PLANADVISER: Tell us about your practice and how you and your team members got into advising retirement plans.
The Parks Group: For more than three decades, our team has focused on bringing comprehensive consulting services to the retirement plan marketplace. Over the course of numerous market cycles, significant market corrections, and important changes to the legislative landscape, our institutional consulting team has successfully navigated these challenges in the focused and passionate effort to help more plan participants retire successfully. We fully realize that our valued client relationships allow us to positively impact the quality of retirement for thousands of 401(k) plan participants, and through our comprehensive fiduciary process have helped protect the interests of many plan sponsors as they seek to address their fiduciary duties.
Tom Parks, founder of The Parks Group, began his journey in 1981 at the institutional consulting group of EF Hutton. Through many organizational changes, corporate mergers and an array of corporate cultures, Tom’s singular focus on helping employees suitably prepare for retirement has remained unchanged. He has, however, embraced change in the marketplace and was one of the first adopters of encouraging plan participants to consider professionally managed portfolios within their investment menus.
PA: What is your mission statement?
PG: The Parks Group at Graystone Consulting is passionate about helping plan sponsors maximize their fiduciary protection. Our mission—through the development of a prudent fiduciary process—is to provide our institutional clientele with fiduciary protection. This is accomplished by providing plan sponsors with a “paper trail” of decision‐making designed to help address the considerable challenges posed by the mandates of the Employee Retirement Income Security Act (ERISA).
To that end, we work diligently with our clients to develop an investment process that is structured to help protect the plan sponsor while helping guide plan participants towards successful retirement outcomes.
PA: Describe any particularly noteworthy initiatives you have led with your customer base in the past 12 months (investment, education, plan design or communication).
PG: The Parks Group at Graystone Consulting focuses its efforts to include putting forth plan design recommendations designed to have “inertia” work to the benefit of the individual participant. Over the past 12 months these recommendations / initiatives have included:
- Implementing automatic enrollment
- Establishing higher default rates (i.e. moving from 3% to 6%)
- “Stretching the match” (redesigning the match formula to encourage increased employee savings)
- Implementing auto‐escalation
- Increasing the auto‐escalation rate from 1% per year to 2%
- Raising the contribution maximum to 10%, 12% or 15%
- Instituting re‐enrollment procedures, which have dramatically improved plan success measures
- Changing the “information architecture” for plans (i.e. listing long‐term performance first)
- Changing the qualified default investment alternatives (QDIAs) to include only automatically diversified, professionally managed portfolios
These plan design initiatives have resulted in significantly improved participant success measures for many of our 401(k) clients.
PA: Describe a difficult client relationship issue, and how it was resolved.
PG: Our work in the retirement plan marketplace has been particularly effective with several new clients. Near the end of 2014, our team began working with a new client in the health care industry that maintained five defined contribution plans. Our team had multiple interactions with the plan’s Recordkeeper as well as with the plan sponsor’s retirement plan committee and its board of directors.
The following objectives were accomplished over a nine‐month period:
- Redrafted multiple Investment Policy Statements (IPS) to re‐assign committee responsibilities, streamline the decision‐making process and align the IPS with ongoing quarterly investment monitoring criteria.
- Conducted a full investment due-diligence process on the investment menus. The result was one simplified investment menu consistent across all five plans that reduced the number of investment choices offered (while still offering appropriate diversification opportunities) and was more participant friendly.
- Followed a thorough due-diligence process to select a target-date series that is appropriate based on the goals and objectives of the combined plans and specific employee demographics.
- Changed the QDIA to align the plans with current regulations.
- Utilized a Fiduciary Benchmarks report to identify recordkeeping cost savings opportunities. The recordkeeper subsequently lowered its fees by 0.11%, which amounted to roughly $300,000 annually in dollar terms.
- Worked with the recordkeeper to uncover an additional $400,000 in revenue to help offset future plan costs.
PA: As a retirement plan adviser, what do you take the most pride in?
PG: The process we have refined over many years of experience supports plan sponsors in fulfilling the extensive responsibilities of a fiduciary, maximizing their resources and—most importantly—helping their employees retire on time, successfully and with dignity.
PA: What benchmarks do you use to measure plan and client success? How do you react to clients or prospects who don’t share your goals for their retirement plan?
PG: On an annual basis, The Parks Group performs a fiduciary benchmark analysis for each client to assess their plan’s fees and participant success measures. Among others, we compare the plan’s participation rate, contribution rates for non‐highly and highly compensated employees, percentage of participants maximizing the company match and percentage of participants invested in automatically diversified options to a benchmark group comprised of similarly‐sized plans.
In addition, we look to the average tenure of our consulting relationships as a way to demonstrate the quality of the services we provide. We are pleased to report that the tenure of our average institutional client relationship is more than 10 years, with several relationships dating back more than 25 years.
BUSINESS AT A GLANCE
LOCATION: Milwaukee, Wisconsin
TOTAL ASSETS UNDER ADVISEMENT: $7.6 billion
MEDIAN PLAN SIZE (IN ASSETS): $75 million
TOTAL PLANS UNDER ADMINISTRATION: 55