Business at a Glance as of 12/31/22

• Plan assets under advisement: $5 billion
• Median plan size (in assets): $91 million
• Plans under administration: 37
• Total participants served: 67,607

PLANADVISER: Tell us about your practice and how you got into advising retirement plans.

Dunteman: I came to advising retirement plans indirectly. I’ve been interested in capital markets and investing since my first internship at PaineWebber and after reading Peter Lynch’s book, One Up on Wall Street. Post college, I worked in the currency futures trading pits of the Chicago Mercantile Exchange, was a financial adviser at Edward Jones, and wholesaled both asset management and retirement plan products for Kemper Funds in the Southeast and OppenheimerFunds in the Midwest. Francis was my client for about seven years while I worked at OppenheimerFunds. While having lunch with Mike Francis in December 2006, he asked a question that changed the course of my career. If I was ever interested in making a change, he suggested I give him a call. Shortly after that conversation, OppenheimerFunds was bumped from being a Tier 1 to a Tier 3 firm at my largest client. The client represented 25% of my business at the time. Suddenly, I found myself without access to that firm’s branches. It was frustrating that the time and energy I spent fostering relationships with that firm’s advisers became worthless because of something which was out of my control.

I spent some time reflecting on Mike’s comment. While I enjoyed wholesaling asset management, I also enjoyed selling retirement plans. He and I talked for quite a few months about the growth of his team’s business, how his team started and how it was structured differently than competitors, the team’s mission to provide truly conflict free advice to both plan sponsors and plan participants, and what it would take to transition from what was a sales position to retirement plan consultant. The decision for me became a no-brainer.

I joined the Francis team in 2008 as a principal and lead investment consultant. But to be clear, my role is not one focused on investments only. I guide our clients in the following areas: fiduciary duties and training, ERISA compliance and operational issues, plan design and benchmarking, capital markets discussion, asset allocation design and implementation, investment manager due diligence, participant education programming, and fee benchmarking. I sit on the firm’s investment committee and actively contribute to the team’s capital markets outlook. In addition, I contribute to our quarterly article geared toward fiduciary training during quarterly meetings.

Today, my clients range from large, publicly traded, global businesses, to small, privately-held, family-run entities. I manage the relationships of 29 clients. They represent approximately $4.9 billion in assets, ranging from $5 million to more than $1 billion, and about 47% of the firm’s revenue. They include mainly manufacturing, professional services, health care and technology services. I serve as an ERISA 3(21) on all relationships. I do not currently have any 3(38) relationships.

As part of my leadership duties at Francis, I’ve been mentoring our younger consultants on their career path and have taken on the duty to help our firm grow our presence and brand across the country.

Finally, our team values professional development, so I undertook the task of becoming a CFA charterholder.

PLANADVISER: How is your team/process/structure unique? How has it evolved? Where will you be in five years?

Dunteman: Business Structure

I believe our team’s business structure is unique within the industry. We believe our team needs to provide focused, expert, conflict-free advice to both retirement plan sponsors and their participants.

Our structure is truly independent. We are 100% employee-owned and plan to stay that way. Our only source of income is through contracts with our plan sponsor clients. We do not contract with individuals. This is unique in that we offer extensive retirement plan consulting, employee education services and comprehensive financial planning, but we do not offer wealth management. In addition, we serve as an ERISA fiduciary for all the services provided to plan sponsors and plan participants.

Our competition tends to fall in one of two camps. The first group offers investment consulting services but relies on the plan’s recordkeeper to provide employee education and guidance. They do not want to provide advice to plan participants.

The second group offers both investment consulting and wealth management services. Often, this group provides retirement plan consulting services in order to gain access to participants in hopes of capturing the wealth management business. By not offering wealth management services, our team members are never put in that awkward position of providing potentially conflicted rollover advice. In addition, this unique structure allows us to comfortably serve as an ERISA fiduciary for the advice provided to plan participants. It is our understanding that most of our peers will not, or cannot, serve in such a capacity.

We recognize that our firm is leaving revenue on the table by not offering wealth management services. However, we believe retirement plan sponsors hire our team because they recognize the benefit of such a unique business structure within our industry.

Team

We have built a unique team of talented professionals who are focused on helping plan sponsors take care of what matters most – their employees.

Education and professional development are important. Our team is comprised of professionals whose degrees include a JD, CPA, CFA, CFP and master’s in education. We ask all of our research analysts to have or be working towards their CFA charter. We ask all our financial planners to have or be working towards their CFP designation.

