PLANADVISER: Tell us about your practice and how you and your team members got into advising retirement plans.
The Beacon Group: Our practice is primarily focused on advising retirement plans. Our senior-most partner ran a third-party administration (TPA) firm for 25 years, prior to moving to a wealth management firm in 1991 and founding the team. From the beginning, serving the needs of retirement plans was the primary focus of the team. Each member of the team has pursued extensive education and credentials to provide expert service to our retirement plan clients.
PA: What is your mission statement?
BG: To empower participants with the tools, resources, and appropriate investment options to retire with respect and dignity on their own terms.
PA: How is your team/process/structure unique? How has it evolved?
BG: The most unique part of our business process is our approach to participant education. We believe there is a large gap in what the retirement industry believes/surveys and what actually is occurring in plans, at the very least with participants who join our clients’ plans. We believe the basic financial knowledge gap is greater than what is stated. We have utilized behavioral finance in our presentations to help participants better understand how they can impact their retirement picture.
The process starts with enrollment meetings where we will review the basics of the plan and the importance of saving. We then discuss what the participant can actually control: savings rate and asset allocation. While this is a broad review, we have found that more participants sign up and save more than the standard automatic contribution. They also choose a risk level that is suitable instead of a standard moderate risk level.
The next step is to hold another level of presentations: Budgeting (helps with deferral rates) and Investing (helps participants understand asset allocation). We have had great traction with these meetings where participants have thanked us for the basic financial knowledge they did not receive during their school years.
After the group meetings, we conduct one-on-one meetings with participants to further assist with payroll calculations or questions they may have with the options within the plan. We also utilize Morgan Stanley’s in-depth financial planning tool, LifeView, to draw up a full retirement picture for participants that not only includes the spend-down effect but allows us to calculate when certain larger expenses will occur in retirement. We have not seen a tool with as much capability as the LifeView from our peers.
The evolution of this education process has occurred because of the work we put into our business model when plans were holding tight while the dust of the Affordable Care Act was settling. We found that prospects were putting off the decision-making process, which allowed us to improve and streamline our investment process. We ensured the tracking held all the key criteria and we had a high conviction list of funds. This led to more time available to conduct education. It has also reduced the investment discussion to about 10%-20% of an investment committee meeting, which led to more focus on administration and education.
This approach and the case studies we have completed have led to winning at least 10 plans in the last 12 to 18 months.
PA: Describe any particularly noteworthy initiatives you have led with your customer base in the past 12 months (investment, education, plan design or communication).
BG: In addition to the education initiatives we are currently working on, we have worked with clients on fee levelization and target date analysis. We believe these are two areas that require the attention of the Investment Committee.
PA: As a retirement plan adviser, what do you take the most pride in?
BG: Every member of our team wants to make a difference. As corporate retirement directors at Morgan Stanley, we are able to make a difference for the participants of plans we serve. We do not have a minimum account balance requirement like other Morgan Stanley advisers who work with individual investors. We are able to help the people who need the most help. We believe from a behavioral standpoint, the retirement industry failed participants years ago by focusing on the wrong retirement number: the final balance.
The industry has shifted the message to the contribution percentage but it is our call as advisers to bring this information to participants. With pensions going away and participants unsure of Social Security (Pew Research Study), the weight falls on the contribution percentage. The days we are the most proud are when our education creates a need in a participant’s mind to make a positive decision that will help impact their retirement picture.
BUSINESS AT A GLANCE
LOCATION: Jenkintown, Pennsylvania
TOTAL ASSETS UNDER ADVISEMENT: $1.7 billion
MEDIAN PLAN SIZE (IN ASSETS): $20 million
TOTAL PLANS UNDER ADMINISTRATION: 105