Client Service June 29, 2020

Advisers Giving Back: Brad Arends at intellicents

The plight of rural community health care systems is a personal matter for the community in Albert Lea, Minnesota, and for Brad Arends at intellicents.
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Art by Celia Jacobs


The PLANADVISER Advisers Giving Back profile series has primarily found its subjects through word-of-mouth recommendations made by the peers of advisers and firms that are generous with their time and financial resources.

That is certainly the case with Brad Arends, co-founder and CEO of intellicents, who was recommended by his brother and coworker, Grant Arends. Grant was also a recent profile subject recognized for his inspiring work in Africa. Grant shares high praise for his brother’s work improving access to affordable health care for a small southern Minnesota community, and so do others in Albert Lea, Minnesota, as Brad Arends was named by the Albert Lea Citizen of the Year Committee as Citizen of the Year for 2020.

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The recognition is tied to a yearslong effort Arends has led to bring more affordable and local health care back to Albert Lea.

“Honestly, this whole thing was forced upon me,” Arends tells PLANADVISER. “We are located here in a small town in southern Minnesota that has about 18,000 people. It is the county seat and we are on the border of the state of Iowa—just seven miles from the border. Up until about three years ago, we had proudly been a ‘Mayo town,’ as you will hear people say.”

What Arends mean is that the local hospital system in Albert Lea was acquired some time ago by the Mayo Clinic, and the relationship was strong for years.  

“People in our region will know that Mayo has acquired the vast majority of hospitals in our area,” Arends explains. “We waved the Mayo flag here in Albert Lea until three years ago, when they announced they would have to dramatically reduce services in our local hospital. Frankly, it was such a cutback planned that we only have a hospital in name, in our view, in the community’s view. They got rid of all overnight hospital beds, all labor and delivery, the intensive care unit [ICU] and more.”

For its part, Mayo says it needed to move the services to stop the local hospital from hemorrhaging money. Arends says he and others in the community understand that motivation, but that the outcome of requiring people in the local community to commute significant distances to other Mayo health care resources was just not an outcome they could accept.

“How viable is a community from a health care and economic perspective if it doesn’t have these services?” he asks. “Mayo told us that they would be doing this transition over a three-year time period, and it was just very distressing for everyone here. When I say this whole thing was forced on me, I mean that I was recruited basically to unite and organize several citizen action groups’ efforts to save our health care. I felt it was my duty to give back to the community to chair this effort.”

That happened three years ago as of early June, and Arends has been quite busy ever since helping to lead this effort in addition to his day job at intellicents.

“We successfully united three different groups and set up basically this joint citizen action group that we have organized more or less like as a business in terms of our core values, our mission statement and goals,” Arends says. “As you might expect, there is a lot of emotion and passion involved here, so having the skillset of knowing how to be that quarterback or middle man is important. They asked me to participate for that very reason, I think, and because I had been involved in the community in the past as a business leader.”

Offering some advice to peers that may one day be asked to do similar things, Arends says it is critical to go in with eyes wide open.

“I will tell you that I came on conditionally and I required that I could have a co-chair whom I get to select,” Arends says. “I knew this was going to be a big undertaking and that it would not just be a matter of a few weeks or a few nights out of the year. This is a huge mission we have taken on and we cannot fail. For example, I knew from the beginning that we would likely have to look past Mayo and create our own solution. Don’t get me wrong, Mayo is probably the top health care brand in the world. They provide absolutely amazing services, but the cost and the consolidation was just too much for us to accept.”

With Arends’ leadership, the citizen action group came up with an alternative that would involve establishing an entirely new health care provider in Albert Lea.

“We had to unite the community to do this, including the citizens, the city, the county and the business community,” Arends says. “Where are we today? We’ve made tremendous progress, but we have a long way to go as well.”

Using money raised from the community, the citizen action group first hired outside experts to analyze whether another provider could even feasibly come in and serve an anticipated annual patient load of 60,000 people without losing unacceptable amounts of money. The answer was yes—though it would not be an easy matter.

“From that point, we got a business plan in place and then set up a five-step process that would start with a full service acute care clinic in town and eventually get us to the point where we could provide outpatient surgery in a hospital setting,” Arends says. “We did an RFP [request for proposals] to see who would or could own this and staff this. It wasn’t possible for the city or the county to own it and run it, so we had to look at a number of alternative providers. We had a whole subcommittee dedicated to this review.”

Arends was able to put his own expertise to work during this effort.

“My day job, of course, is to be an adviser in the 401(k) space, but we have actually been dealing with other benefits since the 1980s,” Arends says. “We’ve consulted on all types of benefits and health insurance, so I had the necessary background expertise and I’ve really benefited from that. I could understand the quality and cost issues that really drive this marketplace and which would determine whether or not this effort could work.”

