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What Would Aesop Say About ESOPs?

jerry ripperger's picture

Aesop (pronounced ee-sop), the famous Greek story teller, had no knowledge of Employee Stock Ownership Plans (ESOPs).  In all fairness, it would be surprising if he did as they were not recognized until the Employee Retirement Income Security Act of 1974 was passed – almost 2,500 years after his death.

Why would Aesop support ESOPs?A picture of Aesop, the greek storyteller

I reviewed some of his quotations and it leads me to believe that he may be a supporter of such plans.  ESOPs address several issues that seemingly parallel quotes he had noted among his contemporaries in ancient Greece that still exist today.

It is thrifty to prepare today for the wants of tomorrow. – Aesop

Are most employee’s planning for their financial future?

Let’s look at some facts. According to the first quarter 2012 Principal Financial Well-Being Index, 67 percent of employees are very concerned about their long term financial future, but only 35 percent of employees indicate that they are saving enough money to live comfortably in retirement.

Let’s get back to the basics really quick before this all starts sounding Greek.

ESOPs are defined contribution retirement plans.  Typically they are funded by the employer and serve as an additional retirement plan.  The average account balance for an ESOP participant is $195,000, offering a sizable benefit at retirement and helping close the savings gap*.

ESOPs help you prepare today for a future need, retirement.

What’s in it for Aesop – and you?

Never trust the advice of a man in difficulties.  –  Aesop

Well said Aesop. The Principal Financial Well-Being Index also found that about a quarter (24%) of employees indicate that they use a financial professional to provide advice and guidance.  Who are the other 76 percent turning to – if anyone?  Families, friends, and neighbors may not possess any insight greater than theirs.

ESOPs are typically advised by a number of professionals including accountants, attorneys, consultants, and investment advisors.

As a retirement plan there are fiduciary requirements regarding the operation of the program.  This professional guidance can assist participants as they prepare for retirement.

Why Aesop – and you – need to take action ASAP!

After all is said and done, more is said than done.  –  Aesop

Alternately this might be stated as “talk is cheap” or “actions speak louder than words.”

What percentage of your fellow employees are not taking action? Funny you should ask…

Twenty eight percent of employees have not yet planned for retirement.  A slight majority of employees (51%) think their personal financial situation is unchanged from a year ago.

As a result, it is unlikely that merely willing a change is going to create one.

Seize the day!

An ESOP helps create change by creating retirement savings on behalf of the employee.  The employee does not typically see a reduction in take home pay.  In this instance, more is done than said.

If Aesop could like ESOPs, ask yourself, “Shouldn’t you take a look as well?”

In addition to blogging here, I also tweet regularly about topics of interest to ESOPs @jlripperger.

Click here to follow my ESOP blog

Your turn…

Affiliation Disclosures

No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values. Company stock is not a pooled investment. Stock may experience greater volatility and should not be directly compared to investment options that have a more diversified investment mix. It is not intended to serve as a complete investment program by itself.

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

*The ESOP Association.  2010 Company Survey conducted among ESOP Association members


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