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

Greenspring was originally founded as a pure, fee-only registered investment adviser (RIA) (no B/D affiliation) focused strictly on private wealth. In the early days, we often did project-based comprehensive financial planning and we had a number of small business owners and executives who hired us for these types of engagements. As part of the planning process we would evaluate their 401(k) options and found that their employer plans were often a confusing mess. 

Beginning in late 2005/early 2006, we started to focus our time on the corporate retirement plan space. Our idea back then was that being a fiduciary under the Advisors Act, our commitment to being fee-only (no indirect comp, 12b-1 fees, etc.) and passive investment philosophy would clearly differentiate us and be really well-received by the qualified plan space. 

At the outset, we knew we needed a way to differentiate our services and we couldn’t rely on our experience in the space (we had none) or our age, as we were all around 30 years old. We decided the area we could differentiate was from a technical standpoint around being a fiduciary so we started to research the Employee Retirement Income Security Act (ERISA). We would have wholesalers from all the different vendors come in, and we would ask them about fiduciary responsibility and 401(k) plans. Back then, around 2005 and 2006, nobody could really give me a good answer. Frustrated, I printed out the entire ERISA regulation and read it over a weekend. And what I realized was that very few people had any idea what the rules and regulations actually said. 

And so we just started to try to think practically around how to help clients be compliant and follow a good process. From the beginning, there were two basic ideas that formed the basis of our philosophy: 1. Every great plan had to start with an effective committee; and 2. It had to be about more than just the investments.  

We were having a really hard time winning much business because we were telling a story that was pretty ahead of its time back then. We were very early advocates of trends like fee transparency, automatic plan design, fiduciary training, passive investing, 3(38) services, fiduciary advice at both the plan and participant level, etc. 

Frustrated (and ready to quit and go back to working exclusively with private clients), I walked into my partner’s office at the time and said, “I am so fed up with the 401k industry. It’s such a mess. I quit. I’m not doing it anymore.” He kind of talked me back off the ledge, and on a whim, I said, “You know what? I’m going to write a book.” And he laughed, and he said, “Oh, really? What are you going to call it?” And I said, “Fixing the 401k. Because the retirement industry is so broken it needs to be fixed.” And he just kind of laughed at me. But that night, I went and said, “If I was going to write a book for the layman about a 401k plan, what would the chapters be?” And I came up with an outline, and then, over the next six or seven months, I would just write and knock out chapter by chapter. The result was a book that I published in August 2008 called “Fixing the 401(k): What Fiduciaries Must Know (And Do) To Help Employees Retire Successfully.”

While not everyone in the industry agreed with our ideas, the release of that book was the launching pad for our retirement practice because it helped us differentiate our firm and it gave us the opportunity to speak at a lot of conferences, do workshops, etc. Slowly, we started to build a really good client base. In 2009, we met Todd Lacey who owned The (k)larity Group in Georgia at a conference where we both were on a panel. In late 2010, he reached out to us and said he had a chance to take a corporate job at Transamerica and wanted to sell his firm to us. We worked out a deal and in April 2011 we bought The (k)larity Group and brought on an additional 20 clients in the Atlanta area and an additional staff member. This got us to about 40 total plans and helped us further establish our footprint and capabilities as a specialist. 

We’ve continued to grow and now have four lead advisers on the institutional team, two relationship managers and a dedicated participant adviser. We also have shared resources that support our Private Client Group and a six-person investment committee. We are fortunate to have attracted really talented people on our team who are bought in to our approach and philosophy and how to serve clients. Currently, we work with more than 80 plans and close to $2.8 billion in plan assets.

PA: How is your team/process/structure unique? How has it evolved? Where will you be in five years?

One thing that differentiates us is how we have developed proprietary consulting tools and methodologies that we use with our clients to help them manage the fiduciary process. This includes our strategic plan management tool called the (k)larity Quotient, our target date analysis methodology called Target Date (k)larity, a web-based fee benchmarking app we recently developed and launched called FeeMetri(k)s, and our newest deliverable which is an online fiduciary training curriculum called Fiduciary U. 