Where do things stand today? Right now, this effort, like many other things, has been delayed—but not derailed—by the coronavirus pandemic.

“At this point, we have hired a health care attorney to help us establish a public charity under a new brand of the Albert Lea Healthcare Coalition,” Arends says. “That happened around Christmastime and it allowed us to go out and start raising the real money to go out and buy the building, contract with health care providers to staff and run the practice—to take all those steps towards achieving our ultimate goal of being able to provide outpatient surgery.”

So far, the group has raised nearly $4 million in total, $1 million of which came from one wealthy graduate of Albert Lea High School. As of late June, the group has purchased the required real estate and it has contracted with a health care entity in northern Iowa to staff and run the facility once it is built.

“Right now we are supposed to be two months into construction, but that has obviously been delayed,” Arends says. “We have the blueprints and even had the contractors internally selected for our five-step plan to begin. Then the coronavirus crash happened, and the health care entity’s parent organization put a freeze on all capital expenditure projects. So, right now, we’re targeting an October start for construction. We’ll have to go out to bid again and repeat some of the work we’ve done, but we’re optimistic. The health care provider hasn’t pulled out, which is just amazing. It’s conceivable we’ll be up and running by April 2021.”

Though the work has been anything but easy, Arends says it has been incredibly meaningful, and he encourages his peers to make the effort to give back in whatever way they feel most empowered.

“I can tell you as a person who has long been active in volunteer work that this has been the most fulfilling project I’ve worked on,” he concludes. “Health care impacts everyone. What also has been so gratifying is seeing a new crop of future leaders emerge from this effort. I see myself from 20 years ago in some of these folks who have stepped up to help. They are people in the business community that had not been active in the past but who have now found their voice. I’m so inspired to see them stepping up and I no longer worry about a lack of future leaders.”
Data & Research June 26, 2020

Financial Consequences of COVID-19 Differ Across Generations

Tailored financial advice is now more vital than ever for participants at all stages of the retirement savings journey, experts say.
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Art by Andrea D’Aquino

Workers aren’t just concerned about the hits to their emergency savings account during and post-COVID-19. They’re financially stressed about retirement, too. 

In response to the current crisis, Baby Boomers, Generation Xers and Millennials have shifted their viewpoints on what their financial futures will look like. According to a recent study by the Transamerica Center for Retirement Studies, about one in four workers has lost some confidence in their retirement savings since the beginning of the pandemic, and, across the three generations, this decline in confidence increased with age: 20% of Millennials now feel unsure, while 25% of Gen Xers and 32% of Baby Boomers do.

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An Edelman Financial Engines study found half of the workforce has felt significant financial stress since the start of the pandemic. By April, one in three workers had already made changes to their finances, whether to their emergency savings accounts, investment allocations, personal loans or retirement accounts.

As workers turn their attention toward their income and paychecks—with many having just enough emergency savings to squeeze by—retirement is taking a backseat. This de-emphasis on defined contribution (DC) plan and pension savings creates adverse repercussions for retirement readiness.

“People are focused on the income coming in,” explains Matthew Rutledge, a research fellow at the Center for Retirement Research at Boston College.

Baby Boomers

Baby Boomers, those who are just at the cusp of retirement or who are already phasing into their post-employment years, are facing the toughest setback—with some pushing back their retirement or, in some cases, working through it. A survey by TD Ameritrade found 15% of American workers have already made the decision to pause their retirement start date, and 51% are considering balancing their income shortfall as a result of the crisis by taking a job during retirement. The Transamerica study reported that 52% of workers expect to work past age 65 or, rather, not retire at all.

Others may decide to leave the workforce sooner than they planned; Rutledge says. For example, navigating an unfamiliar work environment may drive older, experienced teachers to retire earlier or some may consider the dangers of returning to work once schools re-open to be too great. Opting for an early retirement will be the only option for some, but it may have financial consequences.

Still, offering sustainable options for employees, along with tailored educational resources and tools to get through the current market climate, can help the financial situation for all, and especially for Boomers. Offering retirement education and advice can incentivize workers to allocate money to their retirement accounts or at least to pay attention to them.

The Transamerica study found two-thirds of workers actually want more retirement education and advice from their employer. Catherine Collinson, CEO and president of the Transamerica Center for Retirement Studies, says she believes implementing tailored programs customized to age increases education and understanding.

