October 12, 2017

2016 RPAY – Alliance Benefit Group Financial Services, Corp.

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Underlying all of the work that Alliance Benefit Group Financial Services, Corp., does is an underlying emphasis on what it calls “sustainable retirement”—defined by the company as at least 85% of employees being able to replace 75%, or more, of their income.

To accomplish this, the firm has a two-part strategy centered around “results-based plan design” that makes effective use of automatic features, coupled with “boots-on-the-ground” campaigns that use one-on-one participant advice.

“We then continuously benchmark these retirement readiness results so our campaigns can be ongoing, modified and successful in helping participants achieve a sustainable retirement,” says Brad Arends, CEO. This includes providing each sponsor with aggregate retirement readiness reports for its employee population and benchmarking those figures against other plans.

The results of these plan-level retirement readiness reports are “often alarming,” he says. For that reason, they are an effective catalyst for significant plan design improvements. As well, Alliance Benefit holds its plans up to the 90/10/90 benchmark whereby 90% of employees participate in the plan, deferring an average of 10% of their salary, and 90% of participants use a professionally managed asset-allocation tool. Although not all of its sponsor clients are quite there yet, the company continues to help them draw a path to the goal.

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Based on the results of these year-over-year retirement readiness reports, Alliance Benefit creates an education policy statement (EPS) for each client, “tailored to each plan’s specific subset of participant needs. The EPS emphasizes employee retirement readiness through plan design, high-touch communication and advice services to educate and empower participants.”

The group attests that this approach has “dramatically improved” a number of sponsors’ plans, noting that, since 2013, two of its clients have been winners and five have been finalists in the PLANSPONSOR Plan Sponsor of the Year awards program.

It observes that “too often, advisers in this industry spend the vast majority of their time focusing almost exclusively on fiduciary governance and investment policy monitoring services.” Although these are, of course, critical, and addressed through Alliance Benefit’s 3(21) and 3(38) fiduciary services, this is only half of the equation, according to the firm.

A retirement plan adviser’s “main deliverable” should not merely be “protecting his client from getting sued,” as Arends sees it. “With the average American on track to replace only 58% of the income he will need to retire, the industry needs to change. Therefore, the success of a retirement plan must also be judged by the success of each individual participant in attaining a comfortable retirement,” he says. “Helping participants achieve a sustainable retirement must go beyond the traditional means many plan sponsors, providers and consultants have attempted. A successful strategy must encompass overall financial wellness and understand behavioral science.”

Financial Wellness
For 2016, Alliance Benefit Group has expanded its educational and advice programs with the launch of “All My Money,” a participant education, advice and financial wellness program. The firm can customize the program for each sponsor; advice includes both a do-it-yourself and a formal, eight-to-17-week classroom curriculum teaching overall financial health.

At in-person, mandatory group meetings it holds for participants, the firm advocates deferral rates of 10% or greater and age-/risk-appropriate asset allocation. Thanks to the size and makeup of the team, those group meetings are bolstered with in-person, one-on-one investment and benefit consultations with each participant where they review individual retirement readiness reports. Clients can make these one-on-one meetings mandatory, as well.

In addition, Alliance Benefit Group produces educational videos that are available to participants through live streaming or on-demand. On top of this, it provides each participant with quarterly statements that include a gap analysis. By analyzing each plan’s demographics, the firm can tailor messages to various employee groups through statements and emails. Additionally, it coordinates with each plan’s recordkeeper and administrator to showcase any education they provide online and in print.

“From our personalized retirement readiness reporting, to face-to-face education and advice meetings, to Web-based video education, Alliance Benefit Group is providing a multitude of engaging educational options designed to complement the learning styles of a diverse demographic of more than 50,000 participants,” the firm says.

To enable participants to grasp their financial standing in a more holistic, meaningful way, Alliance Benefit has developed the All My Money mobile app, through which participants may aggregate other holdings and projected Social Security income. Not only does this aid participants, the firm says, but it “better allows the Alliance Benefit Group team to help [them] achieve financial fitness today, resulting in a better chance of retirement readiness tomorrow.”

To complete the holistic offering, the group has partnered with Dave Ramsey, a leader in financial wellness, to offer his SmartDollar curriculum, and with the LearnVest online program, which provides budgeting support and personalized tools for financial wellness.

Client Service Model
Serving each client is a team composed of one or more consultants, a relationship manager and client service administrative staff. The firm is selective about the clients it onboards. “If a potential client doesn’t share our purpose, our cause—driving sustainable financial outcomes for the American worker—and simply offers a plan because ‘it has to,’ then, in all likelihood, it isn’t a good fit for our firm. We strive to be a valued partner with our clients, working to help their people succeed,” the firm says. Noteworthy initiatives that Alliance Benefit Group has concentrated on in the past 12 months include developing custom target-date funds (TDFs) and portfolios using the plan’s underlying fund options. Furthermore, the group “is now working on a way to build a customized glide path for each individual participant based upon [his] unique financial situation.”

The firm continues to migrate away from revenue-sharing funds to the lowest-cost, institutional ’40 Act [Investment Company Act of 1940] mutual funds or collective investment trusts (CITs). If any funds have a revenue-sharing fee, the firm conducts fee levelization. For a number of clients, it has conducted in-depth analysis comparing the value of actively managed vs. low-cost passively managed funds. With many participants on the doorstep of retirement, Alliance Benefit Group has helped some plan sponsor clients include retirement income annuity solutions in their lineups, as well.

However, perhaps the largest business change in the last year was the sale of the recordkeeping/administrative support services side of the Alliance Benefit Group business to Alerus Financial. Although the businesses were kept as separate units, and considered sister companies, the sale will allow for the consulting business to be the main focus and continue its growth, according to Arends.

