Business at a Glance as of 12/31/21

• Plan assets under advisement: Approximately $2.25 billion and our team advises on about $6.75 billion
• Median plan size (in assets): $17 million
• Plans under administration: 96 different plans in our office and I service and support about 35 in some capacity
• Total participants served: The clients I serve have roughly 40,000 participants and our team services over 120,000.

PLANADVISER: Tell us about your practice and how you got into advising retirement plans.

Massa: It’s funny how someone steps into anything as a career sometimes. A simple customer service job at Merrill Lynch opened a door for me to work in their retirement legal department as basically a paralegal. I was answering questions about ERISA and IRAs I probably had little business talking about, but I learned an incredible amount in a short time. I moved on to take on roles as a relationship manager, documents specialist, employee educator, bank trustee, marketing product manager, compliance specialist and eventually even running the operations for a TPA. All the while, I would watch how so many advisers knew so little about retirement plans and yet would get paid egregious compensation while providing next to nothing in service. I knew there had to be a better way.

Our advisory practice started in 2010 as the offspring of a local health and welfare consulting firm with literally zero assets. Our goal was a different one. Yes, we believed in the standard services of funds, fees, and fiduciary responsibility, which were still state of the art at that time. But we believed that to be a consultant, you had to hold yourself to a higher standard. We started offering plan corrections and remediation services, helping sponsors repair their plans under ECPRS, which few other non-TPA firms were capable of doing. While most advisers were still offering two-page investment policy statements, we were drafting complex committee charters, education policy statements and even codes of ethics. The bulk of our contemporaries at the time that we would compete against considered plan design consulting to be akin to asking if you had a match. In contrast, we were helping employers compare their plan document’s compensation definition to the codes set up in their payroll system to ensure they were in alignment. For mid-sized plan sponsors that had experienced problems in the past, what we were doing was revolutionary; a tangible differentiator.

By 2014, we had grown to almost $3 billion in assets, and we were named a finalist for team of the year for the first time. Our team had grown from four idealist advisers to seven seasoned professionals with a knack for getting our clients the most out of their vendor relationships.

After our health and welfare parent company was purchased in 2016, we tried to integrate our services into the core functions of the new, larger organization, but the two weren’t in alignment. So, we approached management about an opportunity to purchase our business with the help of a partner committed to retirement plans and ultimately partnered with Qualified Plan Advisors. Since then, we were once again named a finalist for Team of the Year in 2018, and today, our assets have grown to $6.75 billion. Along the way, we’ve added services such as financial wellness, HSA management, student loan debt programs, liability insurance evaluations and ESG investment evaluation.

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

Massa: I imagine everyone who responds will tell you they work in a team environment. I think that what’s unique about our team is that there is no competition between any of our commissioned-based, 1099 compensated staff in the QPA Houston office. All the compensation is shared in a more egalitarian approach. It encourages us to partner up on existing clients and new opportunities based on each person’s strengths. We also don’t place a fixed sales or production quota on each other. Rather, our first goal is to ensure the existing clients are happy at all times and that they come first all of the time. We don’t cancel or reschedule meetings with existing customers to meet with a prospective customer … ever. We also don’t actively prospect. 100% of our clients come from referrals, which we believe is much more effective.

Our team also consists of salaried professionals who support our clients. They are professionals that have been trained by us on every aspect of retirement plans. Legally, they are advisers in their own right, licensed Series 65 professionals capable of managing their own clients whenever they choose to do so. All clients are assigned multiple points of contact to ensure that they can be attended to by someone familiar with their plans. All of the work associated with each client (e.g., investment research, meeting minutes, compliance testing review and quality control, 5500 reviews, plan document review, employee education meetings, etc.) is divided between our salaried and non-salaried professionals during weekly and quarterly one-on-one meetings, which keeps each team member fully up to date with what is happening with every client.

As far as where we’ll be in five years, I expect the industry will once again have changed, as it always does. Five years ago, financial wellness was a mere buzzword, and now it’s everywhere. In the future, I believe the convergence between health and wealth will continue. Our initiatives in HSA management will be coupled with educating employees on how to handle the effects of reference-based pricing, the risks of balance billing that may ensue, and how to effectively utilize your HSA to manage part of the costs. Financial wellness programs at U.S. companies will become commonplace and the trend will be to provide family based financial literacy to both parents and the children in the home as well, helping to ameliorate the financial futures of the next generation. ESG investing will become the standard and most companies will be looking at risk-adjusted metrics that also account for environmental and governance factors that reduce investment risk, while also trying to look qualitatively at the social impact our investments have on employees, the environment and the community at large. Offering multiple in-plan income solutions, both annuity and non-annuity based, will likely become the standard and we’ll be spending time educating employees on which one better fits their future objectives. As for QPA Houston, I imagine we’ll have reached the $10 billion asset milestone and we’ll be reminiscing about my having won the adviser of the year award in 2022 (one can hope anyway).