Kelly O’Donnell, executive vice president and head of workplace at Edelman Financial Engines, believes working with a dedicated financial planner is one of the most effective tips for workers, and especially those so close to retirement. “We know that retirees and those getting close to retirement are most concerned on the market volatility,” she says. “That group has a level of complexity surrounding their retirement where they are better off working with a financial planner.”

Generation X

For those in Gen X, who are in their prime earning years, the effects of COVID-19 have also weighed on their current and future finances. Coupled with the fact that many are juggling careers and families—with some also handling home schooling and caring for aging parents—most are simply not thinking about retirement.

“It’s so critical for them to focus on the long term, and yet, of the three generations, they’re the most likely to be distracted,” Collinson says. Twenty-five percent of these workers say their confidence in retirement savings has plummeted since the start of the pandemic.

Sixty-nine percent of Gen Xers said they would like to receive information and advice from their employers on how to achieve their retirement goals. Gearing education toward the middle group, while also implementing savings programs or loan options, can substantially help. Taking advantage of DC plan loan options rather than withdrawing from retirement accounts allows participants to pay themselves back while decreasing the potential loss in savings. “The ability for workers to take out a loan and pay themselves back is a very powerful tool,” Rutledge says. “The best lender a worker can have is themselves.”

Millennials

Older Millennial workers found themselves entering the workforce in the middle of the Great Recession. Once they landed a job, adding money to a DC plan was an actionable step they could take to prepare for the future, Collinson says. The median age that Millennial investors started saving for retirement was 24, while Generation Xers began their savings at 30 years old, and Boomers at age 35, the Transamerica study notes. “There is tremendous growth among Millennials’ household savings in their retirement accounts,” Collinson adds.

The Edelman Financial Engines survey found Millennials faced higher stress than other groups, as many had just begun their financial recovery from 2008’s recession. “Older Millennials were getting their footing again,” notes O’Donnell. “And now they’re moving backwards again with this crisis.”

For younger Millennial investors, the market recession due to COVID-19 has been their first real downturn, whereas Gen Xers and Boomers have survived multiple bear and bull markets. After exhausting their emergency savings—if they had any to begin with—some Millennial investors turned to their retirement accounts for more income. Advisers can turn towards education on emergency savings, believed to be one of the most important considerations for workers, and especially Millennials, going forward.

Generation Z

While the workforce has largely encompassed Boomers, Gen Xers and Millennials, it’s worthy to note a new group slowly entering the workplace: Generation Z. Just as each age group is defined through major global events—Boomers were born after World War II; Generation X following the Vietnam War and Civil Rights Movement; and Millennials at the turn of the new millennium—the events of 2020 are likely to define the youngest workforce, Collinson says.

Gen Zers, who have already been deemed as responsible savers, will likely emphasize emergency and retirement savings after witnessing the effects of the most recent crisis. A study by the Center for Generational Kinetics (CGK) found 35% of Gen Zers are planning to begin saving for retirement in their 20s. Of those already in the workforce, 88% are already actively portioning some of their income to retirement on a monthly basis, according to a Betterment for Business report. “Gen Zers are thinking about retirement and how their financial plan is performed,” Edward Gottfried, a group product manager of Betterment for Business, previously told PLANADVISER. “They feel the same financial uncertainty that those in other age cohorts are feeling.”

While Gen Zers have a long way to go until retirement, O’Donnell notes how even those starting out can benefit from the advice of a financial planner. Implementing a sidecar savings account, or other emergency savings vehicle, will aid even younger workers take ahold of their finances.

The Power of Advice

To encourage savings among all age groups, David Stinnett, principal and head of Vanguard Strategic Retirement Consulting, notes the importance of adding automatic features, such as auto-enrollment, auto-escalation and re-enrollment features, with the addition of advice. “Implementing automatic increase, defaulting people into TDFs [target-date funds] and, if you haven’t already, considering adding advice as a feature to the plan, can certainly help all generations,” he says.

For advisers, Stinnett says ensuring clients aren’t panicking, and continue to not do so, will support their financial recovery moving forward. Coming out of the pandemic, he suggests focusing on appropriate asset allocation, and aiming towards aggressive savings goals to get back on track.  

According to the Edelman Financial Engines study, more than third of U.S. workers said they would benefit from financial advice during the crisis. Plan advisers working with employers must understand the demographics of the plan, along with the needs, solutions and objectives of the employer, states O’Donnell. It’s about working with the employer and participants to determine what is essential to their experiences. “Targeting personalized messages and solutions to where people are in their financial journey is extremely important,” she continues. “For someone who can’t pay their bills or are thinking about taking out a loan, there are different solutions for them than for those who are moving their retirement egg out because of market volatility, or the possibility of losing a job in the household.”

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