PA: Tell us about your practice and how you and your team members got into advising retirement plans.
Everhart Advisors was founded in 1995 by Scott Everhart and since establishment, the firm has provided consulting and investment advisory services to retirement plan sponsors and their employees. Before and after founding the firm, Scott’s initial focus was in the relatively new field of true “comprehensive financial planning,” still in its infancy. Through these early financial planning relationships he was provided the opportunity to compete for and earn 401(k) consulting and advisory engagements.
Having always valued independence and implementing a comprehensive and consultative approach, Scott was drawn to the opportunity of optimizing retirement plans from all facets without restriction or conflict, including vendor selection paired with the uncovering hidden costs and revenue sharing, creating fee transparency and cost control, ensuring open architecture investment flexibility, along with implementing prudent and documented processes. A decade and 40 retirement plan relationships later, Scott made the decision to transition the focus and brand of the firm to 401(k) consulting and advisory, along with a name change from Everhart Financial Group to Everhart Advisors. Now another 10 years since that decision and 20 years since the firm founding, Everhart Advisors is the largest retirement plan advisor in Central Ohio with 280 retirement plan clients and a team of 25 associates built specifically to serve and address the needs of employers, fiduciaries, and employees.
With two of the five current partners, Brian Hanna and Matt Romeo, joining the firm directly from college 20 years ago and mentored by Scott, a foundation and expertise of the firm continues to be fee transparency and cost control, while the breadth and level of services continues to grow and expand.
PA: How is your team/process/structure unique? How has it evolved? Where will you be in five years?
The term “team” is often used to describe a firm with perhaps more than one adviser and supporting staff, while we serve our clients through a team-based approach. A coordinated team of highly qualified and knowledgeable associates is assigned to and oversees each client relationship, with a lead consultant, relationship manager, and education specialist, all dedicated to their respective roles.
Our team-based approach allows us to deliver the necessary support, leadership, and services with focus, bandwidth, and world-class competence. Our relationships managers ensure we remain in constant contact with the client and all deliver robust and proactive service and support, including vendor coordination and advocacy, regulatory guidance and outsourcing, implementing and documenting initiatives, along with general administrative support—we have multiple relationship managers with 25 years or more in the retirement plan industry.
However, most often, it seems to be our dedicated education team that both sets us apart from the market and for which we find clients most enthusiastic. Two very important and unique aspects of our team—our educators are Certified Financial Planners and we provide recommendations and advice to participants, rather than information or guidance only, thus functioning as fiduciaries at the employee level. We have found no comparison to the dedicated education team we deploy onsite to meet with employees, their fiduciary status and associated impact.
PA: What have you done in the past year to improve participants’ retirement readiness?
Of course, automatic enrollment and automatic escalation have become best practice, if not an imperative plan design, to combat the behavioral challenge of inertia and helping improve the retirement readiness of participants. While employers are more aware of automatic enrollment and adoption continues to increase, we push employers to be courageous when implementing and challenge them to both implement automatic enrollment at 6% and to always include automatic escalation to 10% or now even up to 15%.
However, we continue to find no substitute for one-on-one employee engagement and the provision of advice. The auto features are powerful without a doubt, but to ensure true success (i.e. retirement readiness) employees must themselves understand the behavioral challenges they face, why behavioral change is vital, what aspects are within their control, and then embrace the work necessary. Perhaps an appropriate analogy is that the auto features are like “giving a man a fish,” while we seek to “teach a man to fish as to feed him for a lifetime.” Both together will lead to improved retirement outcomes over the long-term and a solution to the retirement crisis.
While the challenges may be daunting, we continue to place significant emphasis on changing the behavior of the individual. We deliver proactive education solutions that are continual, compelling, technically proficient, and most importantly, personalized. As a result, employees are better informed, and most importantly, better able to embrace the process of preparing for retirement.
In addition to the retirement readiness, we have also introduced “financial wellness” component to our education, with a series of onsite workshops led by our education team, covering emergency savings, debt reduction, and budgeting. We are all well aware of the symptoms, including lower contributions, lower balances, and higher loans, with this push of financial wellness helping solve the actual problems in addition to behavior challenges, such as the lack of budgets, extraordinary spending, consumer debt, and school debt. Again, our delivery method here is onsite, while also providing clients access to online/video based resources for their employees, such as SmartDollar and Edu(k)ate.
