Business at a Glance as of 12/31/21
- Plan assets under advisement: $450 million
- Median plan size (in assets): $20 million
- Plans under administration: 35
- Total participants served: 10,000
PLANADVISER: Tell us about your practice and how you got into advising retirement plans.
Fraser: I started my post college career working for Inc. magazine in Boston and New York City where I learned to have a deep appreciation for entrepreneurs and the businesses they ran and the challenges they faced in growing their companies. My goal when I left the magazine and embarked on a career in financial services was to help entrepreneurs succeed. Like most new advisers my intent was to build a wealth management business focusing on high-net-worth individuals. My focus changed as I understood the opportunity to help the average working American save in a company retirement plan and that was also an opportunity to help company owners. These owners wanted a less financially stressed team of healthier, and happier employees creating a more productive work force.
My very first retirement plan client was a heavy equipment rental company in Arizona. The owner Jerry Adams made it clear to me that he was going to retire well and the reason for that was because of all of his hard-working employees. His direction to me was look after his team members and treat each one of them as though they were my only client. Speak to them in a language that was simple and understandable. This became my model for education and service over the past 30 years.
PLANADVISER: How is your team/process/structure unique? How has it evolved? Where will you be in five years?
Fraser: My team structure and process is unique in that we do not currently nor have we in the past handled personal wealth management business. We specialize in company 401(k) and non-profit 403(b) retirement plans. We provide personalized financial planning but are not compensated above and beyond our fees for the retirement plan.
We break down our business into three simple components all based on a quote from Maya Angelou: “People may forget what you said, people may forget what you did, but people will never forget the way you made them feel.”
1. Work we do for the retirement plan committee. Simply put, we do all the stuff that everybody else does. We act as 3(21) fiduciaries, provide plan governance, have quarterly planning investment reviews and most importantly create excellent plan design.
2. Work we do for the participants. This is where we shine. We provide group and one on one meetings on an ongoing basis. One of our accounts has 55 locations in six states and we have been to every one of those locations twice a year for the past 18 years providing education and service.
The cornerstone of retirement financial security for most Americans is the monthly payment they will receive from Social Security and 73% of Americans leave money on the table. A primary focus of our education is to make sure that each and every team member has a strategy to maximize this benefit. We compare the benefit from Social Security to a lottery ticket win. Even with a $1000/monthly benefit over the 20 years in retirement it equates to almost a quarter of $1 million in income. Keeping in mind that the average family making $40,000 annually spends $1000 on lottery tickets with a one in 292 million chance of winning the Powerball this example hits home.
All of our plans utilize auto enroll/auto escalations based on Shlomo Benartzi and Richard Thaler’s “Save More Tomorrow” recommendations.
However, I believe the words we use in our business are confusing. The average American does not understand percentile or numeracy well enough. So, I have changed the words to make more sense. Instead of talking about percent of salary deferral I’ve changed to “PENNIES ON THE DOLLAR.” Everyone believes they can afford to take just one penny out of every dollar to save for retirement in year one and then each additional year save an additional penny out of every dollar. My model has been researched by Benartzi and his team at UCLA as well as Carnegie Mellon and Cornell University. The research has shown that the model may change the way people save all around the world.
Using this model allowed a casino plan in California that we manage to take their average deferral to 9.2 pennies per dollar in just eight years, with a participation rate of 97.7%. This with a very low wage base workforce.
3. HOPE! According to three major providers with over 16 million participants I have confirmed that at least 92% of the average 65-year-olds in their plans have less than $60,000 in their accounts. This along with their Social Security monthly benefit still requires many to consider working in retirement. It is emotionally draining to sit with a participant and share with them that they have $2600 a month in retirement income and learning that their expenses are $2200 a month.
The $400 that is left is what they have for fun money. So much for the provider brochures that show retirees on big boats, golf courses and living the life of luxury. We needed a solution and I’ve come up with one. “Retirement Life Hacks!” I have been sharing with participants options for a better retirement life utilizing their hobbies or assets to create income and allow them to have a more hopeful retirement. Take for example Sean in Oregon who will never have to utter the words “welcome to Walmart” or “would you like fries with that order”? Sean has a boat that he will be utilizing personally 27 days a month in retirement but for four days he will be taking people for rides on the Oregon coast through a site called “Boatsetters.com” and increasing his monthly income by $2000. When I explained this option to Sean it was like I had given him the golden ticket from Willy Wonka! Another great example is Betty who wants to spend winters on the beach in St. Augustine, Florida but her income doesn’t allow for that opportunity. Betty loves animals and through a website called “Critter Sitters” will not only be staying at the beach in St. Augustine but also being paid to do so looking after a cat. WOW!
