PA: Tell us about your practice and how you and your team members got into advising retirement plans.
Wealth Enhancement Group was founded in 1997 by three advisers with a shared objective: Do what’s right for the client. They sought to deliver unbiased, truly comprehensive advice by using their complementary skill sets in financial planning, investment management and tax strategies. This powerful combination formed the foundation of our team-based approach that we call the Roundtable. This unique approach allows us to provide all the specialists you need, all in one place. All dedicated to simplifying the financial lives of our clients.
In recognition of the evolving complexity and opportunities to serve clients in qualified and nonqualified retirement plans, I joined our firm in 2010 to establish a Retirement Plan Consulting (RPC) team dedicated to serving retirement plan clients. I molded our retirement plan service model into a vision of what could be, rather than what was. This was possible because I was building it from the ground up, and was not held back by any legacy systems or thinking. And, just as our founders did when they started Wealth Enhancement Group, I recognized a new and better approach was necessary.
My inspired vision for our team and service model evolved from experiences in life and business. I grew up on a farm in rural Wisconsin, the eight of 10 children. The extent of what I learned from my parents about money was how to be frugal with it. Frugality was a matter of survival, since we didn’t have much. It was also a motivator that helped me pay my own way through college and spark my interest in financial matters.
I doubt I would be in this industry and as passionate about helping participants if it wasn’t for Richard, my mentor at my first job out of college. When I went from contractor to full-time employee at my first job, he took me out to lunch and said something to this effect, “Joe, you are eligible for benefits now. You have health insurance, dental and vision coverage, etc. There is this thing called a 401(k) plan. It allows you to save money for your retirement. I know that may sound like a distant future, but if you start saving now, it will be easy. The maximum you can save in the plan is 15% (in 1992). You should save that and not think twice about it. The company will help you with some matching money, but the 15% is what you need to save over your working career to ensure you will have enough money to retire at a reasonable age. Now if you save this 15% from the start, you will never miss it – this is your first job out of college and you have never made more money in your life.”
I started saving 15% right away. Richard was absolutely right – I didn’t miss the money, and I couldn’t believe how fast the money started to build up. To feed my growing interest, I subscribed to financial publications and started educating myself about investments and other financial matters.
In 1996, and only four years after Richard nudged me to save 15% in my own 401k, I found my way into the employee benefits and retirement plan industry. After a few years, I realized retirement plans were my passion, and have focused in that discipline ever since. While I started on the recordkeeper side, I moved to the adviser side in 2002.
As an adviser, I was an early student of behavioral finance. I incorporated principles of it into virtually everything I do, in material ways beyond just plan design. In June of 2007, as mobile technology was emerging, I wrote a business plan that led to becoming the chief architect and original designer of iJoin, the retirement plan industry’s first transactional and device-agnostic mobile technology to help participants. The participant experience and results we created with iJoin demonstrated that thoughtful applications of mobile technology could improve participant decision making and confidence in retirement planning.
Now at Wealth Enhancement Group, I have built an inspired team and continue to find ways to help plan sponsors and participants based on creative and material applications of behavioral finance. All of my team members have personal experiences that influenced us to want to help others improve their financial health and retirement readiness. Those are great motivators that drive us every day to make a difference for others.
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.
As part of our proactive plan management approach, we lead several strategic initiatives each year for all clients, as well as individualized initiatives for specific clients. In the last year, our strategic initiatives for all clients included building a financial wellness curriculum for participants, and simplifying the topics and messaging under five comprehensive categories: earning, saving, spending, insuring and investing. In the next 12 months, we will continue to build meaningful content within this curriculum to help workers. Additionally, we have reviewed the definition of plan compensation to ensure clients are following it. This was a primary plan design initiative that spanned from 2016 to 2017, and led to helping many clients correct how they were handling payroll and other potentially eligible plan compensation, such as fringe benefits.
With the passing of the Department of Labor’s (DOL) new fiduciary rule, we have been recommending clients consider amending their plan documents to allow for more flexibility and options for terminated/retired participants in taking distributions. Considering the expected impact on rollovers and the availability of quality advice for individuals, especially for lower account balances, we are suggesting clients consider adding installment and ad-hoc payments as additional distribution options.
