Phillip Sherman

Senior Retirement Plan Consultant,
Deschutes Investment Consulting LLC

Business at a Glance as of 12/31/24

• Location: Portland, Oregon
• How many retirement plan assets do you have under advisement? $2B
• What is your median plan size (in assets)? $25.8M
• How many plans do you have under administration? 78
• How many participants in total do you serve? 41,200
• Parent firm: Not applicable

PLANADVISER: How is your team unique in the marketplace? How do you differentiate yourself from others?

Sherman: Our firm stands out in the marketplace by acting as an extension of our clients’ HR teams, offering hands-on, personalized retirement plan consulting. As a small, independent RIA, every adviser is actively involved in both sales and service, ensuring that the team you meet in your first meeting is the same team you will work with throughout your relationship with Deschutes. We take pride in providing direct access to our experts, not pushing clients to a 1-800 call center or external departments. This hands-on approach allows us to build long-term relationships with plan sponsors and committees while fully understanding their goals and needs.

We understand that simply offering a retirement plan is no longer a differentiator for employers. We collaborate closely with HR teams to move beyond the “checkbox” approach, helping to transform the retirement plan into a meaningful benefit that employees engage with. By taking the time to understand each organization’s mission and objectives, we tailor plan design and employee education to align with those goals, ensuring that the plan is not only effective, but also integrated into a broader HR strategy.

As regulations, technology and benefits complexity continue to grow, plan sponsors face increasing challenges. That’s why we leverage additional in-house expertise, including an actuary, to provide specialized support on complex regulatory and financial matters. This expertise—typically found only in larger firms—comes with the personalized attention and agility of a smaller team.

PLANADVISER: What challenges do you think the retirement plan industry faces, and what role do you have in addressing and confronting those challenges?

Sherman: The retirement plan industry faces several challenges, including increasing regulatory complexity, technological advancements and employee engagement. While recordkeepers and tech solutions help streamline plan management, these tools often fall short in engaging participants. In fact, many of the automatic features—while great for driving numbers—make it easier for employees to be less hands-on with their retirement account. Many plans see minimal engagement through digital platforms, as technology alone can’t drive the behavior change needed for employees to fully utilize their retirement benefits.

The challenges participants face with tech and resources also affect plan sponsors. While strides in regulation have made plans better designed for the future, they’ve also made them more complex. The knowledge required to stay compliant and manage these complexities is growing, and when combined with other burdens on plan sponsors—especially as multiple benefits face increasing regulation—it can be nearly impossible to run a successful plan without expert support.

As the talent battle intensifies, employees are seeking more from their employers in terms of financial support and guidance. In response, plan sponsors need hands-on, expert support to ensure their retirement plans are not only compliant but also effective and engaging for employees.

Our role is to bridge this gap by offering personalized, hands-on support that technology alone cannot provide. We work closely with plan sponsors to improve employee engagement through tailored education and communication efforts—and that is not just for employees, but plan sponsors as well!

PLANADVISER: Please tell us about an important issue that your 403(b) plan sponsor clients face and what actions you have taken to assist them in overcoming that issue.

Sherman: Today, 403(b) plan sponsor clients face the complexities introduced by the SECURE Act, particularly the long-term, part-time employee rules. While many advisers simply follow the prescribed guidelines, I recognize the operational challenges these regulations create, especially for organizations with inconsistent historical employee tracking or high turnover. HR teams in these organizations are often stretched thin, and without institutional knowledge, compliance becomes even more difficult.

We’ve been involved with many of our 403(b) plans longer than the HR teams themselves, which gives us a unique advantage. By understanding the specific operational challenges and culture of each organization, we recommend simpler, cost-effective alternatives that minimize the administrative burden. For example, adjusting eligibility requirements based on the organization’s structure ensures compliance while reducing stress on the HR team.

As an employee of a small business, I’m acutely aware of the financial challenges that businesses of all sizes face. I understand that after wages, health care is often a company’s second-largest expense, and retirement planning might not always be a top priority. When it comes to nonprofits, this is only magnified, as many of these firms cannot compete with the salaries their for-profit competitors can offer. These are often employees who choose to work in this industry for the goodwill and intrinsic value gained by the work they do, but as we know, Costco does not accept ‘goodwill dollars’ to pay for groceries and gas. What these companies do believe in though is the power of real employer benefits, and we find that our nonprofit clients are extremely supportive of financial coaching and support.

PLANADVISER: How did you get started advising 403(b) plan sponsors? What advice would you give other advisers wanting to enter this market?

Sherman: I got started advising 403(b) plan sponsors through introductions from current clients who sit on the boards of nonprofit organizations. These connections provided an entry point into the nonprofit sector, where I quickly realized the unique challenges 403(b) plan sponsors face. Many nonprofits struggle with limited resources and high turnover, and the retirement plan generally has suffered as an afterthought due to these challenges.

To effectively serve this market, I focused on building strong, personal relationships with plan sponsors. I made it a priority to truly understand their organizational culture and specific challenges, offering tailored solutions that not only meet compliance standards but also address their employee engagement needs. Over time, my deep understanding of the unique financial pressures faced by nonprofits allowed me to offer creative, cost-effective retirement plan solutions that aligned with their mission and budget.

For other advisers entering the 403(b) market, my advice is to focus on relationship-building and really understanding the specific needs of nonprofit organizations. While the technical aspects of 403(b) plans are important, the key to success in this market is understanding most importantly that these are not 401(k) plans and not your traditional for-profit organizations. Nonprofit organizations value advisers who are committed to helping them navigate their challenges while providing valuable retirement benefits to their employees. The organizations can be fiercely loyal to those who share their vision and help them as an extension of their team. Be patient, stay adaptable and always keep the mission of the organization at the forefront of your recommendations.

PLANADVISER: What’s your favorite book or podcast?

Sherman: My favorite book would be “Thinking, Fast and Slow” by Daniel Kahneman.

Like any book, there are certainly criticisms that can be drawn, but what really keeps me coming back to this, time and time again, is its ability to get me to look at things differently. If I am ever in a rut with a process in work or life, I find the general messages from this book helpful to reframe my perspective. It is a great introductory piece to help anyone who is interested in the intersection of psychology and the way we look at money and finances.