Consider Behavioral Bias in Retirement Plan Design & Communications 02/22/2019 Download Action Document As an investment professional, you may already know a great deal about how behavioral bias affects how investors make decisions and how they perceive their account performance. We know, of course, that behavioral finance tells us that many people are influenced by their emotions, their aversion to risk, their own social peer group, and sometimes by a skewed perception of control or investment skill. When it comes to retirement plans, there are a few things we can do to
Download Action Document As an investment professional, you may already know a great deal about how behavioral bias affects how investors make decisions and how they perceive their account performance. We know, of course, that behavioral finance tells us that many people are influenced by their emotions, their aversion to risk, their own social peer group, and sometimes by a skewed perception of control or investment skill. When it comes to retirement plans, there are a few things we can do to
Help Clients Find the 401(k) That’s Right for Them 01/30/2019 Download Action Document You know the expression - it’s not a one-size-fits-all-world. We’re different. From the foods we eat, to the cars we drive, to the places we go on vacation. And it’s also true when it comes to 401k plans. Ask two company owners what their’s looks like and you might get two different answers. It happens for a good reason - they may understand it differently and in fact, they may have very different plans. It’s no wonder really since there are so many options available
Download Action Document You know the expression - it’s not a one-size-fits-all-world. We’re different. From the foods we eat, to the cars we drive, to the places we go on vacation. And it’s also true when it comes to 401k plans. Ask two company owners what their’s looks like and you might get two different answers. It happens for a good reason - they may understand it differently and in fact, they may have very different plans. It’s no wonder really since there are so many options available
Helping Participants Understand RMDs 12/28/2018 Download Action Document In the retirement plan business, we naturally focus on helping clients accumulate wealth. But at some point we turn our attention from accumulation to decumulation. After all, everyone will reach the age at which they no longer contribute to their accounts and begin to withdraw money from them to sustain their lifestyles beyond their working years. At age 59 and a half, it’s permissible to withdraw money from a qualified retirement plan or IRA without penalty and
Download Action Document In the retirement plan business, we naturally focus on helping clients accumulate wealth. But at some point we turn our attention from accumulation to decumulation. After all, everyone will reach the age at which they no longer contribute to their accounts and begin to withdraw money from them to sustain their lifestyles beyond their working years. At age 59 and a half, it’s permissible to withdraw money from a qualified retirement plan or IRA without penalty and
Compliance Essentials 11/20/2018 Download Action Document At a glance, compliance tests assure that every retirement plan is producing a meaningful benefit to rank and file employees and that it demonstrates a level of fairness in the benefits those same employees get as compared to the benefits achieved by owners and other highly compensated employees. While it's not your responsibility to oversee these tasks, we think it's important to keep in mind that data requests and compliance tests are part of how clients experience
Download Action Document At a glance, compliance tests assure that every retirement plan is producing a meaningful benefit to rank and file employees and that it demonstrates a level of fairness in the benefits those same employees get as compared to the benefits achieved by owners and other highly compensated employees. While it's not your responsibility to oversee these tasks, we think it's important to keep in mind that data requests and compliance tests are part of how clients experience
Use Benchmarking to Your Advantage 11/01/2018 Download Action Document In some ways you can divide clients into two groups - those who are primarily motivated by lowest cost and those who seek value. That doesn’t necessarily align nicely with retirement plan benchmarking since it’s much easier to compare and report things that are more easily quantified than things like expertise and quality and the care of consulting that we deliver together. When cost is the primary driver, benchmarking is a pretty straightforward quantitative
Download Action Document In some ways you can divide clients into two groups - those who are primarily motivated by lowest cost and those who seek value. That doesn’t necessarily align nicely with retirement plan benchmarking since it’s much easier to compare and report things that are more easily quantified than things like expertise and quality and the care of consulting that we deliver together. When cost is the primary driver, benchmarking is a pretty straightforward quantitative
Mergers and Acquisitions 09/21/2018 Download Action Document Everyday companies large and small make decisions to combine forces. In fact, in 2017, more than 15,000 companies announced a merger or an acquisition. And it probably won’t surprise you, but M&A activity spans all major industry sectors and nearly all geographies. For some, it’s a strategy for growth. For others, it’s a defensive move to survive as markets and business requirements change. Whatever the motivation, there are almost always impacts on retirement benefits.
