Feedback: December 2012

Question: What role should business play in assisting employees in retirement planning?
Robyn Barrett
Founder and Managing Partner
FSW Funding
Sector: Financial

I think businesses need to help fill the gap where Social Security will fall short. Most employees are spending their income on living and don’t know how or where to begin investing for retirement. Businesses can provide employees a valuable benefit by offering a Saving Incentive Match Plan for Employees, or, as it is commonly known, a SIMPLE IRA. SIMPLE IRAs are tax-deferred, employer-provided retirement plans that allow employees to set aside money and invest it to grow for future use. The SIMPLE IRA is employer sponsored, like the 401(k), but offers simpler, less costly administration rules and is low in risk. Like a 401(k) plan, the SIMPLE IRA is also funded by a pre-tax salary reduction.

To encourage employee participation and planning for the future, companies can choose to match up to 3 percent of their employees’ compensation, but only if the employee is contributing. The overall cost to providing retirement benefits is relatively low, and will not only benefit employees but can also help small businesses be more competitive when trying to recruit top talent.

Robyn Barrett is founder and managing member of FSW Funding, specializing in factor financing for small to mid-sized companies nationwide. Barrett holds a Bachelor of Science in accounting, a masters in business administration; she holds her CPA and spent more than a decade in corporate finance before launching her company in 2001. Barrett works with start-ups facing cash flow challenges, companies with previous credit issues and companies poised for growth. 

Rick DeGraw
Executive Vice President, Chief Administrative Officer
SCF Arizona
Sector: Insurance

As SCF Arizona transitions to become the largest private mutual insurance company in Arizona, we believe we have a strong commitment to helping our employees have all the tools necessary for a secure retirement. Our employees are the daily face and contact of our company with the business community. We are committed to having our employees healthy and well trained and secure in their future. We have a strong 401(k) retirement plan in place, and we provide employees with extensive opportunities to meet in groups and privately with retirement planning specialists and have control over the type of investment returns they desire.

In other words, we recognize that employees have different needs for retirement planning. They can choose greater risk with possible greater returns or less risk with virtually guaranteed returns. We recognize that an employee’s age and family status have an impact on the type of investment they choose. We want them engaged directly in their retirement planning with the ability to make choices and changes as their retirement fund builds.

Rick DeGraw has been with SCF Arizona for seven years, previously serving as communication director for the Maricopa Community Colleges; president & CEO of Roots Development, Inc.; an assistant professor at ASU; and as Arizona State Senate Judiciary Staff. DeGraw is a graduate of Westminster College, Rutgers University and Princeton University. He has been in the Valley for 40 years and has been active in politics and community service with numerous entities.

Jeff C. Young
Senior Vice President
First Financial Equity Group
Sector: Financial

I will limit this discussion of “retirement planning” in the context of the question to the company’s role in its specific retirement plan as it relates to the employee. (Obviously, in the full consideration of the total retirement planning exercise, the company would play no role whatsoever given the myriad components involved, of which the corporate retirement plan is just one part.)

I believe it is incumbent upon the retirement plan sponsor to provide investment professionals to offer assistance in the employees’ decisions regarding investment and plan choices, asset allocation and the amount of the contribution itself. The costs of making poor decisions can be high, and the company could offer significant help to the employee by providing for experienced advisors in an atmosphere of confidentiality and on company time.

Besides offering individualized sessions for the enrollment periods, the company may also find it beneficial to have quarterly or semi-annual group meetings for the plan sponsor to review investment fundamentals and broad economic overviews.

Jeff C. Young is a senior vice president of First Financial Equity Group in Scottsdale, Ariz. He has been an investment advisor and financial planner since 1982. Young is a Registered Investment Advisor (RIA), has a Series 7 Securities License as well as Series 63, 65 and 39. He is also a member of FINRA’s Board of Arbitrators. He is a retired lieutenant colonel in the U.S. Army Reserves.