Nonprofit 411: How Inclusionary Practices Can Empower Traditionally Underrepresented Investors to Save More for Retirement

Nonprofit 411 CORE-minBy Lisa Cardinal, Associate Sales Director, Massachusetts CORE Plan

A survey conducted by The Harris Poll on behalf of Empower Retirement reveals that many employees experience a sense of disconnection from the retirement and financial services industries. In the short term, this disconnection can cause confusion about how best to plan for the future, and in the long term it can result in a less secure retirement.

Our results also show that traditionally underrepresented groups are behind when it comes to retirement preparation. In other words, not only are there perceived inequities across demographics, but there are also realized retirement inequalities.

One reason for this retirement inequality is that a higher percentage of traditionally unrepresented groups do not have access to workplace retirement plans. Having that access increases the likelihood that an employee has begun saving. In addition, traditionally underrepresented employees tend to lag their counterparts when it comes to their income levels. It stands to reason that this disparity may impact the ability of lower-income employees to save for retirement.

Investors who have been traditionally underrepresented recognize the need for more financial education and guidance, but many are uncertain where to turn for unbiased advice. Many employees who are not white men say they will not be taken seriously as a client by a financial services company.

Perhaps as a result, many of these employees are turning to family, friends and colleagues for financial advice instead of financial advisors. This leaves a large percentage of Americans relying on sources that are not necessarily trained for providing retirement savings guidance.

To help people of all demographics save effectively for retirement, employers and financial services providers should constantly evaluate and re-evaluate communications, retirement plan offerings and employee outcomes, then make adjustments as needed. This effort starts with understanding the current reality of employee attitudes and outcomes.

According to the Harris Poll survey, the top 5 ways respondents want to learn about retirement are:

  1. Online tools I can use to fit my needs/situation
  2. Easy-to-read articles on websites
  3. Personalized information about my savings
  4. Classes I can view online to educate myself
  5. Visual information

Tackling the retirement wealth gap starts with communicating to employees clearly and straightforwardly about their retirement saving opportunities. Employers and advisors who can take the time to understand investors’ needs are more likely to connect with them. Additionally, financial services providers should make sure all employees have access to unbiased retirement advice and increase participation throughout the organization, so the population of retirement savers better reflects the makeup of society. Over time, such efforts can help close the retirement wealth gap.

The Massachusetts CORE Plan is an affiliate member of the Massachusetts Nonprofit Network and a 401(k) retirement plan designed specifically for Massachusetts nonprofits.

For additional information about the CORE Plan, please contact Lisa Cardinal at 617 510 4036 or lisa.cardinal@empower-retirement. com or visit www.ma-employer-core.com.