Download Action Document Everyday companies large and small make decisions to combine forces. In fact, in 2017, more than 15,000 companies announced a merger or an acquisition. And it probably won’t surprise you, but M&A activity spans all major industry sectors and nearly all geographies. For some, it’s a strategy for growth. For others, it’s a defensive move to survive as markets and business requirements change. Whatever the motivation, there are almost always impacts on retirement benefits.
Four Things to know about ERISA Fidelity Bonds and Fiduciary Liability insurance 08/03/2018 Download The Action Document The Employee Retirement Income Security Act known as "ERISA" regulates 401k and most other types of employee benefit plans. Under ERISA, anyone who handles plan funds must be covered by a fidelity bond. The bond protects the PLAN from losses that may result from fraudulent or dishonest acts. Here are some important things to know about Fidelity Bonds. An ERISA Fidelity Bond is not the same thing as Fiduciary Liability Insurance. The fidelity bond insures the
Download The Action Document The Employee Retirement Income Security Act known as "ERISA" regulates 401k and most other types of employee benefit plans. Under ERISA, anyone who handles plan funds must be covered by a fidelity bond. The bond protects the PLAN from losses that may result from fraudulent or dishonest acts. Here are some important things to know about Fidelity Bonds. An ERISA Fidelity Bond is not the same thing as Fiduciary Liability Insurance. The fidelity bond insures the
Aligning Plan Design with Client Goals 07/09/2018 Download Action Document Most of us live in homes that were not custom-designed for us. We adapt to them rather than expect them to be optimized to how we like to live. Most retirement plans are sold the same way. Companies buy something off the shelf that was intended for a generic audience, but not necessarily ideally suited for them. The irony is that while these plans are sold as cost-efficient, they often wind up costing their buyers a great deal in the long run because of lost tax
Download Action Document Most of us live in homes that were not custom-designed for us. We adapt to them rather than expect them to be optimized to how we like to live. Most retirement plans are sold the same way. Companies buy something off the shelf that was intended for a generic audience, but not necessarily ideally suited for them. The irony is that while these plans are sold as cost-efficient, they often wind up costing their buyers a great deal in the long run because of lost tax
Your TPA Partner Can Help You Win Business 06/05/2018 Download Action Document When it comes to the administration of retirement plans, most TPAs can execute the work pretty competently. And while there are differences in quality of process and internal expertise, most of this is technical work that happens behind the curtain. The result is that the vast majority of advisors, and clients for that matter, don’t generally see or perceive these differences. Where we really differentiate are in three important areas you and your clients DO see and
Download Action Document When it comes to the administration of retirement plans, most TPAs can execute the work pretty competently. And while there are differences in quality of process and internal expertise, most of this is technical work that happens behind the curtain. The result is that the vast majority of advisors, and clients for that matter, don’t generally see or perceive these differences. Where we really differentiate are in three important areas you and your clients DO see and
Advantages of an Unbundled Platform 05/18/2018 Download Action Document There are some things that we’re happy to buy right off the rack. After all, mass production usually means consistency and cost-savings. On the other hand, when we do buy off the shelf, we compromise on individual choice and sometimes flexibility in getting the exact qualities and features we want. In retirement plan terms, that can be a good way to think about the difference between a bundled solution and an unbundled solution. In a bundled approach, the client
Download Action Document There are some things that we’re happy to buy right off the rack. After all, mass production usually means consistency and cost-savings. On the other hand, when we do buy off the shelf, we compromise on individual choice and sometimes flexibility in getting the exact qualities and features we want. In retirement plan terms, that can be a good way to think about the difference between a bundled solution and an unbundled solution. In a bundled approach, the client
Plan Audits 04/11/2018 Download Action Document Your clients are familiar with the idea of an audit on their personal or corporate tax return, but they may not be familiar with an audit of their qualified retirement plan. There are two broad categories of plan audits. Today, we’ll focus quickly on two groups of plans that the Department of Labor requires to have financial statement audits by an independent qualified public accountant, or CPA. These audits are based on a plan’s participant count or if the plan holds
