demographic and/or results from a survey asking your customers which they use and “Other” with an open short-text entry. Check recommends the following:
      • ADP
      • Paychex
      • Ascensus
      • CUNA Mutual
      • Empower Retirement
      • Fidelity Investments
      • Accrue
      • HumanInterest
      • John Hancock
      • Lincoln Financial
      • Mutual of America
      • PAI
      • Principal
      • The Standard
      • T. Rowe Price
      • Vanguard
      • Voya
    • Option 2: Open short-text entry

How to move from interest to sold

What should my GTM motion look like?

Our recommended retirement GTM motion can be found in this Whimsical diagram. This offers step-by-step guidance for how to navigate different types of retirement prospects from initial interest through deal completion.

How should I train my sales reps for Retirement?

Check offers out-of-the-box Introduction to Retirement training for reps that can be issued via Trainual. Please reach out to Check with which reps you would like to assign the training to.

How should a Partner handle any Retirement demo requests?

Your retirement vendor and your product team will coordinate to record a demo of the two systems working together. This video should be showcased on your retirement product page as well as independently referenceable so your sales representatives can send the recording link as a follow up to any retirement conversation. If the prospect requires further questions and/or a deeper dive into a retirement platform demo, coordinate a 30-minute calendar invite that includes the prospect, your retirement vendor sales and product teams, and include your sales representative/sales manager as well as your product team. It is critical that you strike while the interest iron is hot and address all possible questions a prospect can have so you can quickly move them through the retirement sales funnel.

What are the common disqualifications a Partner needs to be aware of?

There are no disqualifications from a regulatory or minimum threshold standpoint, however there are a number of scenarios that would be challenging to position a 401k product with.

  • Union Negotiations - In some cases, employers that have collective bargaining agreements with labor unions might face limitations or complexities in offering certain retirement plans due to negotiations and contractual obligations.
  • Limited Financial Resources - Establishing and maintaining a 401(k) plan comes with costs, including administrative fees, setup expenses, and potential employer contributions. If an employer lacks the financial resources to cover these costs, they might not be able to offer a plan.
  • Nonprofit or Government Organizations - If your retirement vendor does not support certain types of nonprofit organizations and government entities might have limitations or restrictions on the types of retirement plans they can offer due to tax-exempt status or specific regulations.
  • Owner-Only Business - Businesses owned by a single individual (such as sole proprietorships) with no common law employees might not qualify to establish a traditional 401(k) plan. In such cases, the owner might consider alternative retirement plan options, such as a Solo 401(k) or SEP IRA.
  • Noncompliance with Testing - Certain nondiscrimination tests, such as the Actual Deferral Percentage (ADP) test and the Actual Contribution Percentage (ACP) test, are conducted to ensure that contributions made by highly compensated employees are proportionate to those made by non-highly compensated employees. Failure to pass these tests could disqualify the employer from being able to operate a retirement plan on your vendor’s platform.

Which regulatory traps should a Partner avoid?

Non-licensed financial planners, who are not authorized or qualified to provide professional financial advice, should avoid discussing certain topics related to an employer-sponsored retirement plan evaluation. Engaging in activities that require a license or expertise they do not possess could lead to legal and ethical issues. Here are some topics that non-licensed financial planners should generally avoid discussing with employers during the evaluation of an employer-sponsored retirement plan:

  • Investment Recommendations - Non-licensed financial planners should not provide specific investment recommendations or advice on how employees should allocate their retirement plan contributions. Offering investment advice requires proper licensing and expertise.
  • Tax Advice - Providing detailed tax advice, such as strategies to optimize tax benefits through retirement plans, requires a thorough understanding of tax laws and regulations. Non-licensed planners should not venture into providing tax advice.
  • Legal Compliance - Non-licensed planners should avoid discussing intricate legal matters related to retirement plan administration, compliance with the Employee Retirement Income Security Act (ERISA), and other legal regulations governing retirement plans.
  • Fiduciary Responsibilities - Discussing fiduciary responsibilities, such as the legal obligations of plan sponsors and administrators, requires specialized knowledge of ERISA regulations and plan administration best practices.
  • Retirement Planning Strategies - Offering comprehensive retirement planning strategies that take into account an individual's entire financial situation requires expertise that non-licensed planners do not possess.
  • Investment Analysis - In-depth analysis of investment options, such as evaluating the historical performance and risk profile of specific funds, is beyond the scope of non-licensed planners.
  • Risk Assessment - Non-licensed planners should not provide risk assessments for specific investments or strategies, as this requires knowledge of risk management and investment analysis.
  • Retirement Income Planning - Creating retirement income strategies, including withdrawal strategies and methods for ensuring financial stability in retirement, should be left to licensed professionals.
  • Social Security Strategies - Discussing Social Security claiming strategies, such as when to start claiming benefits, requires a deep understanding of Social Security rules and implications.

