2015 RPAY – The D’Aiutolo Institutional Consulting Team at UBS Financial
PA: What have you done in the past year to improve participants’ retirement readiness?
D’Aiutolo Institutional Consulting: What good is a retirement plan that doesn’t lead to employees being ready to retire? Plan design and investments alone aren’t enough for 401(k) plans to achieve participant retirement readiness. To address this, we added a new position and service. The position is the participant outcomes director; the service is to create a partnership with the human resources (HR) staff of our clients and the recordkeeper to identify all workers within 15 years of retirement and to customize communication strategies that will allow participants to confidently assess the viability of their strategies to produce adequate lifetime income. These services include off-site group meetings for employees and their spouses, personalized gap analyses and individual retirement income planning sessions.
PA: As a retirement plan adviser, what do you take the most pride in?
DIC: What we take the most pride in is our activism and engagement to work tirelessly on behalf of our clients and their employees. When we take on a client, our mindset is to design a program that addresses the needs of the employees who need us the most. Saving for retirement and turning that savings into adequate lifetime income isn’t easy for most Americans. That is why programs like auto-enrollment and target-date funds (TDFs) alone won’t get it done. Americans are continually faced with challenges: paying their rent or mortgage, putting their kids through college and affording health care, among others. Our team thrives on spending time in the cafeterias and being on-site with our clients. That is where trust is forged.
PA: What benchmarks do you use to measure plan and client success? How do you react to clients or prospects that don’t share your goals for their retirement plan?
DIC: We sort clients into two categories: those that are interested in a competitive benefit and those that are interested in benefit adequacy. Ideally, we want all of our clients to have the desire to work as tirelessly as we do in order to see that their employees can adequately retire one day. Unfortunately, not all employers are onboard with this mission from the onset. We don’t negatively react to those that don’t share our goals.
Our approach with those not onboard with solving for retirement readiness is to provide them with the data to one day convince them otherwise. The benchmarks we use are average income replacement ratios, participation rates, deferral rates, asset-allocation fund usage as a singular holding, average number of funds held, those invested in one non-asset-allocation fund, percentage of assets in the fixed fund, average account balance, number of loans and average loans outstanding, and number of unique Web and call-center users. In addition, we segment these benchmarks by age, salary and length of employment demographics.
PA: What are the most important issues your plan sponsors face with their company retirement plan, and what specific actions do you take to assist them in overcoming those issues?
DIC: We see two issues, mainly: business succession and how to manage an aging work force. Most of the clients we serve have between 100 and 1,000 employees. Many of the owners and executives we work with will want to monetize their value before they transition to new owners. Also, most of our clients have a work force that is continuing to age, and, without pension plans, most have no strategy to transition older employees out and welcome younger employees in.
The one value we bring to help solve this challenge is achieving retirement readiness for all employees. If we can create a defined benefit (DB)-like structure, where the employer can forecast if and when its employees can retire, we can help with its long-term strategic initiatives. This analysis also helps show where the company can deploy resources toward managing health care costs, recruiting, retention and adding additional employer contributions to the retirement plans.
BUSINESS AT A GLANCE
PLAN ASSETS UNDER ADVISEMENT: $1.4 billion
MEDIAN PLAN SIZE (IN ASSETS): $15 million
TOTAL PLANS UNDER ADVISEMENT: 110
TOTAL PARTICIPANTS IN PLANS SERVED: 15,000