2015 RPAY – Compass Financial Partners

PA: How is your team/process/structure unique?

Compass Financial Partners: At Compass Financial Partners, we know we’re not the only firm offering retirement plan consulting to plan sponsors across the U.S. But while other firms may offer a similar list of services, we believe that who we are and how we operate sets us apart. As highly credentialed experts with a seasoned history of helping clients retire confidently, we have earned the trust and respect of our clients and have established ourselves as recognized thought leaders in the retirement plan industry. Our team synchronizes goals across plan design, investments, communications and administrative support to create optimal outcomes for our clients.

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PA: Describe any particularly noteworthy investment initiatives you have led with your customer base in the past 12 months.

CFP: Our investment process is formalized by our internal chartered financial analysts (CFAs), as we believe that having the experience and expertise of highly credentialed staff within our firm lends greatly to the depth, breadth and relevancy of our investment consulting services. Most importantly, our clients appreciate and enjoy the commentary we are able to deliver because of our internal bench strength. Through our “boots on the ground” due diligence efforts over the past 12 months, our CFAs completed investment manager due diligence meetings, traveling to fund headquarters from San Francisco to New York and meeting with portfolio managers directly. In addition, our team attended investment manager conferences and hosted countless conference calls directly with fund investment management teams. This enabled us to provide direct insights and recommendations to our clients where most firms rely on third-party information sources only.

PA: Please describe any special education or communication initiatives you’ve undertaken with plan sponsors or participants.

CFP: In August, we announced our partnership with Financial Finesse, the nation’s leading provider of unbiased workplace financial wellness programs, to provide our clients with enhanced, comprehensive financial wellness programs designed to help employees better save and invest for retirement. 

Through this partnership, we have expanded our capabilities to provide retirement plan participants with robust financial wellness programs and content specifically designed to increase the amount employees defer into the retirement plan; to improve investing behaviors; and to reduce plan leakage such as from plan loans and hardship withdrawals. Our partnership enables us to provide Financial Finesse’s financial education, which earned the 2012 Profit Sharing/401(k) Council of American Signature Award, to our clients at a discount; this enables them to scale their programs with additional nationwide, phone-based financial coaching, customized benefits-
planning platforms and one-on-one financial planning sessions for employees facing serious financial hardship.

PA: What are the most important issues your plan sponsors face with their company retirement plan, and what specific actions do you take to assist them in overcoming those issues?

CFP: The most important issue that plan sponsors face is the potential for their employees to not be able to retire on their own terms. Maximum impact can only be achieved when all parties in an organization’s retirement plan work together as one cohesive team. 

From investment selection to participant education to fiduciary support, our teams’ specialists work together to maximize each plan, enabling clients and their participants to have the best resources to achieve retirement readiness. By building on the foundation of our internal bench strength, we collaborate with each plan’s external partners to enhance the experience and level of service received. We believe that thoughtful plan design, coupled with a measured strategic participant communications program, can effectively push the needle to achieve successful outcomes.

BUSINESS AT A GLANCE

PLAN ASSETS UNDER ADVISEMENT: $5.1 billion

MEDIAN PLAN SIZE (IN ASSETS): $13.9 million

TOTAL PLANS UNDER ADVISEMENT: 92

TOTAL PARTICIPANTS IN PLANS SERVED: 76,000

2015 RPAY – The Casey Retirement Group at Morgan Stanley

PA: What have you done in the past year to improve participants’ retirement readiness?

The Casey Retirement Group: Our team has constructed the informational architecture and education in such a way that participants are more likely to make good decisions. Richard Thaler from the University of Chicago calls it “libertarian paternalism.” This is an apt description because you want to give people a choice, but you don’t want to force them to do anything. We’ve applied the science of behavioral finance and have seen improvements in overall plan health. For example, a casino client initiated retroactive auto-enrollment with auto-increase, due to significant turnover and a transient population, as those things have made it a challenge for highly compensated employees (HCEs) to fully maximize their contributions. 

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Since the change, the average deferral rate for this plan has grown from 3% to 7%, and average participation has grown from 35% to 75%. Not only has this change, combined with the company match, helped non-HCEs to save more, but it has also resulted in a decrease in returns of excess contributions. However, the plan still does not pass discrimination testing; therefore, we recommended a nonqualified deferred compensation (NQDC) plan that provides for return of excess contributions to flow directly to the NQDC plan. Non-HCEs are saving more, and HCEs have a solution for their needs. All participants in the plan can get on track to a dignified retirement.

PA: As a retirement plan adviser, what do you take the most pride in?

CRG: More than ever, the education, information and tools we provide to help participants secure their retirement; such efforts might have the greatest impact on their lives. It is truly rewarding for our team to see participant behavior positively change, even though they may not be aware of the full impact on their lives until years later. We hope someday, upon retirement, they will look back and reflect on the moment when the importance of a dignified retirement became clear. 

PA: What are the most important issues your plan sponsors face with their company retirement plan, and what specific actions do you take to assist them in overcoming those issues?

CRG: Plan sponsors often place retirement benefits at the bottom of their priority list, not fully understanding the impact of their decision. On top of running a successful business, plan sponsors are now tasked with having a working understanding of Employee Retirement Income Security Act (ERISA), Department of Labor (DOL) and Internal Revenue Service (IRS) requirements. Juggling these duties while balancing fiduciary mandates and keeping plan costs low is difficult enough. Add to that the need to help participants reach their retirement goals, in order to maintain a healthy work force, and the need for professional advice becomes clear. 

However, the proper advice is equally important. Too often, we come across plans with an adviser who has been there for years but done nothing more than annual investment reviews. Participants need a professional in order to get answers to their questions and to help them get on the right path to build a secure retirement. We offer plan sponsors services designed to ease their fiduciary requirements by acting as an ERISA 3(21) fiduciary and providing investment advice or taking investment discretion as 3(38) investment manager. 

PA: What changes to your practice or service model do have planned for this year?

CRG: We plan on utilizing model portfolios more this year. The use of target-date funds (TDFs) has undoubtedly been a great innovation in overcoming many of the investment mistakes participants have made. However, limitations do exist during investment reviews. Replacing an underperforming target-date fund can often be burdensome to the plan sponsor and disruptive to plan participants. Underperformance may be due to only a specific asset class within the TDF. Offering model portfolios not only allows for more granular investment reviews but also can add a layer of risk tolerance in addition to retirement age.

BUSINESS AT A GLANCE

PLAN ASSETS UNDER ADVISEMENT: $350 million

MEDIAN PLAN SIZE (IN ASSETS): $25 million

TOTAL PLANS UNDER ADVISEMENT: 40

TOTAL PARTICIPANTS IN PLANS SERVED: 9,300

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