Across our client base, roughly 65% of our clients use automatic enrollment with 52% of our plans under $10 million using this plan feature and 75% of our plans over $10 million. Ninety-two percent of our plans under $10 million default at 3% or higher and 54% default at 5% or more. Ninety-four percent of our plans over $10 million default at 3% or higher and 55% default at 5% or more. Thirty-five percent of our plans under $10 million use automatic escalation 50% of our plans over $10 million use this feature. 

I think what’s uncommon about us is that we have been really good at trendspotting, making the case to clients very effectively and getting clients positioned where they need to be much earlier than most comparable plans. I think our plan design stats really show how we move the needle and bring traditionally larger market consulting practices into the under $50 million and even under $10 million space. 

The biggest thing that has changed is that our team has obviously grown and expanded and we’ve hired more dedicated resources. I couldn’t be prouder or humbled to be in the trenches with this group of people who are so committed to fiduciary principles and client success. 

Like many in the industry, I foresee the continued convergence of health and retirement and figuring out how to coordinate and make that process more seamless for employees. 

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

Over the past several years, we have really amped up the focus on automatic plan design and aggressive implementation with a focus on a 6% default rate, 1% escalation, 15% cap, retroactive implementation and annual sweeps of eligible, non-participating employees and “under savers” (which we define as anyone saving under the default). 

While we almost always do a target-date fund (TDF) conversion when making a recordkeeping change, we have also been effectively promoting TDF reenrollments without a recordkeeping change over the past 18 months. We have had pretty dramatic results with a number of clients who have embraced this approach. 

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) or any plans for the next 12 months. 

In early 2017, we completed a sweep project for a client with a $50 million plan and 400 participants. We auto-enrolled eligible, non-participating employees into the plan at 6% (the plan’s default rate). Approximately 55% of participants enrolled opted to stay in the plan. 

We created a future value calculation for each participant who stayed in the plan using their current age, projected savings rates, current balance, etc. to determine their projected additional retirement savings them and then converted this amount into a projected monthly income at retirement. We did this to illustrate the power of this approach to the plan sponsor as a post mortem and they were blown away. We also presented a summary of this data at an all hands meeting to show participants the power of getting into the plan early and saving at escalating rates over time.

Also in 2017, we completed a comprehensive fund and fee restructuring project for a $135 million plan with 1,200 participants. The plan had all-in costs of approximately 62 basis points (bps) prior to the changes. We renegotiated the fees with their current vendor, moving to a fixed recordkeeping fee and eliminating revenue sharing, and reduced all-in costs to 25 bps, for annual cost savings of approximately $500,000. We did a five-year projection based on plan growth with a discount rate of 4%, which yielded present value savings of more than two million, or nearly $2,000 per employee. 

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

First, the leadership role we take with our clients and their willingness to embrace our advice and recommendations. We are also proud of our track record of bringing proven best practices to smaller plans and not just our larger clients, and we tend to see our clients be early adopters of these best practices.

Second, I think many of our clients would say we go well above and beyond the call of duty and help them with things they never expected us too, whether it’s helping them through compliance corrections, right sizing issues with their vendor, etc. Third, our advice is translating into outcomes for clients. With SURVICE Engineering for instance, who is a finalist in the $50 to 100 million space this year for Plan Sponsor of the Year. 

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? 

We measure plan and client success in two ways. First, we utilize our proprietary plan diagnostic tool called the (k)larity Quotient to assess and monitor plan performance over time. As we implement more best practices over time, we typically see a client’s (k)Q score increase, and progress is easy to quantify and measure. We also take clients through an annual strategic planning process we call Plan with (k)larity to establish three to five year strategic goals that we will measure against over time. 

PA: How do you grow your business? What changes to your practice or service model are you planning for 2018? 

We don’t have a model that carves out business development. Our lead advisers both sell plans and service clients so it’s important to continue to hire well, effectively deliver on our service model and create capacity for our lead advisers to have time to build relationships, prospect and bring on new clients.

We are receiving more RFP requests and invested in RFP software in 2016 that has helped streamline and scale our ability to respond to these requests in an efficient way. Ultimately, growth is a function of providing good service (to retain clients) and activity in the marketplace. In 2017, we brought on seven new plans through the first two months of the year which is unprecedented for us. 

We are also planning to focus targeting our messaging/marketing to several niche markets in 2018 where we already have an established footprint.