Client Service February 5, 2021

15th Anniversary of RPAY: Jania Stout

In the past few years, her practice has grown its assets by nearly $1 billion a year.

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Jania Stout

Since Jania Stout was named the 2016 PLANSPONSOR Retirement Plan Adviser of the Year, her practice, Fiduciary Plan Advisors at Hightower, has succeeded in adding nearly $1 billion in assets every year. This has necessitated adding one new team member each year, bringing the firm’s total staff to 13 and its assets to $5 billion, says Stout, co-founder and a practice leader at Fiduciary Plan Advisors.

The practice has been able to achieve this remarkable growth by moving up market, to plans with $100 million or more in assets, whereas five to six years ago, the practice’s average client size was $30 million, she notes.

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Stout, of Phoenix, Maryland, says that since winning the award, she has also made it a point to hire younger workers, as well as women. To that end, after the University of Maryland’s women’s lacrosse team won the 2019 national championship, Stout recruited a few of the team members who were graduating seniors.

What has not changed for Stout is her focus on financial wellness and the total well-being of the participants she serves. In fact, Stout says she began offering financial wellness programs to her clients as early as 15 years ago. She says she believes that she has created a financial wellness program that could be called “version 3.0,” whereas other retirement plan advisers are really only starting and are at version 1.0.

“I can say that we are at v. 3.0 because we have come out with new ways to engage with participants,” Stout says. “Two years ago we rolled out video content, which our clients and our participants love. We also use different types of technology to engage in our one-on-one meetings with participants, including our use of the WellCents application. This culls a great deal of information on a worker’s financial life and makes our one-on-one meetings far more productive. We also now have four team members whose sole function is to conduct those one-on-one meetings, and are now able to report on the positive success of these meetings to our sponsor clients.”

Stout believes the industry has changed considerably, even in the past four years, and that these changes can enable practices to not only serve participants more effectively, but to recruit more well-rounded individuals.

“Our adoption of auto-solutions—automatic enrollment, escalation and target-date funds [TDFs]—has pushed our industry into thinking outside of the box in terms of what we can deliver to positively impact an individual’s financial life. That has led to advisers offering health savings accounts [HSAs], student loan repayment and restructuring programs and help with emergency savings. It has meant going well beyond the 401(k) or 403(b) plan to help our clients and their employees with everything that impacts their financial life.”

Stout says these developments have made her “absolutely optimistic” about the future of the retirement planning industry. “There will never be a time when working Americans won’t need somebody to talk to, to trust and to provide fiduciary advice,” she says. “There are hundreds of robo advisers out there, but at the end of the day, people want to talk to a human.”

As the industry has taken a more holistic view of people’s financial lives, “more people realize we are a significant industry, and we have become attractive for other types of individuals to join our ranks, who might not have ever considered our industry, people like teachers or others in the service industry,” Stout says.

As to what the industry can do to improve retirement plans and outcomes for participants, Stout says that, first and foremost, leaders in the industry need to continue to prove to lawmakers in Washington the importance of Americans being able to save in 401(k) and 403(b) plans. “I don’t believe defined contribution [DC] plans will go away, but some folks on Capitol Hill want to change the way 401(k)s are run. As long as they are the primary source of savings for Americans, we cannot let that happen.”

Deals & People February 4, 2021

Universal Retirement Coverage Could Help 40 Million Private Sector Workers

More savings would also strengthen the economy and the GDP, according to a Georgetown University report.

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The Georgetown University Center for Retirement Initiatives, with the assistance of the Berggruen Institute and ESI Consultant Solutions, has issued a new report, “What Are the Potential Benefits of Universal Access to Retirement Savings?”

The center says there are an estimated 57 million private sector workers, or 46% of the population working in the private sector, who do not have access to a retirement plan through their workplace. This is particularly true for workers at small businesses and among lower-income workers, younger workers, minorities and women.

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Many other countries have mandatory universal retirement plan programs, the center says, adding that if American workers were automatically enrolled into such plans, more of them would be able to save for retirement. “At the same time, the economy and gross domestic profit [GDP] benefit from stronger savings, investment and economic growth, and the nation benefits from a reduction in fiscal pressures to support an aging population lacking sufficient retirement income,” the report says.

The center notes that in the past decade, several bills aimed at creating universal retirement coverage have been introduced in Congress, to no avail. “In the absence of national action, some states have started to adopt innovative public-private partnership models to expand access to their workers. A few of these new state programs have adopted and launched an auto-IRA [individual retirement account] model, which requires employers that do not already offer their workers a retirement savings plan to automatically enroll their workers in the state program to begin to save unless the worker opts out. These state programs are currently providing many employers and their employees with new ways to save, and the number of new accounts and assets is now growing at a steady pace.”

However, the center says a national approach is still needed  to “substantially increase participation and savings levels, particularly among low- and middle-income workers.”

Of course, the center says, the ability to boost savings will be affected by the design of the savings option, including whether it’s an IRA and/or 401(k) structure; the employers that are required to participate, since, in some cases, the smallest companies are not required to participate; and the default levels of employee contributions and any employer contributions.

An auto-IRA model with no employer threshold, or what the center calls a baseline auto-IRA, is projected to increase participation by 40 million workers by the year 2040.

However, if companies with fewer than 10 employees or that have been in existence for less than two years were exempted from the baseline auto-IRA, this would increase the participation by only 29 million, according to the center.

Should a 401(k) model be used, it says, it would produce higher average contributions and savings relative to an IRA model. If discretionary employer contributions were included, they, too, would boost savings levels. However, if the plan required contributions from employers, the center says this would inevitably slow wage growth and reduce savings levels. Thus, the center says the best approach is the baseline auto-IRA.

“The baseline auto-IRA that covers all employers has the highest overall level of savings,” the center says. “While per-participant savings are higher under alternative approaches, the expansion of coverage anticipated under the baseline auto-IRA scenario with no employer threshold leads to the largest increase in overall savings among the policy options model. … An IRA model encourages a higher level of participation by presenting the lowest barriers to participation for businesses and savers.”

Under the baseline auto-IRA model, the center estimates that participants would contribute $130 billion a year to their plans by 2040—adding up to a cumulative $1.89 trillion over the analysis period.

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