2016 RPAY – The Catanella Institutional Consulting Team of UBS

Being proactive and providing customized and personalized solutions for clients is at the heart of the work of The Catanella Institutional Consulting Team of UBS. The team’s mission statement is “to provide our plan sponsor clients with a customized and service-driven model to deliver successful retirement outcomes for their participants, while effectively helping guide them through the ever-changing fiduciary landscape.”

This service-driven model has resulted in considerable client loyalty—some relationships spanning one or two decades—as well as an influx of numerous sponsor clients with a total of more than $800 million in assets in the past eight years, bringing total assets under advisement (AUA) for the practice to $2.3 billion today. This could be attributed, in part, to the fact that the team goes the extra mile. For one example, a client that is a large private equity firm, created a “carve-out” company. As that new organization launched and looked to create a retirement savings plan from the ground up, the Catanella team provided benchmarking, plan structure and committee assistance at no cost for six months.

This dedication to clients was also clear in 2008, in the team’s quick response to the deteriorating economy.

“In the midst of the 2008 financial crisis, when we knew our plan sponsor clients were being bombarded by hundreds of panicking plan participants, following the news of the fall of Lehman Brothers, our team proactively reached out to Mike Ryan, the chief investment officer [CIO] of UBS Wealth Management Americas, to lead a live market update call with full questions and answers for all of our client plan participants,” says Ken Catanella, managing director, wealth management, who runs the firm alongside his son, Brian Catanella. “Not only did this help those participants avoid making an emotion-based investment decision at the height of market volatility, but this helped to take a tremendous burden off the shoulders of our plan sponsor clients, which was equally important. After our call, they received far fewer participant questions and concerns.”

Another, more recent, example of how The Catanella Institutional Consulting Team determinedly gets in front of critical issues facing plan sponsors is its regular “share class optimization” analysis of each plan’s existing investment lineups. The retirement planning industry is facing a new era of stricter fiduciary scrutiny from the Department of Labor (DOL), along with the potential for litigable action, Ken Catanella notes. The team looks to see if the plan has crossed any thresholds to qualify for breakpoints in share classes or if there are ways to decrease the participant investment costs, he says.

“We then review every share class available for the fund, and, depending on how the plan fees are administered, we seek to explore and explain the options available to the plan. What we have found by providing this to clients is that, not only do we have a transcript of a detailed conversation surrounding the fees of the plan and how they are administered, but we are additionally able to deliver the most efficient fee model available that best fits their demographics and participant base,” he says.

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As a co-fiduciary, the firm works with clients “to find options that are truly in the best interest of their participants over the long run, and these conversations usually lead to significant reductions in plan participants’ overall costs,” Ken Catanella adds.

Critical Plan Design
Getting participants retirement ready is the underlying goal of the team’s approach to plan design. The Catanella team members are big proponents of automatic enrollment, automatic escalation, stretch matches and both in-person group and one-on-one individual participant education. Catanella’s espousal of “auto” features is resonating with clients, as 90% of them use auto-enrollment, 60% use auto-escalation, and 20% have conducted a re-enrollment.

Giving sponsors an analysis of how their investment in their retirement plan can produce higher savings and retirement readiness scores has helped convince sponsors initially skeptical or reticent to embrace these features of their value, the team says.

However, resting on the laurels of automatic features is not enough, the team believes. It is also important to incentivize participants to increase their deferrals by stretching the match, says Brian Catanella, vice president, wealth management. For example, instead of offering a 50% match on a participant’s first 5% of contributions, change that to 25% of the first 10%, he says. “Our position is that we have to be more proactive with plan sponsors and their participants to get into the 10% to 15% savings bandwidth so that participants have a fighting chance of having enough saved for a successful retirement,” he says.

On-site participant seminars are part of the retirement readiness solution, and they need to be engaging, inspiring and candid, the father-and-son team believes. That means going beyond a simple replacement rate calculation and including projections for health care costs, they say. With such expenses rising about 6% a year and projections for a retiree’s health care needs estimated at $245,000 to $392,000, “we believe it is critically important to both deliver financial education and to discuss the ‘elephant in the room’—health care costs after retirement,” Ken Catanella says. “This is a significant wake-up call for our participant audience.”

To make it personal, he talks about how his own father’s lifetime savings were wiped out within five years of retiring, due to an illness his mother faced. “We feel strongly that it’s our responsibility to warn our participants by using real-life experiences and facts customized to the audience, and this model has been successful in our practice,” he says. Likewise, as the firm’s second generation, Brian Catanella speaks to younger participants about the importance of saving early for retirement in spite of other pressing financial needs, such as student debt, the desire to save for a mortgage or to begin contributing to a child’s education.

Other Differentiators
Another way that The Catanella Institutional Consulting Team of UBS says it differs from its competitors is the on-site due diligence meetings the team holds with investment managers it is planning to hire or that it has placed on a watch list. “We closely monitor the philosophy and process of our managers and feel even more confident in making recommendations to plan sponsors when we truly know the people behind it, as well,” Ken Catanella says.

In the past year, the firm has embraced technology as an additional way to communicate with participants, notably through webcasts, smart phone apps, Brainshark technology and investor psychology-based tools to enable participants to measure retirement income success. As Brian Catanella puts it, “We are excited to be a part of this transformational era of the 401(k) plan.”