Our financial planners come from all walks of life. One of our most tenured planners was an airplane mechanic and flight instructor before joining our team. Another team member was an English-as-a-second-language teacher before becoming a financial planner. A third financial planner was selling carpets before he joined us. A fourth was an employee of a client who was so excited about how we helped him and his partner that he wanted to join our team.

To attract team members, we focus on our company culture. For instance, we now offer a sabbatical program for employees who have been with us for an extended period of time. Upon achievement of the first milestone, a team member gets an extra four weeks, to be taken continuously, over which the team member is expected to unplug from work completely. The remainder of the team is responsible for client coverage during that period. The only thing we ask is that the person who takes the sabbatical must share what they learned while away. We’ve been at this long enough now where some team members are participating in their second sabbatical this year.

Our key is to find people who are passionate about helping others. We teach them what they need to know to help us fulfill our mission, and we compensate them in a manner that doesn’t compromise the advice we ask them to provide to either the plan sponsor or plan participant.

Processes

To provide some context regarding our process and provide you a more comprehensive view of how we approach helping clients and their participants, here is a general outline for onboarding a new client through their first full year with Francis, assuming they have hired us for both our plan sponsor services and participant services:

• Fiduciary Training: Upon inception of a new relationship, we provide proprietary fiduciary training to all committee members and key contacts, inclusive of boards, so as to establish the baseline for decsions.
• Governance Process: We then work with key contacts to review/establish charters and investment policy statements.
• Investment Menu and Cost Review: After we’ve helped establish their process, we engage plan sponsors in a philosophical conversation regarding what they want to accomplish with the plan, how the investment menu is constructed how it could be constructed, review of QDIA, review of plan fees and cost allocation methodology.
• Employee Education and Advice Campaign: Based on changes, we work with the committee, recordkeeper and our financial planning team to create and implement an education/advice program at the time of changes to assist plan participants on any needed changes.
• Quarterly Monitoring: Depending on the client and the timing of any changes identified at the inception of the relationship, we implement their governance process through a quarterly performance report. At each meeting, we provide ongoing fiduciary training through a proprietary article written by our team members called Fiduciary Advice @ Work, discuss capital market trends impacting the overall investment menu, the active manager performance vs. passive benchmarks, performance of the QDIA vs. benchmarks net of fees, funds with “watch list” related issues, changes in portfolio management teams, and expense ratio changes/fund structures which may impact plan-related fees.
• Annual Plan Benchmarking: The timing of this report initially depends on the steps outlined above. Conceptually, though, we provide an annual benchmarking report, whereby we review major milestones achieved during the year, plan health metrics, benchmarking of plan design features, ERISA compliance activities, update the plan’s charter and investment policy and review plan fees.
• Operational Audits: If, at the inception of the relationship, or through our ongoing monitoring and benchmarking of the plan, the client expresses an interest, or an operational mistake is made, a client may engage us in a project to review their internal and external process for the administration of the plan with the goal of us providing them with an ongoing strategy for catching any operational deficiencies which may arise, especially due to personnel changes in their team members.
• Plan Participant Services: In addition to the campaign mentioned above, if a client engages us to offer education and financial planning services, the following describes our general process for helping plan sponsors take care of their employees:
• Annual Plan: We create an annual education and advice plan before the start of a new year.
• Annual On-Site Employee Education and Advice Campaign: We prefer to be on- site at least annually at most client locations. While on-site, we provide both group education and one-on-one advice sessions.
• Ongoing Services: Plan participants have access to our team members throughout the year. We create all of our own educational content. This consists of live webinars, written and electronic communications, and our app, available on both Apple and Android/Google platforms.
• New Hires: We have processes in place to pro-actively connect with new hires so they know we are providing services to their plan sponsor and participants.
• Spanish Capabilities: We have two Spanish-speaking financial planners and are able to translate all of our own materials.
• Translation Services: We have contracted with a third party to assist with participants who have other language needs to help facilitate meetings.
• Education and Advice: At a minimum, once a year, we review all activities conducted in order to measure success.

The above process is fairly representative of the work I conducted and coordinated with Fiskars Group, the client who nominated me and our team for this year’s award for Plan Sponsor Services. While Fiskars had been a client whom I had worked with since 2014, the committee and senior leadership went through a major change in 2020 and 2021. As a result, and their desire to bring all their retirement benefits under one governance process, I essentially had to walk through the entire process with a new committee in 2022. I’d be happy to elaborate more in my interview with the judges.

We serve as an ERISA fiduciary for the advice we provide to participants.

Finally, based on our strategic plan, over the next five years, we expect to have three more locations, offer a tax planning/advisory service, hire an expert in Medicare/Medicaid and continue to execute on our mission of helping plan sponsors take care of what matters most—their people.

