PA: Tell us about your practice and how you and your team members got into advising retirement plans

Ascende Wealth Advisers, Inc. (AWAI) was founded by Ascende on February 1, 2011. AWAI is a Securities and Exchange Commission (SEC) registered investment advisory firm dedicated to providing unbiased investment advice by acting as either an ERISA 3(21) co-fiduciary or an ERISA 3(38) investment fiduciary to corporate sponsored qualified and nonqualified plans as well as international and offshore savings arrangements. 

Our team members either have, or are trained to have experience in both plan investment advice as well as true plan consulting expertise equivalent to anything an employer may expect from the largest consulting firms in the U.S. Our team members are just as likely to be working on calculating match true-ups, conducting corrections under EPCRS, or reviewing a plan’s compensation definition versus a company’s payroll system definitions as they are to be researching mutual funds or building defined benefit (DB) liability driven investment strategies.

Our team members came into this business from all walks of life.  While some were recruited directly into Ascende/AWAI from college and have learned the business through various certifications and one-on-one training, others started as paralegals, recordkeeping administrators, pension plan corporate trustees and compliance testing and plan document specialists as well as investment advisers and investment managers.

PA: What have you done in the past year to improve participants’ retirement readiness?

We have historically leveraged both the recordkeeping vendor’s data, as well as client census data, to try and build a complete picture of the plan’s participant retirement health levels. We have routinely asked our vendors to calculate the gap analysis based on criteria agreed upon with the plan sponsor, depending on the vendor’s capabilities or limitations.

For our own analysis, we use plan participant data from the employer census data, combined with account balance data to create a series of PivotTables that enables us to look at plan data based on employee age, service, gender, geographic location and HCE/NHCE status relative to their contribution rates, catch-up use and maximization, match maximization, health-savings account (HAS) use and maximization, average account balance and rates of plan participation.  This data allows us to more effectively target our communications to the employees that need it most.  In 2018 and beyond, we will be further leveraging this data to help us identify employee groups that require more hand holding and one-on-one communication services.

PA: Describe any particularly initiatives you have led with your customer base in the past 12 months (investment or education or plan design or communication) or any plans for the next 12 months.

We have been working on multiple initiatives over the last year to assist our plan sponsors in the health and success of their plans and plan participants, including implementing advanced financial wellness solutions for many of our clients over the past 12 months. This means going beyond simply encouraging participation in the 401(k), our financial wellness programs focuses on a holistic approach to employee’s daily lives. To encourage participation, we have helped employers run a variety of campaigns to encourage participation in the program, and even integrated the scoring system with health and welfare wellness programs to enable employers to offer a single wellness benefit.

Additionally, AWAI has been leading conversations with employers to eliminate revenue sharing and convert to either an employer-paid model, or a model where employees pay a pre-defined per capita or pro-rata fee for plan services.

We have also been partnering with some of our clients to provide employee education and investment management services to help employees better understand how to use their HSAs more effectively. We provide group education to employees on the benefits of HSAs and some strategies for getting the most out of their use in paying health expenses as well as understanding how to invest your HSA dollars most effectively. We have also been working with employers to bring down the cost of HSA investments since these accounts typically have much investment management higher costs than 401(k) plans.

In 2015, when the Department of Labor sent a letter to plan sponsors encouraging them to evaluate the quality of their existing plan auditor as well as what to do when conducting RFPs for plan audit services,  AWAI launched an initiative to review and evaluate 100% of our client’s auditors using the criteria provided by the DOL and adding multiple additional questions we felt were prudent.

We have implemented custom liability driven investing (LDI) strategies for DB plans in this market using our own proprietary investment modeling. We have successfully reduced plan expenses by no less than 30% for each of these plans and have improved their funded status through actively managed strategic asset allocations of index funds and ETFs that also leverage the principles of LDI to hedge liabilities as the funded status improves.

As part of our 2018 initiatives, we will be conducting more one-on-one education meetings with employees using data compiled from our Health & Retirement assessment and other retirement readiness tools to create targeted education campaigns and one-on-one meetings designed to improve outcomes at the individual level.