BUSINESS AT A GLANCE

LOCATION: Philadelphia, Pennsylvania
PLAN ASSETS UNDER ADVISEMENT: $2.3 billion
MEDIAN PLAN SIZE (IN ASSETS): $55 million
TOTAL PLANS UNDER ADMINISTRATION: 28
TOTAL PARTICIPANTS IN PLANS SERVED: 28,140
SUPPORT STAFF: 2

2016 RPAY – Jania Stout

A 20-year veteran of the retirement planning industry, Jania Stout, managing director of Fiduciary Plan Advisors, started in the industry in recordkeeping and administration at ADP and Fidelity Investments. Wanting to have a greater role in engaging with and offering advice to plan sponsors, eight years ago, Stout became an adviser, and two years ago, she founded her practice in order to “truly help our plan sponsor clients.”

“The past eight years working as a plan adviser have been extremely rewarding,” she says. “Anyone who knows me or works for me knows that I am in this business to change lives. It is not just about charts and graphs and market returns. It is about protecting my clients and helping participants get over the finish line.”

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Stout prides herself on taking a fresh look at retirement planning, starting with a financial wellness program she launched in 2012, well ahead of today’s concentration on financial wellness. “It was important to me that I delivered to my clients in-person financial education and not just rely on the providers,” who, she thought, were not doing as good of a job as she would have liked. So, Stout decided to invest the time and resources to create a well-thought-out financial wellness program.

Stout called the program H.E.R.O., with “H” standing for having a budget, “E” for eliminating debt, “R” for knowing your retirement number, and “O” for owning it. “The feedback I received after rolling that out was amazing,” she says. “That is when I became officially hooked on the idea of financial wellness. If I could help people today with their financial issues, I could get them to focus their resources after paying off debt to save for retirement.” Three years ago, Fiduciary Plan Advisors began offering monthly educational webinars for participants, as well.

The H.E.R.O. financial wellness program is supported by a change in nomenclature for the plans that Stout serves. Rather than call them retirement plans, or 401(k) plans, she is encouraging her clients to refer to them as “life and savings plans” that encompasses more than just retirement savings. In the past 12 months, she has introduced the idea adding post-tax savings to the plans, so that participants can start saving for an emergency fund, pay down debt and, thereby, be better equipped to contribute to their retirement.

With retirement outcomes being paramount to Fiduciary Plan Advisors, Stout has also created a unique position at her practice: the director of participant success. “The biggest impact I have had on improving retirement readiness is creating the role of the director of participant success,” she explains. “This is a salaried position and is someone who works with me and our clients to ensure we deliver the right amount of focus on educating and advising our clients and their participants. We don’t just deliver in-person meetings. We deliver a strategy and spend hours and hours on implementing it.”

The director of participant success is reinforced by a subcommittee for financial wellness that Fiduciary Plan Advisors establishes within every retirement plan committee. Working very closely with the subcommittee, the practice, led by the director of participant success, conducts biweekly calls with the group and reports on progress being made toward the plan’s goals every quarter. “It is probably the most time-consuming aspect of our business model, but it is the most important aspect to helping improve the outcomes for our participants,” Stout says. “It is easy for most advisers to say they do financial education or conduct meetings, but it is the tracking of the outcomes that I think we do a bit differently than most. It is tedious at times, but when you deliver the outcomes and start to see a goal being achieved, it makes it all worth it.”

On the subject of helping participants to save as much as possible, Fiduciary Plan Advisors has also educated one sponsor client about the helpfulness of the post-tax savings to reduce loans. This client has had an ongoing issue with loans, Stout notes. “I am working with the committee now on amending the plan to do away with loans and add a post-tax source for savings. This way, a participant can take money out of the post-tax source, i.e. the emergency fund, and not need to consider a loan. This client has about 3,500 employees, and we are excited to see that if we educate them about having a budget, eliminating debt and making use of the post-tax savings, this will drive better outcomes for them.”

Fiduciary Plan Advisors is as concerned with educating Millennials as it is with other demographic groups about the need to eliminate debt, Stout say:  “Many Baby Boomers, for example, have refinanced their homes several times and are going into retirement with a high percentage of debt and no budget. For the first times in their lives, they will have a big pot of money and not really know how to have that last for their retirement years.” That is why it is as equally important to educate pre-retirees about eliminating debt as it is Millennials, Stout believes.

Better Plan Design

To convince plan sponsor clients to create more robust plan design and embrace financial wellness, Fiduciary Plan Advisors highlights the results of two of its clients that won the PLANSPONSOR Plan Sponsor of the Year awards in 2015 and 2014. Stout’s goal is for 100% of employees to participate in the plan; save an average of 10% a year, including company matches; for 90% of participants to be invested in an asset-allocation solution; and for 90% of participants to be on track for a successful retirement.

The high bar that Stout sets for her plans appears to be working, as 90% of her clients automatically enroll participants, 40% use automatic escalation, 40% have completed a reenrollment, and 100% use an asset-allocation solution.

Fiduciary Plan Services is also working to move all of its clients out of funds with revenue-sharing fees. The firm also clearly states all fees on participant statements.

In addition to these services, Fiduciary Plan Advisors conducts all-day fiduciary training workshops for plan sponsors. For large pension plans, the practice offers outsourced chief investment officer (CIO) searches.

As for what Stout takes the most pride in as a retirement plan adviser, it is “changing the lives of working Americans. It is a big reason why I feel so good about the job I do.”

LOCATION: Phoenix, Maryland
PLAN ASSETS UNDER ADVISEMENT: $1.5 billion
MEDIAN PLAN SIZE (IN ASSETS): $40 million
TOTAL PLANS UNDER ADMINISTRATION: 30
TOTAL PARTICIPANTS IN PLANS SERVED: 25,000
SUPPORT STAFF: 4

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