I recently had a conversation with a pharmacy owner and I asked him the question, "Is your pharmacy 401k perceived by your employees as a benefit?"  He responded like most pharmacy owners would and said that the 401k is part of a comprehensive benefit package for his full time employees.  I then followed up with another question.  Do your employees understand how to use your retirement plan to achieve their retirement goals? He responded by saying, "I have no idea, but I need that to be a resounding yes."

Unfortunately, this is a common conversation we have in the pharmacy world (and business world in general). Fortunately, pharmacy 401ks can be a significant tool to help prepare pharmacy employees for retirement. These plans also can significantly enhance the legacy pharmacy owners have for their employees by doing what they're supposed to do, help the employees retire.  We are at a crucial cross roads in our country when it comes to preparedness for retirement for employees and you may be on the last line of defense.  It's time for all of us collectively to put our boots on and get to work. So, how can you help pharmacy employees prepare for retirement?

We believe the two main things that need to be addressed are the quality of advice and level of service being received by pharmacy employees.  Improving in these areas can immediately start combatting the problem of retirement preparedness. Did you know: 8 out of 10 Americans are unprepared for retirement. This statistic is very sad but true.  This means that there is a great chance that only 20 percent of your employees will be adequately prepared for retirement.

Let's look at quality of advice first.  We often have conversations with pharmacy owners who say they chose the advisor on the plan because they know him or her, go to church with him or her, know his or her parents, he or she was the only option in town, etc.  We rarely hear that he or she is the most knowledgeable advisor that we found in helping employees achieve the money they need to retire. This is one of the biggest responsibilities you have when you decide to start a 401k plan.

It's important that your advisor is skilled in this area because it's really your head on the chopping block if things do not go well for your employees. We suggest you ask the following question to your current advisor or any advisor(s) you are evaluating for your 401k:

How would you help (provide employee name and information here) use my plan to retire?

The advisor should give you specific steps he or she would take to help that employee to retire.  You may want to do this for employees that are at different stages of their lives (i.e. 55 year old vs. 25 year old) to make sure the advisor can help a wide variety of employees retire.

Now, let's move to level of service. This is another area where advisors need to dramatically improve. It's not uncommon for us to hear that it's been years since we have seen our advisor.  Once again, it's important to remember that it will be your head on the chopping block if things don't go well for the employees. A high level of service can help protect you as the owner and help improve the education of the employees. Employee education is another big responsibility you have as the plan sponsor. If you feel you are not getting the proper level of service or want to assess your current level of service from your advisor, then we suggest you have a meeting with him or her and ask him the following question:

Would you be willing to commit to a minimum of two meetings a year with the employees and one with me as the plan sponsor?

We feel the answer should be yes to this question from all advisors because this should be the minimum level of service provided.  

The first employee meeting should be just an update on where things stand with the 401k and potential changes in the 401k world.  The second (this is the most important and most neglected) would be a one on one meeting with the employees to help them understand the things they need to do to retire with the plan in place (i.e. how much risk to take and how much to contribute).  The meeting with the plan sponsor is just an annual review to make sure the plan still meets the needs of the plan sponsor and the employees.

In the spirit of Thanksgiving, we want all of you that read our blogs that we truly appreciate you. We hope and pray that we are making a difference in the pharmacy community.  If there is anything we can ever do for your, please do not hesitate to ask.