Furthermore, we will be working with our vendors to take an active role in researching their preparedness relative to the five standards of Identify, Protect, Detect, Respond and Recover as laid out by the National Institute of Standards and Technology. Vendors will be sent a questionnaire to respond to that is more in-depth than the questions posed in a typical 401(k) RFP. This questionnaire will then be updated and maintained and provided in any 401(k) RFP as an addendum to the vendor search so that employers can be assured that their vendors are prepared at a level consistent with the latest thinking, tools, and technology as necessary to combat this rising threat. This report will also be kept on file for existing clients to use as part of any audit they may be required to respond to.  We believe that this issue has already become a standard fiduciary best practice and our clients will be at the forefront of meeting and exceeding this standard.

PA: As a retirement plan adviser, what do you take the most pride in?

Developing a relationship of trust with employees and employers. As an adviser, clients expect us to manage plan fees, monitor fund performance, and manage their fiduciary responsibility. These tasks are vital components of our business and lay at the heart of our practice. However, we take the most pride in extending our relationships beyond just those basic tasks. Focusing on holistic financial wellness and supporting employee’s retirement goals are the most effective way we have to make a real difference in our clients’ lives. In order to achieve these goals we have to build trusting relationships with our employer clients and their employees.

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?

Leveraging our recordkeeping vendor partners, we view plan success through a number of key metrics including, but not limited to, plan participation rates, participant deferral rates, target date/managed account usage, etc. We compare our client’s statistics versus those of their same size peers and peers in similar industries. Through AWAI we were also able to offer a number of survey statistics to illustrate to our clients and prospects how their plans compare against their similar competition based on their industry.

Another key metric that many recordkeepers now illustrate to plan sponsors is the percentage of plan participants that are “on track for retirement”.  While we like this metric, sometime it can be misleading as it may not capture a participant’s entire retirement account (for example they may have a sizeable balance at a previous company retirement plan that is not captured, a pension benefit from a previous employer, etc.).  We think that in order to truly capture whether someone is on track for retirement is to meet with them face-to-face (either in a group setting or one-on-one meetings) to understand that individual employee’s unique circumstances and to capture their entire financial position.

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?

In the face of increased consumerization of employee benefits, one of the most important issues facing plan sponsors is the inability to effectively promote utilization of the plan. It is easy for employees to feel overwhelmed and frustrated with the variety of choices and volume of decisions to be made. The basic steps to begin investing for retirement consists of completing an enrollment form, determining the appropriate amount of pay to contribute, and allocating among a wide variety of investment options with varying risk tolerances. No matter how easy vendors or recordkeepers make this process, it is easy for an employee to get hung up or confused and say they’ll come back to it later. Even for those plans with automatic enrollment, designed to make the process as easy as possible, an employee can be left wondering where their money went, what it is being invested in, and when they can get it back.

In an industry where it seems the answer to every question is more technology and less human interaction, we strive to be the partners for these employees and meet with them face-to-face. We work to provide general education on why retirement savings is important, assist with enrollment, help determine a good starting amount to contribute, or walk through a personal risk tolerance assessment.  The goal is helping as many participants as possible take that first step, or smooth out their current path, towards investing for their future.

PA: How do you select what recordkeeping providers to work with and how many relationships do you currently have across your client base?

We regularly work with the following 21 national providers: ADP, Ascensus, Charles Schwab, Empower, Fidelity, Guardian, John Hancock, Lincoln Financial, MassMutual, Nationwide, OneAmerica, Newport Group, Principal, Prudential, Securian, T. Rowe Price, The Standard, TransAmerica, Vanguard, VOYA and Wells Fargo. Each vendor goes through an extensive, regular and recurring vetting process and must offer an open architecture investment platform with no proprietary fund requirements in order to be recommended.  We will also work with any providers, especially if they are the plan sponsor’s existing vendor and fit the needs of the sponsor and their plan participants and the fees are reasonable for the services provided.  Since we do not receive, and have never received, remuneration of any type from any of these providers, it is our policy that any possible services they may be able to provide to AWAI is irrelevant in our analysis. AWAI and QPA is recordkeeper-agnostic and works diligently to ensure that each of our clients is served by the recordkeeper that is the best fit for its unique circumstances.