Majority of Small Business Owners Feel Unprepared to Make Benefit Decisions
While more than half view retirement benefits as a “must have,” they are unprepared to make selections and could use the help of an adviser, Lincoln Financial Group says.
In today’s tight labor market, more than half of small business owners view retirement plans as a “must have” benefit to retain employees, according to a survey by Lincoln Financial Group. However, 93% feel unprepared to make decisions about setting up a retirement plan, indicating that they could use the help of an adviser.
Seventy percent of employees at small businesses are concerned about planning for retirement, but only 42% of these companies offer retirement benefits.
“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,” says Jamie Ohl, executive vice president, president of retirement plan services at Lincoln Financial Group. “Offering a comprehensive plan doesn’t have to be complicated. It only takes a conversation with a financial adviser and a few simple decisions for a small business owner to set up a new plan or enhance the one they offer today.”
The survey also found that 69% of small business owners are worried about having the resources to administer additional benefits. Lincoln Financial recommends that they meet with a financial adviser to help them find the best solutions for their company, as well as help them with tax implications and plan design. Advisers can also help small business owners assess current benefits, assign value to new benefits, administer the plan and educate employees about its benefits.
“Financial advisers and plan providers like Lincoln can help by serving as a consultative partner, helping small business owners understand solutions, make the right selections based on employees’ needs and helping them educate their employees,” Ohl says.
The survey also found that small business owners are concerned about participation in their retirement plan. Lincoln Financial says that educating participants about the benefits of the plan can boost participation. Seventy-nine percent of retirement plan participants wish they had a better understanding of the elements of saving for retirement, and only 42% say they are saving as much as they should.
Lincoln Financial’s findings are based on an online survey of 675 small business owners conducted by Collage Group last August.
Lincoln Financial’s survey echoes the results from another recent survey by SCORE, a nonprofit provider of mentor services to U.S. small businesses. That survey found that fewer, 34%, of small businesses do not have retirement savings plans.
Like the Lincoln Financial survey, the SCORE survey found that 71% of businesses that do not offer a retirement plan said it is too expensive to set up, and 63% said they do not have the resources to administer such plans.