PLANADVISER: What have you done in the past year to improve participants’ retirement readiness?
The Kieckhefer Group: We have approached participant retirement readiness on four fronts: 1.) implementing and updating the auto enroll and auto increase features, 2.) stretching the match, 3.) expanding participant education, and 4.) introducing our affiliates at Next Level Planning & Wealth Management and their financial wellness programs.
First, we have encouraged the use of the auto enroll and auto escalation features. For plans that have not implemented the features, we brought in costs analysis for potential health care costs for older employees as a way to help quantify the lack of retirement readiness. For plans that implement only auto enroll, we have gone back and added the auto escalation feature. For plans that auto enrolled only new hires, we have gone back and implemented retro auto enroll to capture every one. These special enrollments have been very well received by existing employees and new hires.
Effective use of the auto features goes hand in hand with the second approach, stretching the match. Plans are only as good as the participation rates and the contribution levels. Stretching the match is important because the results encourage participants to save at a higher level. The Department of Labor’s (DOL’s) safe harbor programs and the industry standards can be misleading and detrimental to plan participants’ retirement goals. The DOL encourages participants to save at the suggested level of 15%. The match in the plan should encourage the participants to save at a 15% level and not at something less. Most of our plan sponsors get it.
Thirdly, participant education is a key for long-term success. We have conducted more education meetings this past year than in any year in the past. We are recruiting plan advisers to join us and help with our education and enrollment efforts. We set up group meetings as the generic introduction to the plan and a summary of the plan features. We follow up with the explanation of the auto features, the selection of the qualified default investment alternative (QDIA), custom portfolios, target-date funds, long-term savings and retirement security. We then take our plan participants onto the recordkeeper website and walk them through the enrollment process. We have always offered individual meetings, and this past year, we have seen an increase in participants utilizing our service. We have established regularly scheduled dates that we are on site to deliver the one-on-one meetings. We also offer our email address so that if they need a question answered or they want some extra help, they can get to us almost any time of day or night.
And fourth, we recruited a team of advisers, Next Level Planning and Wealth Management, who offer a compete series of programs for financial wellness. Next Level delivers a full menu of financial wellness seminars covering a variety of topics that are not confined to retirement savings and investing. We feel responsible to our plan sponsors and our plan participants to help every participant work toward a successful retirement. We have selected a good team who deliver valuable services to our plan sponsors and plan participants. Our participants trust us, and we believe it is that trust that allows them to make important financial decisions without fear. This expands our ability to help more participants.
PA: What is your mission statement?
KG: Act with integrity, hold yourself to the highest standards, and place participants first.
PA: As a retirement plan adviser, what do you take the most pride in?
KG: The most humbling and satisfying aspect of what we do is the positive impact we have on participants and their futures. There is an old adage: You work the first part of your life for yourself and the rest of your life for the next generation. We are in the second phase of our careers, and we recognize that we are working for the next generation.
With the ever-increasing number of participants who depend on their 401(k) savings and Social Security almost exclusively for their retirement, we are an integral part in making their retirement dream possible. With our extensive knowledge in provider services and costs, we can help match the best provider for the plan, reduce costs and expand services. We have consistently seen that selecting the best investments, lowering the costs, providing ongoing education and ultimately building a relationship on service and trust, helps deliver better outcomes for participants as they pursue a better retirement.
For our plan sponsors, our level of expertise helps them manage their plan. It is their trust in us that we are the most proud of because it is the trust that is the foundation of our relationship. Recently, one of our plan sponsors told us that they always know they will get a comprehensive answer the first time they ask a question.
Rob Kieckhefer has taken our mission to a new level with his involvement on Wisconsin’s 529 College Savings Plan Board. As the chairman of the Investment Committee, Rob has used his education, knowledge and technical expertise help Wisconsin build a better 529 Plan for Wisconsin. As reported by the James DiUlio, Director, Wisconsin 529 College Savings Board, as of 12/31/2015, Wisconsin Tomorrow Scholars and Wisconsin EdVest reported over 280,000 participants holding over $3.8 billion.
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?
KG: We start with a detailed review of the plan, the investments and the areas of the plan that need to have a systematic review. We have a 20-point list of items to implement, document and continually update. Working off of our 20 point list, we ask our plan sponsor to identify any issues that need to be addressed immediately and then prioritize the remaining items. Not everything has to be done at once; however, everything needs to be systematically reviewed, addressed as needed and documented.
We use participation and deferral rates as key measurements of participant readiness and starting points for our work. Participation rates are quantifiable and provide the plan sponsor with the ability to set numeric goals. Many providers have resources to help define the number of participants that are on target to reach a successful retirement.
We use performance of the individual funds based on 11 fiduciary measures. We focus on best-in-class, long-term returns.
We are continually reviewing all fees, including our own. Recordkeeping fees are coming down, the assets are going up and the net fees should be coming down. The expense ratios of our funds are under constant evaluation and compared to lower share classes, collective trusts, exchange-traded funds (ETFs) and index funds.
We will, on occasion, get push back from plan sponsors who feel that by just offering the plan they are doing everything they have to for their employees. We explain that it is in their best, long-term interest to build the lowest-cost plan, with top-performing asset class investments so that at the end of the day, their participants are engaged and will have the best chance of achieving a comfortable retirement. The retirement plan is too important a benefit to disregard. We explain that we only have one standard of excellence, one goal of achievement, and the cost is the same. This simple conversation helps to engage the plan sponsor in a new way.
BUSINESS AT A GLANCE
LOCATION: Brookfield, Wisconsin
TOTAL ASSETS UNDER ADVISEMENT: $1.25 billion
MEDIAN PLAN SIZE (IN ASSETS): $15 million
TOTAL PLANS UNDER ADMINISTRATION: 59