In summary, “Alliance Benefit Group is committed to being a leader in the retirement advisory business.”

BUSINESS AT A GLANCE

LOCATION: Albert Lea, Minnesota
PLAN ASSETS UNDER ADVISEMENT: $2.6 billion
MEDIAN PLAN SIZE (IN ASSETS): $16 million
TOTAL PLANS UNDER ADMINISTRATION: 150
TOTAL PARTICIPANTS IN PLANS SERVED: 50,000
SUPPORT STAFF: 17
October 12, 2017

2016 RPAY – Newport Capital Group

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Newport Capital Group believes it is important to thoroughly understand each plan sponsor’s goals for its company, so immediately upon starting with a new client, the practice asks it what issues are most pressing—both for the company and for employees. As the firm puts it, having an “open dialogue during onboarding sessions” is key.

“By asking these questions, some seemingly outside the realm of retirement plans, Newport Capital Group can realign the strategy to best fit the specific needs of that client,” says the firm. “Only by assessing the real aims of our clients can we craft a coordinated retirement strategy that best serves to incent, attract, reward, retain and eventually retire its work force.”

For example, the group may discover that a company is at risk of losing top talent to a competitor. Or that its defined benefit (DB) plan’s funding status is negatively affecting the company’s financial statements. Or that the company has a disproportionate number of older employees who are unable to retire and are costing the company high health care benefit premiums.

With this information in hand, the firm can work to assuage the finance department’s frequent motivation to keep retirement benefit costs down while meeting human resource (HR)s’ goal of attracting and retaining the best talent. Knowing the goals and the challenges of each employer, the advisory team can often make the case for automatic enrollment, re-enrollment and automatic escalation.

“Many of our clients are aware of some of the shifts in industry best practices and have even received feedback from their peers, but they are still hesitant to make changes,” says Domenic DiPiero, president of Newport Capital Group. “Plan sponsors assume a negative reaction from their participant base and have been concerned about adding costs to their bottom line. Taking things like this into consideration, we have found that framing these changes as a long-term benefit has resonated best in most cases.” Indeed, it appears to be working, as 87% of Newport Group’s clients use auto-enrollment, 52% use auto-escalation, and 99% offer an asset-allocation solution, such as a managed account or a target-date fund (TDF).

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Once a client has been onboarded, the firm conducts annual plan health assessments, which reveal progress on already identified issues or may uncover new ones that can lead to further improvements in plan design, down the road.

Educating the Committee
In line with Newport Group’s emphasis on open communication at the onset of a client relationship, DiPiero refers to the firm’s initial process as a “two-way interview” that creates an open line of communication with all committee members. The adviser team’s service model also includes education that engages committee members with topics such as current best practices, legislative updates and regulatory issues.

The team’s model allows for customization, based on the needs of each client. Newport Capital acts as a 3(21) fiduciary for all of its clients and makes 3(38) fiduciary services available, as well.

“Part of our service model revolves around performing a fiduciary forensic audit on all new client relationships,” DiPiero says. “At the onset of the relationship, we perform the audit to bring the plan into the high standard we require as a co-fiduciary. During this process, we aim to uncover, rectify and document any existing plan-related issues. Competing this thorough analysis serves not only to protect the interests of the committee but also to set the foundation for a successful relationship between Newport Capital Group and our clients.”

While establishing a strong rapport with the sponsor and committee and improving plan design are vital, so is participant education, the firm believes. This is why it develops a tailored education policy statement (EPS) for each plan sponsor. “Increasing participation begins with a robust educational and communication initiative to explain to participants the importance of saving for retirement and to reiterate to employees the value of the benefit offered by their employer,” it says.

“Using our tailored EPS as a road map, we first identify the participant and demographic groups not contributing or participating in the plan,” DiPiero says. “We then work with the plan provider to target those employees directly, using language and methods specific to each individual or group.”

The next step is to increase deferrals. The firm scours the demographics and offers solutions specific to the groups that are either falling short in deferral amounts or are projected to be unable to replace enough income in retirement, DiPiero says. Again, using the EPS as a road map, the firm “deploys tailored educational and communication resources from the provider focused on changing participant behavior.”

Here is where Newport Group has found one-on-one education to be effective, so the firm has engaged providers that can supply “the same cutting-edge technology and methods that are offered by the most sophisticated wealth management firms,” he says. “By offering an education resource willing to sit down directly with participants and advise them, we’ve seen incredible success in increasing deferrals and helping participants achieve retirement readiness.”

Client Survey
Last fall, the firm hired Advisor Impact to conduct a confidential, Web-based survey of its clients. “We feel that asking our clients what they want from us, as their adviser, is the most important step to providing an unmatched client experience, as well as delivering cutting-edge services,” DiPiero says. “We also wanted to show our clients that we care about the quality of our relationships and services and, most important, give voice to their experience and opinions.”

The survey came back with a client satisfaction score of 99%. While “thrilled” with the results, Newport Capital decided to take the survey a step further with one-on-one brainstorming calls between DiPiero and the clients, starting this past January. Based on the clients’ feedback about what could help them with plan administration, Newport Capital will be designing an in-person and webinar seminar series to further educate plan sponsors on best practices.

The group plans to conduct another client survey within the next few years and has reinforced its open-door policy with all of its clients.

As to what the team takes the most pride in as retirement plan advisers, DiPiero says, it is “improving participants’ retirement readiness and helping them realize their future potential.”

BUSINESS AT A GLANCE

LOCATION: Red Bank, New Jersey
PLAN ASSETS UNDER ADVISEMENT: $8.5 billion
MEDIAN PLAN SIZE (IN ASSETS): $155 million
TOTAL PLANS UNDER ADMINISTRATION: 104
TOTAL PARTICIPANTS IN PLANS SERVED: 100,000-plus
SUPPORT STAFF: 15

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