Business at a Glance as of 12/31/22

• Plan assets under advisement: $7.1 billion
• Median plan size (in assets): $4.9 million
• Plans under administration: 46
• Total participants served: 93,915

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

Montanye: We are structured as a team of experts who work together on the same roster of clients. Our core team includes lead advisers Steven Kaczynski and Loraine Montanye (myself), consultant adviser Richard “Rick” Applegate and administrator Connie Pallof. We receive additional support from other areas of the firm for a total extended team of 11.

Our story began 40 years ago when Rick Applegate started advising plan sponsors as a one-man practice. Rick was an early adopter of the fee-only compensation structure when commissionable sales were the industry norm and carried the values of fiduciary responsibility and client service through the decades. Among my favorite stories about Rick occurred when a client’s files were audited by the DOL. The auditor wrapped up its review of the sponsor’s well-documented process and made the comment to one of the committee members, “That’s how it’s supposed to be done.”

After an extensive search for a like-minded firm that he could trust with his clients, Rick chose to merge his practice with DBR & CO. To join him in advising his book, he first hired Steve and, later, me.

Prior to joining the team, Steve worked as a portfolio manager at a large family wealth office. He has more than a decade of experience performing macroeconomic and investment analysis, investment manager due diligence and implementing fiduciary governance best practices for retirement plans and institutional investors.

Likewise, I have also been in the financial services industry for more than a decade. My early experience was in retirement-plan-adjacent work such as personal wealth management and investment performance analysis for institutional accounts, but I really started working exclusively on retirement plans while employed in the asset management division of a major bank. What I found personally fulfilling about working in retirement plans was the positive effect good plan design could have on the masses. Saving for retirement isn’t an issue reserved for Americans of any particular demographic—it’s something that everyone can benefit from. I found fulfillment in the opportunity to participate in providing a benefit to people who work in offices, people building machines, people who spend long shifts in mines, people at the front lines in health care and people involved in all types of other industries. I was actually so enamored with the work I was doing that I almost didn’t pay any mind to a recruiter’s invitation to interview for the team at DBR & CO. Fortunately I did take the call, received the invitation to come on board and the rest, as they say, is history.

While Rick is still involved in consulting and in expanding the firm’s national footprint, Steve and I are now driving the advice and service for the practice. Rick handed us the keys to an impressive legacy while allowing us the latitude to push forward and stay ahead of the curve on the plan service and to continuously improve processes for our sponsor clients.

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

Montanye: I would say that we differentiate ourselves by our independence, credentials and specialization. As independent fiduciaries, we don’t receive kickbacks from or have partnerships with mutual fund companies or service providers, enabling us to provide conflict-free advice. The credentials we are proud to hold include the CEFEX® certification, which involves heavy independent review of our processes (we are one of only about 140 worldwide firms to hold this). Additionally, our extended team (inclusive of the core team) maintains a long list of credentials, with 5 CFPs, 4 CPFAs, 3 CFAs, 2 ChFCs, 2 CLUs, 2 AIFAs, 2 AIFs and 1 QKA between us. Finally, as a specialized retirement plan advisory team, we are in the minority among our RIA peers who intentionally service retirement plans as a core business, as opposed to others for whom retirement plan consulting is only incidental to their greater practice.

We evolved from Rick Applegate’s early days as a one-man practice to a cohesive team of experts that coordinates to provide superior fiduciary guidance to plan sponsors—a story that we are proud of.

In five years, our goal is to retain our valued relationships with the sponsors we currently service while having expanded our reach to more employers. We work to always put service first and will maintain forward momentum in adding to our partnerships.

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

Montanye: I would first say that growth, while important to us, is still second to client satisfaction and retention. For this reason, the No. 1 source of new business for us has been referrals from existing clients.

While we work with sponsors from many industries, we have been particularly successful in engaging with sponsors in the health care industry, as we have clients who are large regional hospital systems, independent physician offices and all manner of providers in-between. We hope to earn a reputation as the go-to retirement plan adviser in health care.

We are also planning some exciting changes to our service delivery in 2023 and 2024. For starters, while we always fulfilled the terms of our engagements with clients, we have taken additional steps to formalize our annual service calendar and identify any opportunities for us to get ahead of potential issues before they affect plan sponsors. Our unofficial motto for the service model facelift has been, “no surprises.” The goal is to make sure the sponsor’s experience is as smooth, unalarming and minimally burdensome as possible, while still empowering them to fulfill their fiduciary responsibilities.

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

Montanye: We believe that it is important because company-sponsored retirement plans are key to the financial success of Americans and for the hiring and retention success of employers.

Currently, only about one third¹ of Americans are on track to have their full income needs met in retirement, and they are turning to their employers more and more to help them bridge the gap. In fact, according to a recent Betterment survey, 65% of employees rank “A high-quality 401(k) or other retirement plan” as the top financial benefit a prospective employer could offer that would make them consider changing jobs, ranking ahead of other compelling benefits such as student loan assistance and childcare support.²

While plan sponsors often have good intentions in wanting to step up to the plate in assisting employees with retirement savings, the rules, costs and administrative responsibilities can be daunting. We at DBR & CO function as a team of experts to provide comprehensive fiduciary and investment advice to plan sponsors so that they do not have to navigate the fiduciary decisionmaking process alone.

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?

