Retirement-Plus

Troy Hammond: It’s been eight years since we won the award, and the industry has evolved tremendously since then. There are two main differences in the services we deliver today versus then. The first involves participant outcomes. In 2013, our financial wellness program was focused on education and engagement. Pensionmark has expanded to a full range of participant services, from basic planning to advice, managed portfolios and financial coaching. We can help participants with questions well beyond just their retirement plan.

The second change concerns outsourcing sponsor responsibilities. Traditionally, advisers concentrated on helping plan sponsors deal with day-to-day issues—assisting with administration, explaining investment reviews and making plan recommendations to help them make the right decisions. Today, clients prefer to engage with us—to outsource responsibilities—so they can focus on their plan sponsor duties. The most common, of course, is the 3(38) work we do. We’ve gone from virtually nothing to approximately $14 billion in discretionary assets in just the last five years.

Jania Stout: Basically, we’ve expanded services we already had. For example, we’ve always produced monthly webinars about topics to do with saving, investing, getting out of debt and budgeting. We now conduct 18 a year, which include health-related topics—both physical and mental health. We recently did a “Happiness” webinar and had over 200 attendees. Because the families of the employees we serve are most likely all at home, we launched a “Family Affair” track so employees could invite their family members to our webinars. The first was for younger adults and older children, geared toward teaching them basics about money.

And we expanded upon helping our clients with their overall wellness strategy, which became more integrated into their entire benefit offering. This ultimately helps us engage with their employees.

Domenic DiPiero: When Newport Capital Group was founded, in 2004, our service model was based on recognizing that clients needed a fiduciary partner with institutional investment experience.

Since winning the award in 2016, our model has changed. Our team has grown and refined the services we offer, while continuing to bring an institutional investment approach. We remain a large firm with a boutique mindset. The success of our hands-on team approach with clients is evident in our long-term client relationships.

We’ve added more oversight, and processes and procedures to help our clients stay ahead of any pending regulatory changes that could affect their plan. We collaborate with our industry colleagues in the ERISA [Employee Retirement Income Security Act] legal, plan-audit and recordkeeper space to bring committee education to our clients. Our team’s long tenure at Newport Capital Group demonstrates our culture and philosophy, and having a positive role in the lives of tens of thousands of participants who comprise our client base.

Stout: We’ve become increasingly vocal and consultative concerning our clients’ HSA plans. It’s taken time to help clients recognize that we should be either leading or a part of these conversations. For example, most ignored the investment aspect of their HSA plan, assuming that the majority of employees used up their account funds each year. When we helped these sponsors dig into the data, we found many of the accounts were accumulating balances. And there was more need to ensure that the investments and fees associated with [them] were reasonable.

Also, many of the large retirement recordkeepers now have an HSA offering. Helping our clients evaluate those partners is important. We want as much synergy as possible between participants’ HSAs and their retirement accounts.

DiPiero: Health-care savings in general comes up increasingly in client conversations. When it does, we have a network of referral partners and bring in experts to address our clients’ needs. HSAs have tax advantages and benefits that make them a great option to save for retirement medical expenses. We help educate our clients on the role these different accounts play for their employees.

Hammond: That’s an avenue we’re certainly exploring. As financial advisers, it makes sense for us to assist in managing the non-cash investable assets.

DiPiero: Holistic financial wellness gets to the root of helping people understand how they can be better prepared with emergency funds and budgets, and understand the impact of their debt.

With COVID-19 this year, we’ve stayed the course and helped participants get back on track. We worked with our clients’ respective providers on innovative education campaigns to address concerns via modified messaging to discuss the new environment, corporate values and community support. We’ll continue to focus on helping participants make good financial choices and recognize, now especially, that extends beyond retirement readiness. 

Hammond: We have an in-house team of financial advocates who can help employees with a variety of wellness options, depending on the client’s preferences. We offer education and engagement; a financial health app; foundational planning; personalized advice, including professionally managed participant accounts; financial coaching; and financial management services.

Stout: When it comes to holistic financial wellness, we start with financial foundations such as goals and priorities, then build a budget and tackle any debt. Holistic financial wellness must be tied in to an individual’s goals if you want to increase his chance of success. We’ve added two more participant success advisers. They are salaried employees; most have or are working on their CFP [Certified Financial Planner] designation, and 100% of their time goes to financial coaching sessions. These sessions are included in our annual fees. Some clients prefer to have the on-site or virtual days of coaching be billed á la carte. We’re flexible and want clients to use our services, so we work with them on determining the best fee structure.

In the first half of this year, we conducted over 1,000 one-on-one virtual advice meetings. We also added a financial assessment tool; the employee answers questions on a dashboard that provides us information. This tool has led to more efficient and meaningful conversations, and engagement has been better than ever. The financial assessment is tied to signing up for the one-on-one meeting, so we’ve had no participant pushback.

Stout: These plans are a step in the right direction, but I’m not convinced they’ll redefine our business. My fear is that some people will focus on these plans as a way to drive down costs. From what I’ve seen, there tend to be many layers in these plans that add to the cost.

PEPs and MEPS are perfect for small nonprofits that need a plan that provides them better oversight. Companies and organizations with under 50 employees might lack the human resources [HR] staff to handle the required fiduciary focus. I think the plans have great potential in the areas of governance and oversight. As for midsize to large companies, I haven’t seen a compelling reason for PEPs to be part of those. We’ve been successful in finding low-cost plans for these clients, and, frankly, we want to be engaged with them on an individual level.

Hammond: I think once we get clarity on a few more nuances, we’ll be in a position as an industry to offer some [solid] solutions. We’re building one solution at Pensionmark that should be an exceptional alternative plan. When constructed correctly, these plans can offer employers a way to deliver the most competitive solutions to their employees at a reasonable cost. Then sponsors can spend time impacting participant behavior and focusing on their job versus taking on responsibilities beyond their expertise.

My concern is for adoption. I’m already hearing that many are positioning these as a cost play. Given that sponsors will be hiring multiple service providers to outsource their work, I believe there will still be less-expensive solutions in the marketplace if cost is the driver. We need, as an industry, to reframe our perspective on why these are the right solutions for plan sponsors so we can better express the value proposition to our clients.

DiPiero: Retirement income planning is extremely important. We’ve been working with our providers on educating the plan committees about guaranteed retirement income solutions for plan participants and vetting and determining the appropriate investment options for each plan.

Further committee education is key, highlighting in-plan guaranteed income. Primary risks include sequence of return, longevity and inflationary risk to ensure decisions are made in participants’ best interest. We work with all clients and respective recordkeepers on education campaigns to, first, make sure participants understand the importance of maximizing contributions annually; second, tying these savings to their life post-retirement; and third, educating on their choices in retirement income planning.

Stout: How advice ties in to retirement income planning should be included in any discussion with someone retiring in the next 10 years. Many we speak with have no clue how their money will last in those retirement years. They also don’t understand how their strategy to spend down their savings should work.