PLANADVISER: Tell us about your practice and how you and your team members got into advising retirement plans.
The Parks Group at Graystone Consulting: I have focused my entire 36-year career on the retirement plan marketplace as a result of an intensely personal experience.
Growing up as one of eight children, I watched as my father put in long hours working for an automotive company in Detroit, Michigan. When my dad got home, my mom put on her coat and went off to work nights at a local grocery store. The financial drain of raising and schooling eight children was exceptional.
After decades of utilizing all of their financial resources to keep their family afloat, my parents were finally able to retire.
Fortunately, my father benefitted from a retirement plan at work, and for the first time in their lives, my mom and dad were able to go out to dinner, to travel and to pursue their
individual passions. I witnessed first-hand the incredible importance of having a retirement plan “nest egg” that very directly impacted the quality of life for my parents post-retirement.
Upon entering the financial services marketplace many years ago, the decision regarding which path to pursue was automatic and easy. I was determined to help as many people as possible enjoy a successful, dignified retirement and have enjoyed and appreciated the opportunity to help thousands of hard-working people who—like my mom and dad—are very dependent upon their retirement plan “nest egg.”
PA: What is your mission statement?
PG: At the Parks Group at Graystone Consulting, our mission is to help as many people as possible enjoy a timely, successful retirement while maximizing the fiduciary protection of our valued Plan Sponsors. We’ve delivered on that commitment by providing the highest caliber of objective, unbiased investment advice and exceptional client service while adhering to the highest ethical standards, free from conflicts of interest.
PA: How is your team/process/structure unique? How has it evolved?
PG: The Parks Group at Graystone Consulting recognizes that the most successful teams in the Retirement Plan industry are those that are most able to adapt to the industry’s ever-changing legislation and capital market environment.
Accordingly, our teams’ processes and structure are constantly evolving, making the adjustments necessary to fulfill our goal of delivering the highest level of retirement plan consulting in the industry today.
To that end, each and every member of our team recognizes the importance of continued education as we all strive to expand and improve our knowledge of the issues and challenges inherent in the retirement plan marketplace. We regularly attend numerous internal and external industry conferences (PLANSPONSOR, Barron’s, NAPA, etc.) and have earned designations reflective of this effort (CFA, CIMA, AIF, CRPS externally and, internally: Corporate Retirement Director, Institutional Consulting Director, Portfolio Manager and Alternative Investments Director designations).
Personally, I was a founding member of APIC (Association of Professional Investment Consultants) in 1990, and one of the first graduates of IMCA’s Certified Investment Management Analyst program at The Wharton School of Business in 1994. Additionally, I completed the Certified Behavioral Finance program led by Dr. Shlomo Benartzi in 2013, and have utilized all of this training to better serve our institutional clientele and their valued employees.
In summary, our team is “evolving” in that we are constantly working to improve our awareness, education and expertise for the betterment of the thousands of plan participants we serve.
PA: What areas of service are customized for each client? What are the same across your book?
PG: The only aspect of our consulting services that is consistently applied across our entire universe of institutional clientele is our disciplined, proactive, client-focused investment and servicing process. As a matter of practice, we approach each client relationship as unique, understanding that our clients’ corporate objectives, plan demographics, plan design, educational requirements and diverse levels of trustee sophistication require a highly customized consulting approach.
We’ve developed a very specific client “service model” for each relationship, in the effort to build the best possible solution for the demands of a specific situation, including:
· Quarterly Performance Report—“Executive summary” format or detailed analytics?
· Capital Markets Discussion—High-level overview or thorough analysis of the global marketplace?
· Trustee Education—Discussion of industry trends specific to the client’s sector of the marketplace
· Fiduciary Training—Review of fiduciary best practices, customized to each client’s plan structure, design and governance
· Employee Education Support—Dependent upon the services provided by the plan’s recordkeeper and the requirements of the client’s participant demographics
· Investment Menu—Customized to reflect what may be most appropriate for each client’s situation, for both the “standalone” investment options and the professionally managed and diversified portfolios (i.e., Target Date, Target Risk and Custom solutions)
· Method of Delivery of Information—Electronic, hard copy, iPads, Power Point
Additionally, on an ongoing basis, we solicit feedback from each and every client regarding our investment, fiduciary, and educational processes to ensure that our efforts remain the best possible solution.
PA: What do you need to be successful? From your team? From your clients?
PG: I believe that success is no accident! It is the result of hard work, perseverance, learning, studying and—most of all—a passion for your work. Without question, it is important to have the resources, experience and expertise to back up that “passion”, but in the retirement plan industry, success is the direct result of a commitment to excellence.
From a team perspective, it is important to have every team member share that “commitment to excellence” and motivated to do their best to achieve it. If everyone is moving forward towards a common goal together, then success takes care of itself.
From our clients, what we need in order for our team to be successful is their TRUST. Trust in our experience, trust in our expertise, trust in our commitment to them as fiduciaries, and trust in our passion for the retirement well-being of their employees. With that trust and mutual respect, much can be accomplished!
PA: What do you consider the most significant challenge facing Retirement Plan participants? Facing Retirement Plan sponsors? Facing Retirement Plan advisers?
PG: Plan participants need to be acutely aware that they may spend as many years in retirement as they do in their careers, and that the probability of reaching age 85 is 63% for a 60-year -old male and 71% for a 60-year-old woman, and an 89% probability that at least one of them will reach age 85.
We call this “longevity risk” and work very hard through both plan design and participant education initiatives to encourage employees to start early, take full advantage of their company’s match, and to defer as much as they are able in the effort to maximize the likelihood of a secure, successful retirement.