It's important for employers to ensure that any financial professionals they engage for retirement plan evaluation or advice are properly licensed, qualified, and have the expertise to provide accurate and compliant information. If employers seek assistance with their employer-sponsored retirement plans, they should consider working with licensed financial advisors, legal professionals, and retirement plan consultants who specialize in retirement plan design, administration, and compliance.

How does a Partner handle clients asking for prices?

There are many avenues for an employer-sponsored retirement plan that can charge both the employer and the employee for managing their plan. Fees such as Asset-Based Fees, Administrative Fees, Plan Document and Setup, Transaction Fees, Custodial Fees, Per Participant Fees, and many others. These costs can also be adjusted to balance between the employer and employee.

Most modern retirement providers that you would be partnered with have publicly available pricing on their page. If this is the case, we recommend that you train your sales reps to be able to speak to the high-level pricing, educate the employer on the various levers a retirement plan can incur costs, and if the employer has additional questions, connect them with your retirement vendor.

If your retirement vendor does not provide public pricing, Check’s guidance is to educate the employer on the various levers a retirement plan can incur costs, inform the employer that further discussion requires a license to speak to, and connect them with your retirement vendor immediately to address any and all questions they have. If the employer is interested, be sure to ask them to have a copy of their latest 1 - 2 months invoices from their retirement vendor to be able to compare.

How should a Partner pay out reps on selling Retirement?

When addressing sales representative compensation, it's crucial to bear in mind that sales reps possess a knack for optimizing their earnings while minimizing their exertion.

For this reason, Check recommends having your retirement strategy in motion for ~6 months before determining the type and amount of rep compensation. The reason for this is to better understand what types of clients want to attach retirement through your platform before paying out reps. This will ensure that adding retirement to a reps’ book of what they can sell does not cause (e.g. never selling retirement, aggressively pushing retirement, etc.).

During this period, we recommend a flat SPIF equal to 25% of the annual retirement revenue you would get at an average customer. So, if you get $525 as a one-time referral fee and $1.00 per enrolled employee per month, and your average customer has 10 employees, the SPIF would be 25% * $525 + 25% * 10 employees * $1.00 PEPM * 12 months = $161.25.

Over the long-term, you will need to determine your own payouts based on the adoption you are seeing. Industry best practices have sales reps paid out at a rate of anywhere from 20-40% of a deal’s expected year 1 revenue from retirement plans. Compare what these commissions are relative to commissions for other products to ensure that you aren’t creating perverse incentives by introducing retirement sales.

Appendix:

Short History of Employer-Sponsored Retirement Plans in the United States

The evolution of employer-sponsored retirement plans in the United States has been marked by a series of significant milestones, reflecting the nation's changing economic and social landscapes. The concept of employer-sponsored retirement plans emerged in response to the need for financial security for aging workers and a desire to foster loyalty among employees.

Early 20th Century: Pensions Begin to Emerge

The concept of employer-provided pensions gained traction in the early 20th century. Industrial giants like railroads and manufacturing companies sought ways to retain experienced workers and create a sense of long-term commitment. Pensions, a promise of regular income during retirement, began to be offered as a form of deferred compensation. However, these early plans were not widespread and typically covered only a select group of employees.

1935: Social Security Act

The passage of the Social Security Act in 1935 marked a significant turning point in retirement planning in the U.S. While not an employer-sponsored plan per se, Social Security introduced a federal safety net to provide income for retirees, the disabled, and survivors. This somewhat diminished the urgency for comprehensive employer-sponsored retirement plans.