While we have assisted many plan sponsors navigate difficult decisions around plan design, we developed a new construct to help clients improve their decisionmaking and arrive at smart decisions faster and easier. Beyond various calculations and projections we can do with existing systems, our new process incorporates those and cuts through the challenge of arriving at plan design decisions within competing objectives and priorities.
PA: As a retirement plan adviser, what do you take the most pride in?
There is nothing better than the feeling of a participant thanking us for helping them. We often hear from new groups and new participants that no one has ever explained things as clearly as we do. I take pride in teaching and inspiring participants, as well as plan sponsors. Even as I have added a couple of team members that also do participant education, they know I will always do some of it. It keeps me grounded, is a huge source of inspiration and gives me the greatest satisfaction.
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 success across our clients individually, but view them in aggregate as well. We have built a large database of client metrics and important information, which enables us to measure success and opportunities for improvement. We track many participant metrics, plan design features, non-discrimination tests and fees by service provider.
Every organization is unique, and their retirement plan should be too. In that regard, I developed a process we take each plan client through to identify the purpose and priorities of their plan, as well as the metrics by which we will measure success. The process applies behavioral finance in helping plan sponsors make more objective and informed decisions. The outcome is an alignment of their group’s values, goals and decisions to drive the types of positive outcomes they seek. We are able to bring committees to agreement on these through our profoundly simple process.
There are 25 potential outcome metrics we suggest for consideration, three of which we consider to be universal; that is, we use with all of our clients. Those are benchmarking data, plan cost/value and investment results/Scorecard. The other 22 are organized by administrative and fiduciary metrics versus participant metrics.
Through our planning process, we have found our clients are naturally more inclined to actively strive to meet their plan and participant goals. We don’t run into issues with clients or prospects not agreeing with our goals, because we don’t make anything about our goals–we make everything about their goals through the process we provide. Unfortunately, we have experienced clients who no longer want to adhere to Emplouee Retirement Income Security Act’s (ERISA) requirements for their fiduciary responsibilities, integrity or the needs of participants. In these rare situations, we do everything we can to help the plan sponsor get back on track. If they refuse, I am not comfortable serving as a fiduciary, and state so with a resignation letter.
PA: How do you grow your business? What changes to your practice or service model are you planning for 2018?
To grow our retirement plan business, we use the analogy of an octopus with eight legs. Each leg represents a different method by which we are trying to meet new plan sponsors that may be open to our help. In any given year, some methods are more successful than others, and things can change over time. Our primary source of new business has been, and continues to be, referrals. There is no better advocate for introducing us to someone who can benefit from our services than a current client, their personal financial adviser or other business connection who knows our expertise, service and dedication.
Beyond referrals, the most significant other way in which we are growing our business is through plan sponsor education programs. I have been the adjunct lecturer for The Plan Sponsor University in Minnesota since its founding six years ago. I also started a quarterly program, called The Plan Sponsor Roundtable. Additionally, I have been invited to speak a few times per year to different HR, CPA, payroll and CEO groups on retirement plan topics. For all of these education programs, my team and I incorporate adult-style learning techniques, which make the programs more interactive and participatory.
We have already made a few changes in 2018 to our practice and service model. First, we have added a new position as retirement education manager. This role will help us further assist plan sponsor clients and their workers be more educated and move ahead with positive actions.
On the participant side, we have and will continue to build out custom financial wellness initiatives, as that is of great interest in making a difference for participants. Our new retirement education manager is also fluent in Spanish, which is an uncommon value-add in our market. We expect that will help our clients with Spanish-speaking and/or diverse populations to improve outcomes.
For both plan sponsors and participants, another initiative this year is to further simplify our messaging. Our industry is only adding complications, yet plan sponsors and participants are not spending more time at this. I believe the best advisers and other service providers will not only be those that are excellent at what they do, but can translate the complexities of our industry in digestible ways and motivate plan sponsors and participants to do the right things.