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

Massa: Without a doubt, it has always been developing my team. There is nothing like watching a team member learn, grow and excel. One of the biggest challenges I faced in my career was the lack of a mentor for so long. When I finally found one, I’d already taught myself most of the lessons I needed to learn.

In my experience, too many managers are worried about losing their jobs. They view their staff as expendable as long as they keep their job. I promised myself that whenever I got the chance to lead, I would treat my team members differently. When I built the advisory practice in 2010, the first thing I did was establish the mindset. I told them we were the best advisory shop in the country, we just had to show it to everyone else. I believed then and still do now that if you and your team don’t believe you’re the best, why would anyone else? Next, I made it a point to teach them everything I knew and how to apply that knowledge. I tried to figure out what certain people excelled at, and what functions they enjoyed doing and tried to expose them to more of it whenever possible. I knew that this was the single most important thing I could do. I wasn’t going to worry about my job. Instead, I’d try to make myself obsolete. I was certain that, if I helped make great team members, it would translate into great client service. Over the years, I’ve watched so many people learn and grow in front of my eyes. It is the most satisfying feeling you can have to help someone better themselves and outgrow you as a professional.

PLANADVISER: How do you grow your business? What changes to your practice or service model are you planning for 2022 or 2023?

Massa: Our business is grown almost completely via referrals from clients, CPAs, lawyers and health care consultants. We also spend time in the community volunteering as well as speaking at conferences. We’ve never needed to expend resources cold calling or doing direct mail campaigns. However, we do have ongoing email campaigns where we share our materials and insights with the people we meet along the way.

For 2022 and 2023, we will spend more time focusing on HSA management, student loan debt program development, ESG research and policy development, fiduciary liability insurance reviews, and cyber security due diligence and education.