Montanye: Employee Retention

As noted above, attracting and retaining key talent is an increasingly important objective for employers when constructing and maintaining their retirement plan benefits. Without a compelling retirement plan offering, highly qualified professionals might choose to go elsewhere, all else being equal.

The primary way we assist employers to take on the staffing challenge is through effective plan design. When designing a plan in partnership with a sponsor, we factor in the needs of their participants, comparison to other companies of similar size and industry, and the business’s objectives.

Evolving Regulations

The past few years have shown how rapidly regulations impacting retirement plans and their sponsors can shift. From ESG to SECURE 2.0 and many regulatory decisions in between, plan sponsors have had to respond quickly and frequently to ensure their plans remain compliant and that fiduciary duties are being upheld. In addition to changes in regulation, regulatory bodies have proven more willing to act on imprudent behavior, which has increased awareness among fiduciaries (and their advisers) regarding the risks they face when serving as a steward of a plan.

We have addressed this by closely monitoring regulatory activity and proactively providing guidance to our clients. As an example, we have had discussions with each client during recent quarterly meetings about the specific implications that SECURE 2.0 has on their plan. Given the expansiveness of the act, we segmented the many provisions by whether they are applicable to the unique plan and when they will be effective. From here, we developed a tailored set of recommendations and guidance on how to comply that is unique to each plan based on participant demographics, participant behaviors, current plan design and the roster of service providers that each plan engages. We found that this approach helped clients digest a broad piece of legislation and put them at ease about compliance with the act.

Plan Service Issues

We recognize that service and administrative issues are often unavoidable. However, that does not mean they should cause a significant disruption for plan sponsors.

We, as knowledgeable and specialized advisers, are uniquely positioned to assist plan sponsors in receiving a high level of service from all industry providers. We make a point of establishing and fostering relationships with industry service providers so that we can learn how each operates, thoroughly understand the services offered by each and be aware of where each excels or does not. We pair our well-researched and documented findings to the unique needs of each client, enabling us to coordinate an optimized service relationship.

In the same way that our team of experts leverages individual expertise as appropriate in a given situation, we speak up on behalf of our clients to ask the right questions of the right service providers and help to ensure at all times that an expert on a particular subject or process—someone who truly knows what they are doing—is servicing our mutual clients. Just as importantly, when service challenges do inevitably arise, we proactively work with partners, advocating on behalf of our clients to find appropriate solutions.

Administrative Burden

Similarly to how we approach plan service issues, we work to ensure our specialized industry expertise is combined with our intimate knowledge of our clients to recommend administrative solutions that are efficient in fulfilling fiduciary obligations, minimizing sponsor stress and optimizing outcomes for participants. We consider the plan sponsor’s organizational structure, their values, their internal resources and the cost-benefit implications of various arrangements. When discussing the available alternatives with plan sponsors, we place particular emphasis on asking the right questions and on listening carefully to sponsors’ needs and preferences.

Maintaining close relationships with key service providers, including TPAs and recordkeepers, has allowed us to minimize headaches for clients and ensure that their plans avoid disruptions. In addition, we sponsor a Multiple Employer Plan, MEP>ONE, which is designed to transfer the administrative burden to us. This has proven especially impactful for smaller plans that have reduced capacity or resources to sponsor an individual plan.

Participant Engagement

In steady, predictable or strong market years, sponsors often find that participants are not aware of the benefits of their plan or how to best leverage the plan to prepare for retirement. To name a few effects of low engagement, they observe low participation rates, deferrals below what is required for a full match and incomplete beneficiary designations.

In periods of elevated market volatility, we’ve seen participants demonstrate higher levels of engagement, which makes sense behaviorally, given our desire to avoid losses, but it introduces a meaningful burden for plan sponsors, since participants might expect their employer to address concerns with investment performance.

Our first response to navigate the challenges of participant engagement is pretty straightforward: We make sure the plan design and investment lineup serve the plan’s participants. We do not offer a “standard” or “template” plan design in any circumstance, because each employer is different. Even our open MEP is built to enable maximum flexibility in design, as opposed to restricting options in favor of administrative standardization. Our investment selection philosophy is to include both active and passive options that are assessed against their peers by risk-and-return metrics. Furthermore, we may include proprietary risk-based models in lineups so that participants can invest in a diversified portfolio of funds according to their specific risk tolerance and return objectives.

Our next response is to make sure that communication efforts to participants are “cutting through the noise.” Participants receive constant communication from nuisance sources such as marketers and legitimate sources such as benefits providers. They often don’t have the time or desire to sift through every call, mailing and email they receive. We work with sponsors to plan and execute communication efforts when a message really needs to be heard. Examples include targeted communications to specific participants, coordinated participant education campaigns and hard-copy fliers that are sent out with paychecks. We furthermore coordinate our efforts with recordkeepers, who often themselves have robust education resources, to ensure bases are covered without being redundant. We will, for example, present to a group about their plan design and investment options while bringing in recordkeepers to walk participants through website resources. Our goal is always to help sponsors make sure that messages are getting through without overwhelming participants with too much information.

¹Source: Fidelity. Retirement Preparedness During Uncertain Times. 2023.https://preview.thenewsmarket.com/Previews/FINP/DocumentAssets/638914.pdf

²Source: Betterment. The Impact of The Great Resignation on Benefits Needs and Expectations. 2022.https://resources.betterment.com/hubfs/PDFs/b4b/reports/financial-wellness-benefits-survey.pdf