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.
Our tag line is “Preparing Participants. Protecting Fiduciaries.” and we continually seek to accomplish both for our clients—perhaps no two initiatives bring both together more effectively than 1) reenrollment to QDIA and 2) fee leveling. In addition, 360 degree payroll integration is another initiative gaining momentum, especially as respected payroll companies without proprietary recordkeeping platforms build integration capabilities with some of the largest, most respected platform providers.
Although we’ve been implementing reenrollment to QDIA for a number of years, the initiative continues to be a focus of the firm and proving to be an extraordinarily powerful tool, which benefits participants through improved asset allocation and diversification and benefits fiduciaries through the safe harbor protection available through the Pension Protection Act. Of course, reenrollment to QDIA is only implemented upon ensuring a properly aligned QDIA, most often a target date solution. We perform a plan allocation analysis, plotting each participant compared to a glidepath, and often confirm 40-50% or as high as 80-90% participants under or over-exposed to equity based on age. After reenrollment to QDIA, with the necessary notification and opportunity to direct investments, we consistently find 90-95% of participants remain in the QDIA and often similar percentage of plan assets.
Again, while implementing longer than 12-months, we are implementing fee leveling wherever possible, with all revenue sharing returned at the fund/participant level. Of course, fee leveling ensures equitability related to the plan recordkeeping and administrative expenses shared by participants, along with increased transparency, while also providing the ability to utilize share classes with the lowest “net” expense (what some have termed, “most efficient share class”) rather than simply zero revenue share classes exclusively, which has been deemed a best practice if not a source of liability exposure by leading ERISA attorneys, such as Fred Reish.
PA: As a retirement plan adviser, what do you take the most pride in?
Simply stated—helping the American worker understand, prepare for, and achieve successful financial and/or retirement outcomes. We are truly contributing to changing people’s lives for the better, along with helping solve the savings crisis facing the country—for this reason, our work and impact is both significant and fulfilling.
PA: How do you select what recordkeeping providers to work with and how many relationships do you currently have across your client base?
Firm partner and senior retirement plan consultant, Brian Hanna, actually participated on a panel discussing this very topic at the 2017 PLANADVISER National Conference. When sharing the fact Everhart Advisors works with over 30 recordkeeping providers, there was an audible gasp from the audience.
The opportunity for our consultants and relationship managers to work closely with the majority of recordkeeping providers, thus test drive them if you will, has led to extraordinary intellectual capital related to vendor capability and service delivery. We pair this breadth of experience related to service with a 20-year devotion to the topic of compensation/fee structures, revenue sharing and other sources of buried expense, along with benchmarking and effective negotiation.
Platforms we consider for clients and include for the benchmarking and evaluation/selection process all feature fee-based (if not fixed per balance) compensation, complete open architecture, dedicated relationship manager, and the ability to capture revenue sharing and return to the plan—while most web/technology has become a bit commoditized, there remains some differentiation and preference here, especially relating to the plan sponsor web experience (versus the often overemphasized participant experienced). Obviously, all these features have all become far more common than just a few years ago, thus our experience related to service and capability, along with cost and/or fit of the vendor based on the plan demographics, become the drivers of consideration.
With all vendors failing to deliver as expected at some point—especially with so much of the service experience often depending upon the relationship manager—to separate the top-tier providers we often consider our strength of relationship and leverage with the vendor and the ability to resolve issues quickly, along with features that do not rely on service levels. These features might include best-value, lowest cost, strongest brand (often providing comfort to participants), ability to outsource notice and disclosure mailings, fee leveling capability, custom target date solutions, and payroll integration or other technology enhancements applicable to the client.
Business at a Glance
How many plan assets do you have under advisement? $2 billion total, with $1.5 billion sourced in 401k/employer-sponsored retirement plans.
What is your median plan size (in assets)? $2.5 million
How many plans do you have under administration? 280
How many participants in total do you serve? 32,000