Download Action Document Your clients are familiar with the idea of an audit on their personal or corporate tax return, but they may not be familiar with an audit of their qualified retirement plan. There are two broad categories of plan audits. Today, we’ll focus quickly on two groups of plans that the Department of Labor requires to have financial statement audits by an independent qualified public accountant, or CPA. These audits are based on a plan’s participant count or if the plan holds
Mazimizing an Owner's Retirement Benefit 03/30/2018 Download Action Document It’s a common story – business owners put everything into their businesses for years before being in a financial position to put real money away for retirement. Once they’re ready to really get going, we can suggest a number of retirement plan designs and individual plan features that can help them reach their goals. Depending on their situation, here’s a quick snapshot of some of the most popular: First, a 401(k) plan with a Safe Harbor feature can be a great
Download Action Document It’s a common story – business owners put everything into their businesses for years before being in a financial position to put real money away for retirement. Once they’re ready to really get going, we can suggest a number of retirement plan designs and individual plan features that can help them reach their goals. Depending on their situation, here’s a quick snapshot of some of the most popular: First, a 401(k) plan with a Safe Harbor feature can be a great
Understanding how forfeitures work in retirement plans 02/16/2018 Download Action Document When we talk about 401k type retirement plans we sometimes focus on the contributions made by employees that are always immediately vested. In other words, it’s their money and they can always withdraw it without forfeiting any - subject to IRS rules about early withdrawals. We know, of course, that employers often make profit sharing or matching contributions, too. These contributions may be subject to a vesting schedule. Vesting over a period of years provides an
Download Action Document When we talk about 401k type retirement plans we sometimes focus on the contributions made by employees that are always immediately vested. In other words, it’s their money and they can always withdraw it without forfeiting any - subject to IRS rules about early withdrawals. We know, of course, that employers often make profit sharing or matching contributions, too. These contributions may be subject to a vesting schedule. Vesting over a period of years provides an
3(16) Fiduciary Services and Why You Should Care 01/12/2018 Download Action Document As a financial advisor, you know that the people who exercise control and authority over the management of a retirement plan’s assets are fiduciaries. So are professionals who provide investment advice with respect to those assets. In most cases, plan sponsors understand that they, too, play an investment fiduciary role unless they partially or fully outsource that function to an investment professional. What many of them don’t appear to recognize is that they also
Download Action Document As a financial advisor, you know that the people who exercise control and authority over the management of a retirement plan’s assets are fiduciaries. So are professionals who provide investment advice with respect to those assets. In most cases, plan sponsors understand that they, too, play an investment fiduciary role unless they partially or fully outsource that function to an investment professional. What many of them don’t appear to recognize is that they also
It’s All About Relationships 12/12/2017 Download Action Document There are many industry stats about 401k “sales.” Perhaps you have your own. It’s natural to talk in terms of lead generation and sales funnels and qualifying questions and, of course, closing. But, when you get down to it, it’s not really so much about generating leads as it is about generating relationships. Lead gen is all about an internal process. Relationship gen is about focusing on how we solve other people’s problems. To be sure, we still need to deliver on
Download Action Document There are many industry stats about 401k “sales.” Perhaps you have your own. It’s natural to talk in terms of lead generation and sales funnels and qualifying questions and, of course, closing. But, when you get down to it, it’s not really so much about generating leads as it is about generating relationships. Lead gen is all about an internal process. Relationship gen is about focusing on how we solve other people’s problems. To be sure, we still need to deliver on
Help Clients Understand Why a QDIA Matters 11/12/2017 Download Action Document Auto-enrollment has been proven to be effective in raising participation rates in 401(k) plans. As a result, it's been pretty widely adopted across the country, especially in mid- to larger plans. Automatic enrollment creates a situation where many employees fail to make an investment election on their own. This creates a need for a default investment in the lineup. A cash fund has no risk, but also has no growth potential. Other investments may have income or growth
Download Action Document Auto-enrollment has been proven to be effective in raising participation rates in 401(k) plans. As a result, it's been pretty widely adopted across the country, especially in mid- to larger plans. Automatic enrollment creates a situation where many employees fail to make an investment election on their own. This creates a need for a default investment in the lineup. A cash fund has no risk, but also has no growth potential. Other investments may have income or growth