In light of the significant increase in legal action being brought against plan sponsors relating to plan expenses, fee transparency and assorted fiduciary actions I believe one of the most significant challenges facing plan sponsors today is the need to be fully prepared for this “litigation risk”. The courts have clearly spoken regarding the need for plan sponsors to be extremely aware of plan fees, services and how competitive their plan fee structure may be in the marketplace. The Parks Group helps our clients prepare for this litigation risk by implementing disciplined, robust investment and fiduciary processes and by providing a paper trail of decision-making for all committee actions taken.
For each and every client, we provide an Annual Service Review that summarizes all fiduciary actions taken throughout the year along with periodic fee and service benchmarking reports that ensure that all plan fees incurred are commensurate with the services provided and competitive in the marketplace.
The challenges facing retirement plan advisers today aren’t significantly different than they were 35+ years ago when I started my career in that advisers need to be very diligent in staying abreast of the industry’s changing legislative and capital market environment.
Ours is a dynamic industry, and if “success” is to be achieved both for advisers and our clients, a never-ending commitment to excellence is required. The challenge, then, is to prepare for and embrace change!
PA: Describe any particular initiatives you have led with your customer base in the past 12 months (investment or education or plan design or communication).
PG: The Parks Group consistently focuses our efforts on putting forth plan design recommendations designed to have “inertia” work to the benefit of the individual participant. Having earned the title of Certified Behavioral Financial Analyst, I work with my clients and recordkeeping partners to understand how participants make decisions regarding their retirement plan investments and structure educational campaigns, and plan design features accordingly.
Over the past 12 months these recommendations/initiatives have included:
· Implementing automatic enrollment
· Implementing auto-escalation
· Increasing auto-escalation from 1% to 2% per year
· Establishing higher default rates (i.e., moving from 3% to 6%)
· Stretching the match to encourage increased employee savings
· Target Date evaluations in compliance with the DOL’s “Tips for Fiduciaries”
These plan design initiatives have resulted in significantly improved participant success measures for many of our 401(k) plan clients.
I have included below two case studies that highlight the positive impact our initiatives have made on specific client Plans over the past 12 months:
Case Study #1: New Client – Cost Savings and Multiple Enhancements to DC Plans
Our team recently began working with a new client in the healthcare 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 processes and align the IPS with ongoing quarterly investment-monitoring criteria.
· Conducted a full investment review on the investment menu options. The result was one simplified investment menu consistent across all five plans that significantly reduced the number of investment choices offered and was more participant-friendly.
· Followed a thorough due diligence process to select a Target Date Series that was deemed appropriate based on the goals and objectives of the combined plans and the specific employee demographics.
· Changed the Qualified Default Investment Alternative 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.
· Worked with the recordkeeper to uncover an additional $400,000 in revenue to help offset future plan costs.
Case Study #2: Evaluation of Recordkeeping Services
In this second example, a retirement plan client engaged the Parks Group at Graystone Consulting to assist in evaluating their current recordkeeper. It had been several years since
their last review and that led to Graystone Consulting leading the entire review process, which included the following:
· Conducted discovery meetings to understand the plan’s existing goals, processes and procedures
· Gathered plan documents & plan information
· Identified recordkeeping candidates for consideration
· Drafted an in-depth request for proposal and distributed to recordkeeping candidates
· Analyzed RFP responses and summarized results for Investment Committee
· Determined finalists for further consideration
· Assisted the Investment Committee in the decision-making process
The decision was made to retain the current provider and the following changes were implemented as a result of Graystone Consulting’s analysis:
· The acquisition fee of $10,000 was eliminated
· The termination / de-conversion fee was reduced from approximately $5,000 to$2,500
· The number of education days increased from 10 to 15
· The per-participant fee remained the same. Note that this would have likely increased from $77 to $85 due to a lower participant count from a previous spinoff. As a result of the fee remaining the same, the savings amounted to approximately $19,750.
PA: As a Retirement Plan Adviser, what do you take the most pride in?
PG: Without question, I take the most pride in the fact that through the diligent efforts of my team and the passion we share for our clients, we have directly and positively impacted the retirement outcome for thousands and thousands of hard-working individuals.
I recognize that many of the plan participants we support share circumstances similar to those of my mom and dad, and it gives me great pleasure to know that through our hard work, we have been able to improve the quality of life in retirement for so many!
PA: What benchmarks do you use to measure plan and client success?
PG: At the Parks Group, we believe the success of a client relationship should be measured by our ability to help our plan sponsor clients—and their valued employees—not only meet but exceed their investment and retirement goals and objectives.
From a fiduciary perspective, we believe a qualified plan’s success should be evaluated on its ability to stand up to the test of “procedural prudence”. Recognizing that ERISA is about “process” and not “outcome”, our goal is to construct for each client a comprehensive investment and fiduciary process that is designed to maximize their fiduciary protection.
From a plan perspective, on an annual basis we carefully examine each plans “success measures” (participation rates, average deferral rates, percentage of employees taking full advantage of the company’s match, retirement readiness, etc.) to determine if sufficient progress is being made towards the goal of having every plan participant retire on time and successfully.
We also look to the average tenure of our consulting relationships to determine if the fiduciary partnership is successful, and are pleased to report that our average institutional relationship is more than 10 years, with several dating back more than 30 years. In our opinion, this speaks to our teams’ ability to successfully satisfy our clients’ investment and service expectations over multiple market environments.
BUSINESS AT A GLANCE:
Plan assets under advisement: $6 billion
Median plan size (in assets): $75 million
Total plans under administration: 75
Total participants served: 75,000