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

Dunteman: My greatest satisfaction as a retirement plan adviser comes from knowing the advice I provide to our clients results in better outcomes for plan participants and alleviates the concerns they have of running afoul of their fiduciary duties.

Over the 15 years I have been at Francis providing advice to plan sponsors, my clients have higher participation rates, higher average deferral rates, more utilization of Roth, more participants maximizing their match, lower fees, better investment performance, better ERISA compliance and governance structures, better plan designs and better communications programs today than they did before I started working with them.

Ultimately, my advice leads to greater wealth for my client’s participants. As such, I am benefiting society as a whole, in my own small way.

PLANADVISER: How do you grow your business? What changes to your practice or service model are you planning for 2023 or 2024?

Dunteman: We grow our business through a variety of ways.

First, we work through centers of influence. Mainly, these are existing, satisfied clients who refer us to new opportunities. Either they refer us to peers from their networks, or a COI transitions to a new plan sponsor and desire to bring us on board. In addition, we get to other COIs, such as ERISA attorneys who work with our clients. As a result of fostering these relationships, we are included in RFPs, albeit only occasionally.

We also take advantage of public speaking opportunities. We are a member of SHRM, Financial Executives International and Healthcare Human Resources Association of Minnesota. We often participate in annual conferences for these organizations and are provided the opportunity to share ideas with members.

Beyond marketing efforts described above and good old-fashioned cold-calling, we continuously look for ways to enhance our services, without compromising our mission of providing expert, conflict-free advice.

With regards to plan sponsor services, we hired a team member with an extensive recordkeeping background. After discussing operational errors and audits being conducted by the IRS and the DOL, we had a number of clients engage us to help them audit their internal and external processes to ensure compliance with plan documents. Operational audits have now become a standard project conducted for clients, both new and existing.

With regards to participant services, we have developed and provided our own app for several years. It is available on both Apple and Android devices. As part of its evolution, we developed a tool inside the app called the Money Advice Planner. The purpose of the tool is to help a participant determine their five most important financial planning priorities. Priorities include issues such as insurance, estate planning, savings needs, etc. In 2022, we found the area of most need amongst participants was a better understanding of the insurance benefits offered by their employer. When asked if the participant had short or long-term disability benefits, most answered they did not know. We were able to share this knowledge with plan sponsors, which subsequently resulted in more education and financial planning work for our team.

Our latest addition to the team in  Minnesota is studying to become an enrolled agent. We expect this to afford us the opportunity to offer a tax planning service in 2024.

Finally, we have a strategic plan in place to build three new offices over the next three years. We expect this will help us build our brand name across the country, which should lead to more RFP opportunities for the firm.

PLANADVISER: Why do you feel it is important to work with plan sponsors and companies offering retirement benefits to their people?

Dunteman: I think it’s important to work with plan sponsors because they are the ones who can have the greatest impact on a family’s financial wellness.

My parents divorced when I was eight. My mom was not gifted with the proper knowledge to manage her finances. She has filed for bankruptcy twice.

Generally speaking, I think she is like many in our country: Many individuals are ill-prepared to manage their finances properly.

Many of us spend more time with our employer than we do with our families. When it comes to money, people work with those they trust. As a result, plan sponsors are in a prime position to build a culture of trust and have a lasting impact on a family or individual’s financial wellness.

Yet plan sponsors and their team members responsible for running the retirement plan are often stretched thin. Team members often wear multiple hats. Sometimes we see frequent turnover in team members.

As a result, plan sponsors need a trusted partner to help them navigate the complexities of retirement plan management and to help them ensure participants are taking advantage of one of the most important benefits they offer. They need a partner to provide the institutional knowledge during periods of change. They need a partner who can serve as their advocate with other service providers. We often hear, “We didn’t know what we didn’t know” from new clients.

Here are some examples of why I believe it’s important to work with plan sponsors and why I enjoy the work I do:

Plan Sponsor Services: With regards to my work with plan sponsors, I had quite the challenging year with a reasonably long-term client who nominated me for this award. They experienced a major change in senior leadership and committee membership. The company had acquired a number of businesses over the years. With the acquisitions came multiple plans on multiple recordkeeper platforms with two different decision-making groups. I worked with one set of plans and platform while another adviser was assisting a different decision-making group on another plan. I worked closely with my contacts to consolidate the plans. This included revising their governance structure given business changes, reviewing all investment alternatives, conducting an RFP for recordkeeping services, and creating and implementing a conversion and education plan for changes being implemented. What was a normal quarterly review became 18 meetings in 2022 to help this client accomplish all their goals. Our unique business structure and philosophy afforded me the flexibility to do what was right for this client in their time of heightened need.