The Loan They Never Take May Make All the Difference 10/12/2017 Download Action Document IRS rules provide for participant loans and hardship withdrawals from 401k and other plans. They're not required, but rather left to the discretion of the plan sponsor. Today, there's a good bit of debate about how participant loans affect long term retirement outcomes. On one hand, it's not hard to appreciate that employees may be more motivated to enroll in a plan that includes a loan feature since it provides comfort that they'll be able to access their savings in
Download Action Document IRS rules provide for participant loans and hardship withdrawals from 401k and other plans. They're not required, but rather left to the discretion of the plan sponsor. Today, there's a good bit of debate about how participant loans affect long term retirement outcomes. On one hand, it's not hard to appreciate that employees may be more motivated to enroll in a plan that includes a loan feature since it provides comfort that they'll be able to access their savings in
Of Course Your Clients Are Fiduciaries 09/12/2017 Download Action Document When it comes to the topic of fiduciary responsibilities for qualified retirement plans, there are three things we know really well: Plan Sponsors are, by definition, a fiduciary of their own plan as they exercise control and act on behalf of the plan. Some number of plan sponsors don’t know this even though we try to do our best to make this clear. There are real and serious consequences for them and for your relationship with them if they don’t execute their role
Download Action Document When it comes to the topic of fiduciary responsibilities for qualified retirement plans, there are three things we know really well: Plan Sponsors are, by definition, a fiduciary of their own plan as they exercise control and act on behalf of the plan. Some number of plan sponsors don’t know this even though we try to do our best to make this clear. There are real and serious consequences for them and for your relationship with them if they don’t execute their role
When to Set Sail With Safe Harbor 08/12/2017 Download Action Document You already know that a 401(k) is a very popular retirement plan and, like other plan designs, it allows employees to take advantage of tax deferrals on contributions and earnings while their money accumulates for retirement. To enjoy this special status, the IRS put in place rules to assure that plans benefit rank and file employees and not just a company’s owners and highly compensated employees. These are called nondiscrimination rules and there are three tests we
Download Action Document You already know that a 401(k) is a very popular retirement plan and, like other plan designs, it allows employees to take advantage of tax deferrals on contributions and earnings while their money accumulates for retirement. To enjoy this special status, the IRS put in place rules to assure that plans benefit rank and file employees and not just a company’s owners and highly compensated employees. These are called nondiscrimination rules and there are three tests we
DB Plans Are Alive and Well 07/12/2017 Download Action Document For the most part, the news about Defined Benefit plans lately has not been particularly good. Whether a big company could no longer fund its plan or how it was bankrupting their business, headlines have discouraged many businesses from seriously considering a DB plan. But it’s time to take another look because, for smaller, more mature companies, DB plans can be a great vehicle to help employees prepare for retirement. You may be surprised to learn that they are
Download Action Document For the most part, the news about Defined Benefit plans lately has not been particularly good. Whether a big company could no longer fund its plan or how it was bankrupting their business, headlines have discouraged many businesses from seriously considering a DB plan. But it’s time to take another look because, for smaller, more mature companies, DB plans can be a great vehicle to help employees prepare for retirement. You may be surprised to learn that they are
Financial wellness – it’s essential to saving for retirement 06/12/2017 Download Action Document Introducing a workplace retirement plan can be a compelling way for individuals to take control of their retirement savings, but for so many people that don’t have control of their personal situation, the retirement plan at work doesn’t have a chance to be successful without a helping hand and tools to achieve financial wellness. We tend to talk about retirement plans in a vacuum – what it is and why it’s important, but there is a real need to connect it to people’s
Download Action Document Introducing a workplace retirement plan can be a compelling way for individuals to take control of their retirement savings, but for so many people that don’t have control of their personal situation, the retirement plan at work doesn’t have a chance to be successful without a helping hand and tools to achieve financial wellness. We tend to talk about retirement plans in a vacuum – what it is and why it’s important, but there is a real need to connect it to people’s
