2016 RPAY – Graystone – Cleveland/Pittsburgh

PLANADVISER: Tell us about your practice and how you and your team members got into advising retirement plans?
Graystone – Cleveland/Pittsburgh:
We a comprehensive investment consulting team that advises retirement plans, non-profit entities and other board-driven funds. We have been providing these services since 1987 but formally came together in 2012. Our team was formed as a way to harness decades of experience and provide this to our client base. We felt too often we were focusing on one side of the equation i.e. Defined Contribution while not discussing the defined benefit plan. By combining our talents, we now can provide a comprehensive solution to our end client advising the plan sponsor on their complete retirement package. We feel that our solution fills a void that is present in the marketplace because not many teams have experience advising defined benefit and defined contribution. This has helped us become the comprehensive advisor to plan sponsors.

PA: What is your mission statement?
 We are tenured professionals dedicated to providing plan sponsors a high-touch, high-service approach which focuses on results while easing their administrative burden and increasing understanding. Our bespoke solutions are rooted in decades of fiduciary processes that advance retirement plan knowledge, increase legislative awareness, create lasting value and enhance the true benefits of retirement plans. Our dedication to retirement plans forces us to educate, to be educated and to seek further education.

PA: How is your team/process/structure unique? How has it evolved?
 Our team is unique because of the breadth of our retirement plan expertise. Our Pittsburgh office has decades of experience in defined benefit plan risk management services. This includes a large Taft-Hartley practice as well as corporate and cash balance plans. Our Cleveland office manages the majority of our defined contribution plans. This team includes several credentialed former plan administrators that have worked in the recordkeeping industry.

This experience allows our consultants to support our clients as they work through complicated areas such as plan mergers, conversions, compliance and document issues.

PA: What have you done in the past year to improve participants’ retirement readiness?
 In the past year, our team has worked to design/re-design retirement plans that will by default increase the likelihood of a secure retirement. We know that 96% of participants will not change auto-enroll/auto-escalate elections. We also know that target-date funds used as qualified default investment alternatives (QDIAs) assist with proper diversification. We call this type of default design “helmet laws”, meaning that if a participant takes no action on their own, there are guardrails to help prevent as many bad outcomes as possible.

Additionally, the rapid development of gap analysis by providers, both at the plan and participant level, allows a much better success measurement than just an ending account balance.

PA: Describe any particularly noteworthy initiatives you have led with your customer base in the past 12 months (investment, education, plan design or communication).
 In the past year, we have actively recommended to our existing client base that auto enrollment and auto escalation be considered in connection with TDF default elections. We believe that this type of design is now a generally accepted “best practice” in 401(k) design. Other initiatives we have implemented have been independent plan benchmarking studies every two years and requests for proposal (RFP’s) every five years. Additionally, we have implemented pre-retirement education seminars for participants who are within five years of retirement.

In the defined benefit space, we have worked hard with plan sponsors to de-risk their plans, when possible. In most instances this has led to implementation of longer duration private investments and shorter duration liquid liabilities. This has been in contrast to the conventional thinking of adding traditional longer-dated corporate bonds.

PA: As a retirement plan adviser, what do you take the most pride in?
 Because our team of consultants have been advising some clients for many years, we have been fortunate enough to become familiar with several client executives and plan participants. We take great pride is witnessing a participant, we have come to know, retire in a secure financial position. Also, providing solutions to ease the executive team’s administrative burden of maintaining a retirement plan (we call it “taking bad stuff off their desks”) gives our team a sense of accomplishment.

PA: What are the most important issues that your plan sponsors face with their company retirement plan, and what specific actions do you take to assist them in overcoming those issues?
Without a doubt, it is the increase in the regulatory environment and increased litigation.

Regarding increased regulations, we advise our clients to “outsource” as much of the disclosure, distribution and eligibility determinations to a qualified record keeper as possible.

We prefer to have these responsibilities formalized in a 3(16) representation or at a minimum an indemnification of the plan sponsor. Although we do not provide legal advice, we attempt to mitigate our client’s legal exposure assisting in the documentation and implementation of best practices at the investment committee level. This includes formal committee meetings, appointment/acceptance of committee members, independent benchmarking studies and consistent investment reviews.

For defined benefit plans, it is the mismatch that funding status rules have placed on short-term performance and long-term goals. To address these concerns we spend considerable more time focusing on asset allocation expectations and actuarial assumptions. To combine these items, we often present risk-based studies that focus on stress –tests and Monte Carlo simulations. In a world of lower expected returns, plan sponsors need to focus on not being complacent and should always be looking forward.

PA: How do you grow your business? What changes to your practice or service model are you planning for 2016?
 We grow our business through referrals, requests for proposals and active networking. We are selective in the clients that we want to work with and approach because our approach is customized and requires a large amount of work and commitment from the plan sponsors. We are focused on certain voids we see in the current marketplace and attempting to provide solutions to these plans sponsors. For example, many single-employer plans are searching for de-risking strategies using LDI and ultimately get to a buy-out strategy. We work with these plan sponsors on a road-map and help them focus beyond the most recent quarter.

Our service model for 2016 is attempting to increase our use of technology for the betterment of our clients. This may be through more frequent communication, increased transparency or a way to lower costs.


LOCATION: Hudson, Ohio