Plan Participant Services: Our normal cadence with our financial planning services is to be on-site for group education and one-on-one advice sessions annually. Participants can contact us throughout the year remotely to get additional advice. Eventually we have been able to get back on-site at most clients post-Covid. After some on-site group education at one client we had been working with since 2008, we had two individuals contact the financial planner responsible for this client to get one-on-one advice. Each participant was going through a divorce. Combined, these two individuals met with our financial planner 25 times within a year. They had never met with my colleague previously, even though we had been going there since 2008. Each participant had significant, but not unique non-plan related needs. By working with the plan sponsor to help them understand and offer our financial planning services, the plan sponsor was able to offer a service to its team members that afforded our financial planner the flexibility to do what was right for these participants in their time of heightened need. These two individuals would probably not have gotten the help needed unless the plan sponsor had made our unique financial planning service available.

The problem is: Many times plan sponsors don’t know when they will need a service offering like ours until it’s too late, as evidenced by the numerous ERISA-related lawsuits against plan sponsors.

So I believe it’s important to work with plan sponsors because they have the capacity to have the greatest impact on the lives of their participants by designing the most effective plans and offering a comprehensive, conflict free financial planning service.

PLANADVISER: What are the most important issues that your plan sponsor clients face with their company retirement plans, and what particularly effective or unique actions do you take to assist them in overcoming those issues?

Dunteman: The single biggest challenge retirement plan sponsors face as we move forward is consolidation within the recordkeeping and retirement plan adviser industries.

ERISA litigation is coming down-market. For example, in the state of Wisconsin, we recently had one attorney file ERISA-related complaints on behalf of participants against 10 plan sponsors on the same day. Some cases involved plans with only $500 million, instead of the often-targeted $1 billion-plus plan sponsors.

Given the risks to plan fiduciaries and plan sponsors, it is becoming increasingly important that a solid governance process is implemented and documented. It is one thing to have and implement a process for ongoing administration and investment of plan assets. It is another to properly document what has been done. While ERISA states a plan sponsor can reasonably rely on a consultant’s advice, plan fiduciaries cannot do so blindly.

As our industry consolidates and there is pressure on margins, many consultants have started to outsource their due-diligence capabilities to centralized departments or third-party research groups. In addition, with compliance concerns, most teams are not willing to put their opinion in writing.

The result of moving research further away from the consultants who provide the advice to plan sponsors is either forced selling after a period of underperformance or buying an alternative at their cycle high. This leads to greater wealth destruction for plan participants and a greater possibility of litigation against plan fiduciaries.

In addition, as the retirement plan adviser and recordkeeping industries consolidate, plan sponsors will have fewer choices when it comes to their partners. This will eventually lead to a rise in the cost of recordkeeping and the increasing potential for plan participants to receive advice which is potentially not in their best interest.

Our team is being proactive with regards to these trends as we try to highlight the pitfalls which face place sponsors. Here are a couple examples:

Manager Due Diligence: From a due diligence perspective, we continue to conduct all of our due diligence internally. We do not outsource anything. We do not maintain an approved list from which consultants pick alternatives to show plan sponsors. We work with the existing menus of new clients to find gaps in asset classes offered, identify where consolidation can occur and remove underperforming alternatives where we think they exist. Each year, we conduct interviews of portfolio managers and research analysts to fully understand their investment philosophy and process. The due diligence process culminates in a written summary and opinion of each investment alternative in the menu. This provides written documentation of what our team thinks of each alternative. We monitor our batting average as it pertains to the number of active managers which outperform their passive benchmarks. We currently cover more than 250 managers across all our clients.

The end result is that our team knows the asset managers in client menus better than most consultants in the retirement plan adviser community. As such, we think our process lowers the risk of participants being able to claim a breach of fiduciary duty when they follow our advice.

Recordkeeping Providers: Our team spends a lot of time working with recordkeepers on their participant websites. Our clients use approximately 15 different providers. Our financial planning team meets monthly to discuss issues they are experiencing with clients, conduct training sessions and to strategize on new services our team wishes to provide. In an effort to help more recordkeeping partners compete successfully in the marketplace, we’ve been inviting partners to join us in the monthly meetings. The objective is to learn what they are doing to enhance the service levels and participant experience and provide candid feedback on how the recordkeeper might improve services in order to become more competitive. We believe that by offering to share what our team is experiencing, smaller firms can think about where to make their investments and stay competitive with larger institutions. Hopefully this helps impact the consolidation within the recordkeeping industry and allows for more choice by plan sponsors.