I don’t often get the chance to write about my personal experiences. A typical day at AKF Consulting involves client calls, data crunching, trend analyses, industry reports, and the dousing of at least one or two potential fires – all services I consider myself privileged to provide to our State clients. But every now and then I am lucky enough to have the professional become personal. And that’s just what happened to AKF this past year.
So, background: AKF has had a retirement plan for our employees for many years. But during our typical year-end evaluation, it seemed timely to move in a new direction. “How hard could this be?” I thought. After all, we help our clients design retirement plans, evaluate fees, and choose investment line-ups every day. No sweat, right?
Not exactly. What confronted me was an overwhelming sea of choices and decisions that would impact not just AKF’s bottom line, but also my employees’ futures. Pretty high stakes. To complicate matters, many of the decisions I faced in qualified plans don’t exist in State-run Retirement Programs. And who knew plan design – including payroll processing – had so many pricing components to consider? The more provisions and features I thought about implementing, the more expensive the administrative costs became.
Then came the investment selection process. My employees are investment savvy, but would they choose the same investments as I would? How many different choices do they really need? I know from experience that too many choices do not necessarily translate into a better plan. Sigh. Yet another decision to be made.
If this is what small business owners face when considering qualified retirement plans, it’s no wonder so many of them shy away from it. They are confronted with too many options, an unclear path, and a decision tree with so many branches that there seems like no safe (or quick) way down.
I found myself thinking that a State-run Retirement Program would have been easier. (New York State does not offer one yet, but it is coming soon!) For all the talk about how these Programs would make life harder for small businesses, let me now confidently say, from personal experience: it’s exactly the opposite. State-run Retirement Programs answer all the complicated questions at no cost to the business owner. They make life infinitely simpler for employers.
Consider the AKF case: my senior team easily spent 60 hours in the aggregate on the design and set up of the AKF qualified plan. And AKF is just one of approximately 2.3 million1 small businesses in New York State alone. Those numbers really add up: we are talking about State-run options possibly saving small businesses hundreds of thousands, maybe even millions of hours of precious time. Not to mention tons of money and countless headaches.
After going through this process first-hand, I have a new-found appreciation (and empathy) for my fellow small business owners and for our State clients who navigate these decisions every day. Plus, I have an even clearer perspective on just how critical State-run Retirement Programs are. Small businesses have enough on their plates, especially in this pandemic economy. Let’s make it easier for them by supporting and accelerating the launches of State-run Retirement Programs. Both businesses and employees will thank you.