Please imagine the hugs I receive after sharing these opportunities with participants who have felt like their options were limited and I shared with them the ability to have a life in the words of Henry David Thoreau “live the life you’ve imagined.”
PLANADVISER: As a retirement plan adviser, what do you take the most pride in?
Fraser: I am so proud of the fact that I can help those that don’t have the same access to the options entitled Americans have in preparing for a “hopeful” retirement! The expression on a person’s face after we have met and the hugs I have received make me so very proud of the career I’ve chosen. When a 62 year “young” woman shares that she hasn’t had a good night’s sleep in two years and 15 mins later she is in tears thanking me for my help and knowing she will sleep soundly makes for a great day’s work! I sleep pretty soundly after those meetings!
PLANADVISER: How do you grow your business? What changes to your practice or service model are you planning for 2022 or 2023?
Fraser: The business has grown through referrals and will continue to grow through references from clients who are passionate about their team members success and appreciate our understandable hopeful approach. The model has been successful and I don’t see any changes in the way we service and educate going forward.
PLANADVISER: What challenges do you think the retirement plan industry faces and what role do you have in addressing and confronting those challenges?
Fraser: I believe the retirement plan industry needs to wholeheartedly refocus on participant outcomes and simplifying the way we educate. My work around “social security as a winning lottery ticket,” “pennies on the dollar” and “retirement life hacks” are all steps in the right direction. I am honored to be working with Shlomo Benartzi and his team on a pilot research project around de-cumulative that I believe is the next and very important piece of the retirement puzzle. This solution must be simple and transparent!
PLANADVISER: Please tell us about an important experience you have had while getting involved in your local, regional or global community.
Fraser: My first experience with Region9 Head Start was with the Foundation for Early Childhood Education in El Monte, California. I was one of several advisers being presented to enhance the service and reduce the cost on their 403(b) plan.
I went to the meeting with my plan to educate and inspire the committee and share with them how I could fix the plan. Instead, I left being educated and inspired on the wonderful work that the organization conducts each and every day for children and families in need. This was a game changer for me, and I decided at that point I wanted to find a way to make a difference. I thought about all of the invitations I have had over the years from my the DCIO vendors and plan providers for lunches, golf outings, fishing trips etc. I decided I would approach all of these colleagues and ask them to instead of providing these invitations to me that I would love to have them come and serve up some pizza or donuts and provide financial literacy to the caregivers and teachers responsible for the life-changing work they did with these children. (By the way I am not someone who gratuitously accepts these invitations. I have made it a point in my career to always pay at least 50% of the time when I am meeting with colleagues).
This interaction ultimately led to my meeting with the executive director for all of region nine encompassing Arizona, California, Nevada, Hawaii and the Pacific Islands. From this meeting the idea of a scholarship program was conceived and thanks to my generous colleagues in the financial industry we are on track to nearly $250,000 after only four years of the program. One of the recipients of the scholarship was particularly meaningful to me. Cecilia Hernandez recounted how at aged six her mother sent her to work in a fireworks factory in Mexico because of an economic need. The factory exploded and the family moved to the United States where Cecelia pursued her dream of becoming a Head Start educator. The thought of sending my own daughter at age six to work to help provide for our family had great impact and left all who watched her video rendition of this event in tears. All of our lives we have been so blessed and it is an amazing thing to know that we can and should help those who have not been as blessed.
PLANADVISER: What advice can you give to your industry peers about developing a successful philanthropic or charitable vision for a firm?
Fraser: My first interaction with Region9 Head Start was about winning a new retirement plan account. It ultimately became unimportant based on the Immense satisfaction one feels helping those who are less fortunate.
It seems our business is about creating wealth, often about creating more wealth for people who are already wealthy! As one of my CFO’s succinctly put it “you can have a wonderful life and not necessarily be wealthy, it’s about the contributions you make to society.” The work with Headstart has been life-changing and I recommend to all my colleagues to take the time and find those that need a lift up. In the end you will get the same lift!