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 Dominic 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).
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.”
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