PA: What is your mission statement?
Thom Shumosic: My mission is simple: I want to provide every plan participant the opportunity to save and invest enough to retire on their terms. I want to protect the interests of the folks who offer plans and to continue to make retirement readiness the goal for everyone.
PA: What have you done in the past year to improve participants’ retirement readiness?
TS: Three approaches have been used very successfully. First, the use of the internal communications of the companies that we serve; this includes articles in company newsletters and blast emails. Second, a marked increase in “lunch ’n learn”-style gatherings; subjects include Social Security planning, discussions with portfolio managers and research folks, and market commentary. These sessions are very low-key and are designed to draw folks out in a relaxed atmosphere, with the target goal being to get them more involved with their own process.
Lastly, we have done more non-investment events for plan participants: Minor league baseball games, wine tastings and cooking demonstrations have been very popular. These are designed to get closer to the plan participants so they feel more comfortable having the tough discussion on a one-on-one basis about what they need to do going forward to save more. Without a connection to folks, we are reliant on websites and 800 numbers and are doomed to the land of the 70%—or worse—participation rate.
PA: How have you been able to lower fees for clients?
TS: Simply stated, benchmarking is the key to the conversation about fees. While I have always felt that our existing plans have been priced fairly, it is in the cases of takeovers that the use of benchmarking becomes critical, and it has led to effective lowering of cost.
PA: Please describe any special education or communication initiatives you’ve undertaken with plan sponsors or participants.
TS: This is really an extension of the retirement-readiness question. I firmly believe that the difference between plan participants settling for mediocre results and taking them to the next level is one-on-one communication. Even if it simply means having a brief conversation in the hallway, it makes a difference.
PA: Describe a difficult client relationship issue and how it was resolved.
TS: One of the hardest things that we as advisers have to deal with is delivering the hard truth. Whether it’s letting plan participants know that the savings rate they’re using will result in them falling woefully short of their goals, or that their asset allocation doesn’t fit a time horizon, or that skirting Internal Revenue Service (IRS) and Department of Labor (DOL) rules will only lead to a very bad fall—I have the responsibility to tell the truth.
This past year, it was discovered that the payroll department of one of our plans was not remitting money on a timely basis. After a sit-down with the chief financial officer (CFO), the owner of the company and the third-party administrator (TPA), I made the decision to resign. Firing a client isn’t easy, but sometimes the truth needs to be delivered.
PA: As a retirement plan adviser, what do you take the most pride in?
TS: When all is said and done, the measure of my success isn’t in assets under management (AUM) or number of plans under management or number of plan participants. It’s answering this question: Did I make a difference? I take great pride in being able to see those results and the difference in people’s lives. When I began in the financial services industry 26 years ago, I was advised to seek out a specialty. And this specialty allows me to effect change for far more people than anything else I could have pursued in this industry.
BUSINESS AT A GLANCE
Plan assets under advisement: $150 million
Median plan size (in assets): $3 million
Total plans under advisement: 92
Total participants in plans served: 5,000