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The pitfalls of uncoordinated benefits

Employers 02.07.2019 3 MIN READ

According to the U.S. Department of Labor, Bureau of Labor Statistics, on average employee benefits comprise 32% of total compensation.* Lack of coordination or underutilization of key benefits such as Health Savings Accounts (HSAs), Long-term Disability (LTD) insurance, retirement plans and employer stock purchase plans means you may not be getting the ROI for these programs, which can translate into retention problems.

Ayco’s Paul Clickman―senior vice president, Corporate Development Group―is a specialist in compensation and benefits, and has worked with hundreds of companies across the country. Among the biggest challenges he sees is addressing the lack of coordination between benefits.

“The issue isn’t that companies don’t provide enough benefits for their people, or that they need to add another benefit,” says Clickman. “The issue is that those existing benefits or resources are often uncoordinated, and are even at times competing with one another.” The role that Ayco plays as an integrator increases awareness, understanding and utilization of all of the offered corporate benefits, thus increasing efficiency and improved employee outcomes.


The costs of missed opportunity

When benefits aren’t coordinated, there are very real costs to the company. These include:

  • A lack of awareness of benefit choices and how to execute on them, leading to low engagement
  • Replacing talent who pose a risk to retention because they don’t view their benefits as competitive
  • Uncoordinated utilization due to siloed communications (not tied together) as companies increasingly offer disparate employee programs
  • A misunderstanding of the dynamic interplay between benefit elections. For example, electing contributions to a 401(k) or other retirement vehicles may depress participation in an HSA
  • Failure to make elections such as deferred compensation, excess liability, and beneficiary designations, that deliver costs savings, risk mitigation and enhanced focus to the company


The risk to employees

If the employee doesn’t utilize the available benefits completely and holistically, he or she is potentially leaving dollars on the table.

  • Employees who make benefit decisions without truly understanding the consequences of their elections miss out on more informed  and economically sound options  
  • Lack of comprehensive knowledge about benefit options can create a perception that they don’t have access to competitive benefits, leading to lower job satisfaction
  • Employees who aren’t fully utilizing benefits can suffer financial stress

The best opportunity an employee has for wealth accumulation and/or risk protection is the efficient use of employee benefit plans. Maximizing those benefits creates a need for planning between the various areas (retirement planning, tax planning, estate planning, insurance, etc.). 

“We guide executives and employees to understand, appreciate and maximize the resources and benefits that are extended to them within the organization,” says Clickman. “There is a spectrum of alternatives, and we help people think through options. The decisions made in one area of your financial life naturally impact all the others.” For example:

For every dollar that an employee invests in a health savings account (HSA), there are downstream effects that can include:

  1. A lower reportable income for the employee
  2. FICA savings for the company
  3. Depending on where the employee fits within their tax bracket and the level of contribution, the possibility that they might move to a lower tax bracket

Clickman says that Ayco’s unique, holistic financial counseling offering isn’t intended to displace other benefits and vendors within the organization, but rather Ayco can provide decision support in guiding both executives and all employees to utilize the plans provided, including introductions to other in-plan benefit providers (warm transfer). In this capacity, Ayco can also serve as a feedback loop to the organization, highlighting which benefits they are directing employees to most frequently, and conversely, what benefits are most underutilized. 

As innovators in company-sponsored financial counseling programs, Ayco’s holistic and personalized approach to financial planning is at the heart of our decades-long history.

Learn more about Ayco financial counseling as a benefit.

*U.S. Department of Labor, Bureau of Labor Statistics, Employer Costs for Employee Compensation, December 2016,


For disclosures relating to this article, please click here.