Cash Balance plans allow six figure annual contributions 05/12/2017 Download Action Document Most people can contribute to their 401(k) without worrying about exceeding the annual contribution limit. If you’re under 50 years old, that’s $18,000 a year. If you’re 50 or older, it’s $24,000. A small, but important segment of the population, though, has the ability to contribute significantly more to their retirement accounts. For some of them, a profit-sharing plan and 401(k) ups the saving limit to $60,000. But for people really looking to save even more on
Download Action Document Most people can contribute to their 401(k) without worrying about exceeding the annual contribution limit. If you’re under 50 years old, that’s $18,000 a year. If you’re 50 or older, it’s $24,000. A small, but important segment of the population, though, has the ability to contribute significantly more to their retirement accounts. For some of them, a profit-sharing plan and 401(k) ups the saving limit to $60,000. But for people really looking to save even more on
To Roth or Not to Roth: 04/12/2017 Download Action Document A compelling feature of a 401(k) type retirement plan has always been the opportunity to contribute money from your current income on a pre-tax basis today - let it work for you over the years - and then pay taxes on the accumulated balance as you withdraw it in future. That’s a real attraction to many company owners and their workers. But what if you flipped this - and contributed money to your retirement savings account with post-tax dollars that you invested over
Download Action Document A compelling feature of a 401(k) type retirement plan has always been the opportunity to contribute money from your current income on a pre-tax basis today - let it work for you over the years - and then pay taxes on the accumulated balance as you withdraw it in future. That’s a real attraction to many company owners and their workers. But what if you flipped this - and contributed money to your retirement savings account with post-tax dollars that you invested over
Auto-Enrollment and Auto-Escalation Help Employees Save For Retirement 03/12/2017 Download Action Document When we think about the important goals we’ve reached in our lives, like graduating from college or achieving a career milestone, the journey likely took time, perseverance, and a whole lot of hard work. But the payoff in the end are the rewards we’ve earned and the sense of pride we feel in the accomplishment. Saving for retirement is like this, too. The journey absolutely takes time and perseverance, but the need to participate as early in life as possible is
Download Action Document When we think about the important goals we’ve reached in our lives, like graduating from college or achieving a career milestone, the journey likely took time, perseverance, and a whole lot of hard work. But the payoff in the end are the rewards we’ve earned and the sense of pride we feel in the accomplishment. Saving for retirement is like this, too. The journey absolutely takes time and perseverance, but the need to participate as early in life as possible is
Answering the "Why Us?" Question 02/12/2017 Download Action Document Whether retirement plans are core to your practice or part of a larger strategy to help clients, you’ll compete more effectively if you successfully communicate how you differentiate yourself from other advisors. From the perspective of many business owners, most financial advisors provide pretty similar services and say many of the same things. The key is to help them understand why a relationship with you can benefit them. That’s what we call answering the “WHY US?”
Download Action Document Whether retirement plans are core to your practice or part of a larger strategy to help clients, you’ll compete more effectively if you successfully communicate how you differentiate yourself from other advisors. From the perspective of many business owners, most financial advisors provide pretty similar services and say many of the same things. The key is to help them understand why a relationship with you can benefit them. That’s what we call answering the “WHY US?”
It’s Not a One-Size-Fits-All World 01/12/2017 Download Action Document The same applies to retirement plans like a 401(k). Ask two company owners what it means and you might get two different answers. That happens for good reason - they may understand it differently and in fact, they may have a very different plans. It’s no wonder since there are so many options when it comes to 401(k) plans. To be an effective advisor, it’s important to recognize these distinctions and ask the right questions to learn about the kind of 401(k) your
Download Action Document The same applies to retirement plans like a 401(k). Ask two company owners what it means and you might get two different answers. That happens for good reason - they may understand it differently and in fact, they may have a very different plans. It’s no wonder since there are so many options when it comes to 401(k) plans. To be an effective advisor, it’s important to recognize these distinctions and ask the right questions to learn about the kind of 401(k) your