1940s-1950s: The Rise of Defined Benefit Plans

In the post-World War II era, the popularity of employer-sponsored retirement plans grew. Companies saw the value in offering defined benefit plans, where retirees were promised a specific monthly income based on their years of service and final salary. These plans became a common feature of employment packages, and employees began to consider them an integral part of their financial future.

1978: The Birth of 401(k) Plans

The landscape of retirement plans underwent a seismic shift with the introduction of the 401(k) plan in the Revenue Act of 1978. Initially intended as a way to supplement traditional pension plans, the 401(k) plan allowed employees to contribute a portion of their salary to a tax-advantaged retirement account, often with a matching contribution from the employer. This marked a shift from defined benefit plans to defined contribution plans, placing more responsibility on employees to manage their investments.

2000s: Transition and Diversification

The 21st century witnessed a further diversification of retirement plans. Employers increasingly offered a mix of 401(k) plans, individual retirement accounts (IRAs), and other savings options. Companies also started adopting automatic enrollment features to encourage greater employee participation in retirement plans.

Present and Future: Focusing on Financial Wellness

Today, the landscape of employer-sponsored retirement plans continues to evolve. Companies are recognizing the importance of holistic financial wellness programs, which include retirement planning as well as education on budgeting, debt management, and other financial matters. As the workforce becomes more diverse and dynamic, employers are tailoring retirement options to accommodate various needs and preferences, ensuring that employees can retire with a sense of financial security.

In summary, the history of employer-sponsored retirement plans in the United States reflects a progression from basic pension offerings to the complex array of retirement options available today. The evolution of these plans mirrors societal shifts, economic trends, and the changing expectations of both employers and employees.

Types of Retirement Plan Fees

Retirement plans, such as 401(k) plans, can charge employers for using their platform in various ways. The specific fees and charges may vary depending on the retirement plan provider and the terms of the agreement between the employer and the provider. Here are some common ways retirement plans can charge employers:

  • Asset-Based Fees: These fees are based on the total assets in the retirement plan. They are typically calculated as a percentage of the plan's assets and are often referred to as "asset management fees" or "investment management fees."
  • Administrative Fees: These fees cover the cost of administrative services, record-keeping, and compliance-related tasks. They may be charged on a per-participant basis or as a flat fee.
  • Plan Document and Setup Fees: Some providers charge fees for establishing the retirement plan and preparing the necessary plan documents, such as the plan's adoption agreement and summary plan description.
  • Transaction Fees: Transaction fees may be applied for specific activities within the plan, such as processing loans, distributions, or transfers.
  • Investment Expense Ratios: These are the fees associated with the individual investment options offered within the plan. Employers may choose investment options with varying expense ratios, which can impact the overall cost to participants.
  • Custodial Fees: If the retirement plan provider also serves as the custodian for plan assets, they may charge custodial fees for holding and safeguarding the plan's investments.
  • Participant Fees: In some cases, employers may pass on certain fees to plan participants, such as annual account maintenance fees, loan origination fees, or fees related to specific investment choices.
  • Revenue Sharing: Some retirement plan providers may receive revenue-sharing payments from mutual funds and other investment products included in the plan's lineup. These payments can help offset plan costs and may affect the overall fees charged to the employer.
  • Compliance and Advisory Services: Employers may opt for additional services, such as compliance testing, plan design consulting, and participant education. These services often come with additional fees.
  • Brokerage or Self-Directed Account Fees: If the plan offers a brokerage window or self-directed investment options, there may be additional fees associated with these features.

It's important for employers to carefully review the fee structure of retirement plan providers and understand the total cost of the plan. Employers have a fiduciary responsibility to ensure that the fees charged to the plan are reasonable and in the best interests of plan participants. Fee disclosure and transparency are critical aspects of retirement plan management, and employers should be aware of their responsibilities under ERISA (Employee Retirement Income Security Act) regulations. Employers can also negotiate fees with plan providers and consider benchmarking their plan's costs against industry standards to ensure competitiveness.

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Last updated on June 6, 2025

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