Before 401k Advisors LLC, Hilbrant spent 21 years at
Principal Financial Group, as vice president of sales in Chicago. He was
responsible for new-plan sales and employee education efforts for 1,200-plus
defined benefit (DB) and defined contribution (DC) plans.
Hilbrant and the other founders of 401k Advisors USA all had
experience working with the biggest consulting firms in the industry and
anticipated that small to mid-sized plans would someday have the same fiduciary
concerns as plans at the $1 billion level. “That was really the genesis of the
whole thing,” he says. “We felt we had a good opportunity to build businesses
in our local regions.”
Although starting a business was tough, Hilbrant says his
firm—which specializes in 401(k), defined benefit and nonqualified retirement
plans—had appeal because of its client service model. Clients enjoy having a
one-person contact responsible for creating reports, directing employee
meetings, being accessible to the work force and serving as an adjunct to human
resources, he says.
“Our business model is built around face-to-face. I’m going
to be the person here at every quarterly meeting. I’m going to educate. I’m
going to answer a question anytime on my cell,” he says.
That one-on-one approach to client service gave Hilbrant’s
business the edge it needed to get some traction. After all, the new firm was
competing with companies in Chicago that had been around for many years.
“To compete against that existing service model was a huge
challenge,” he says, adding that his company’s unique focus on 401(k) during
that time was one thing that helped differentiate it from other firms. “I’m
thrilled doing what I’m doing and [about] how I got started. How I got here,
that was quite a challenge.”
Today, Hilbrant’s firm advises 42 plans, with a median plan
size of $20 million and five-year average client tenure. Although he targets
plans with assets between $10 million and $50 million, his client base includes
sponsors outside that range; the largest plan has $400 million in assets.
In the future, Hilbrant plans to add four or five clients
each year, which, he says, is a manageable number for maintaining personal
relationships. “I look at each [client] as a new friendship, a new
relationship, a new partnership.”
The firm has four advisers, one wealth manager and four
support staff, and though he has no current plans to grow personnel, Hilbrant
says he is open to adding advisers and expanding the support team in the coming
years, as needed.
The core of Hilbrant’s passion for this industry is helping
the average worker retire. Hilbrant’s father was a lineman for a rural electric
association in Iowa. When his father passed away from pancreatic cancer in
1988, Hilbrant says he was struck by the ramifications of working your entire
life and having no pension or 401(k) assets.
“There are lots of people in this country who have this sort
of scenario, and there are ways to change that,” he says. “So my passion is
really to [help] the average
working-class person.” His firm meets
with an estimated 75% of its plan participants and offers educational group
seminars and one-on-one meetings.
educates beyond 401(k), providing guidance on how to manage personal debt and
expenses; after all, he says, these are connected. Still, “the most important
thing for participants to understand is the connection between what they are
deferring and what that will represent for them in the 20 to 30 years they will
be living in retirement,” he says. “People need to get that connection, and it
starts with a real understanding of how those calculations are done and what
those calculations mean.”
people know the percentage of each paycheck they are saving for retirement but
are uneducated about how that savings will translate into a source of income
later, “We are trying to bridge that gap,” he says, “[to] give people a real
track to march on.”
As you raise
the needle on
retirement confidence, Hilbrant says,
workplace productivity and attitudes also improve. “So it has real profit
benefits for corporate America.”
401k Advisors LLC will continue to
focus on retirement readiness. In fact, he says the firm has a full-time
director of retirement readiness, who gathers data for clients, such as the
percentage of their employees who will be ready to retire “in X number of
years” or which demographics are least prepared for retirement.
As for advising
his plan sponsor clients, Hilbrant conducts quarterly in-person meetings with
them, and his firm documents and archives each piece of the retirement plan.
“As an adviser, you have to go to those meetings prepared to bring value to the
conversation,” Hilbrant says. That may include explaining options and
performance, making action plans, and having studies and research on hand. He
likens it to building a court case with evidence.
appreciate you coming and teaching them something they didn’t know,” he says.
“The educational piece of what we do is a huge component of our service model.”
describes his firm’s investment approach as “unique,” because it provides
investment metrics for funds the clients currently use, as well as for other,
possibly more suitable funds they do not—but could—use. Although such funds
may very well exist, he says, some advisers neglect to inform the client if
their current fund performs sufficiently.
As part of a plan to increase technological
efficiencies, Hilbrant’s firm uses iPads for reports; this spares paper, and
clients can access the reports electronically.
The firm also
offers a cloud-based fiduciary vault for its clients, which archives 30 different
aspects of retirement plan oversight, such as summary plan descriptions,
quarterly reports, meeting minutes and investment policy statements. Through
this system, clients gain convenient access to this information, a benefit they
particularly appreciate—especially when audited or facing legal challenges.
his firm often found that new clients had previously lacked an organized system
for this information, storing it in multiple file drawers. Many advisers retain
just the investment report, he explains, and do not keep track of fiduciary
governance information because they assume their clients have it.
the Web-based archive system provides a new level of efficiency “instead of
just filling up binder after binder with paper,” he says.
When asked what
is next for 401k Advisors, Hilbrant says he foresees working with more defined
benefit plans—his firm currently advises four of them. He says he is a big
believer in these plans, because they are the best way to help participants get
to retirement, properly prepared.