For retirement plan advisers working in the public education market, September through December are the most active times for new clients and increased contribution levels, according to Jim Kiley, senior vice president and national sales manager for Security Benefit, covering the Eastern U.S.
“Obviously, a new teacher or young person starting in a public education profession, should start saving sooner rather than later,” he tells PLANADVISER. “The profession itself offers a number of savings vehicles, but the most important is a 403(b).” Kiley explains that while most employees in the public education market have pensions available, a 403(b) plan gets them accustomed to saving on a regular basis, and pensions are not as robust as they used to be. “Becoming a disciplined saver is necessary for Millennials who may change jobs over their career and who have the benefit of compounding since time is on their side,” he adds.
In addition, returning teachers have likely gotten a raise for the new school year, and it is a great time to set new goals for systematic savings. Kiley says it is the ideal time traditionally for advisers in the 403(b) market and probably their biggest time for sales.NEXT: Focus on education about saving
A survey conducted by Greenwald and Associates and commissioned by Security Benefit found Generations X and Y K-12 educators would prefer to learn about financial planning issues at work, and there are certain areas in which they need more education. Advisers and plan sponsors need to educate educators, at the workplace and in some cases online, Kiley says.
He suggests that education should be more geared toward establishing an overall savings habit, but, while it should be somewhat generic and include information about all savings vehicles available, advisers should point out the benefits of the tax advantage of saving in a 403(b).
Advisers may speak at the orientation meeting for new employees, and sit down with everyone and evaluate what they are doing to be on track for a successful retirement. Kiley adds that more tenured employees are helpful with educating new participants, especially if they started saving early and have seen the pension plan benefits change over time.
“I think the most important thing for both advisers and plan sponsors is to focus on changing behaviors to promote saving,” Kiley says. “This may include breaking down how they spend their money, as well as directing them into the right investments and the right path to having comfortable retirement.”
The beginning of the school year is a time to start new relationships and keep existing employees on track, he concludes.