• Health Savings Accounts – HSAs represent an incredible opportunity for employees to save for both their current and future healthcare costs. A married couple age 65 in 2021 will spend approximately $300,000 in out-of-pocket healthcare costs throughout their remaining lifetime. And yet, that cost would increase significantly if those dollars were funded from pre-tax 401(k) savings because of the taxes on withdrawals. Even if Roth dollars are used, you still paid income taxes and FICA/FUTA on the contributions, making them less efficient than HSAs to fund these costs. Plus, using pretax dollars also risks increasing the couple’s income, which has the added penalty of causing them to pay a surcharge for Medicare Part B and D coverage. Education around HSAs is sorely needed.
• Student loan debt programs – Everyone knows that the cost of higher education has risen tremendously. I was doing research last night on Texas A&M tuition and the cost has risen 56% since 2012 and more than doubled over the last 20 years. Student loan debt in the U.S. now totals $1.75 trillion as of April 2022. Forty-three million (one in eight) Americans have student loan debt according to the U.S. Census. Plan sponsors that can find a way to help Millennials and Gen Z employees with a way to manage that debt are the most likely ones to attract and retain employees.
• New Comparability plans (“New Comp”) – New Comp plans aren’t just for small employers if you know how to use them. I wrote about this in 2018 when the Abbott Labs PLR came out. A company first excludes all HCEs, and establishes three employee groups. Group 1: HCEs (excluded). Group 2: NHCEs with student debt above X% of pay. Group 3: NHCEs with student debt below X% of pay. Those that meet the definition in Group 2 get the nonelective contribution. This passes 401(a)(4) automatically since HCEs are excluded.
• Split Contributions – You can create a separate non-ERISA savings bucket and allow employees to receive the cost of the match in the retirement plan, or the non-ERISA bucket, or split between the two. So, for example, let’s say you offer a match of 100% up to 6%. Here are some examples of how this might work. Employee A contributes 6% to the student debt payment account and receives the 6% match funded there, which they can use to help pay their student loans. Employee B contributes 3% to the student debt payment account and 3% to the 401(k). The employee receives a 3% match in the 401(k). They also receive 3% into the student loan account which they can use to help pay their student loans. Employee C contributes 6% to the 401(k) and 3% to the student loan debt account. 100% of the match is funded solely to the 401(k) and is not available for student loan debt relief.
• One thing to consider is what to do if your 401(k) plan has a vesting schedule. Since the student loan program isn’t an ERISA plan, it doesn’t have a vesting schedule and the money will be spent upon receipt to reduce the employee’s student loan debts. In these cases, legal counsel can construct a promissory note for the employees to execute with terms that explain how many years they need to work with the employer before they no longer owe back the match.
• ESG research and policy development. We are working closely with employers to help them look at the risks of offering versus not offering some ESG-compliant investment options in their plan. We also help them craft IPS language that enables them to evaluate some of the non-financial criteria involved in ESG selection and monitoring, as well as pick out the funds that have an ESG integration philosophy that uses ESG factors to seek improved returns by identifying risks. We believe this is the most prudent fiduciary method of implementing an ESG strategy.
• Fiduciary liability insurance review. As the number of fiduciary lawsuits has increased over the last several years, we are seeing higher premiums, higher cost retentions (i.e., higher deductibles), more use of subrogation, and more exculpatory provisions. However, many times the people who authorize and execute FLI policies at the company aren’t fiduciaries to the plan or aren’t familiar with the risks. In contrast, the insurance companies issuing the policies are trying to limit their exposure at every turn, and the property and casualty brokers, while well-meaning, don’t fully understand the fiduciary risk exposures to provide the necessary counsel to their clients on how to balance coverage terms versus cost. QPA Houston has stepped in for our clients to review the policy coverage terms and determine if there are holes in the policies and risks to the fiduciaries that need to be reviewed with their property and casualty insurance professionals. We then provide our findings to our clients, enabling them to have an informed conversation with their property and casualty brokers.
• Cybercrime is on the rise and we are seeing more lawsuits involving stolen retirement account balances. There is a big question in these lawsuits as to who is responsible and at what level. Never has there been a greater risk to participants than those who are automatically enrolled. These accounts are often never accessed by the participants and the proper security protocols (e.g., custom passwords, two-factor authentication, etc.) aren’t set up, placing these accounts at high risk of theft. We are educating employers about the need to dovetail their corporate cyber policies with their retirement plan fiduciary duties. Employee education needs to be given at both the corporate and personal levels as they are often related. Employees don’t realize that how they treat security on their personal accounts can affect both the company and their retirement assets. Failure by the participant to secure their retirement accounts may end up costing them all of their assets with no one at fault but themselves.
  
  

PLANADVISER: What challenges do you think the retirement plan industry faces and what role do you have in addressing and confronting those challenges?

Massa: In the wake of the Ukraine-Russia crisis, cyber-crime has become a huge focus. As advisers, we need to spend more time teaching plan sponsors and participants about the risks and what they can do to mitigate them. This goes beyond the fiduciary risks and falls into a moral duty. Employees need to know that their money can be stolen, and simple changes can prevent it from happening.

ESG will become the standard in how we evaluate investments and the risks they pose as climate change has an increasing impact on business risk and ultimately financial performance. The U.S. is far behind Europe on ESG investing. But the DOL has made it clear in its recent request for comment on the effects of climate-related financial risk in retirement plan that it is committed to help change that trend. Advisers will need to lead in this arena to help plan sponsors adjust accordingly.

Retirement income has long been a problem without a tangible solution in retirement plans. Should the plan sponsor offer a long-term income solution, or should they empower employees to handle this themselves at retirement? Helping employers create policies around this that are custom to the needs and demographics of their employee population will be a critical change and something QPA Houston is committed to helping solve. I serve on the policy committee for the national Retirement Advisor Council where we are working on a series of whitepapers exploring the issues of retirement income along with making recommendations for the industry to help solve this challenge.

As I mentioned in the previous question, student loan debt, HSAs, and fiduciary liability insurance issues also make this list and I would reference my previously mentioned reasoning.

PLANADVISER: Why do you feel it is important to work with plan sponsors and companies offering retirement benefits to their people?

Massa: I’ve been working with plan sponsors for more than 30 years and, in that time, I’ve discovered that 80% to 90% of the average employees simply aren’t well versed in the concepts of saving and investing. In addition, we know factually that around 50% of Americans are unprepared to pay for an emergency expense of $1,000 or more. What this also means is that the majority of Americans are what we might refer to as disaffected investors. To be more succinct, the average wealth advisor finds these investors uninteresting and prefers to cater to those with assets above $500,000. The very people that need help with their finances are the ones who can’t get any. 401(k), 403(b), and 457 plans, along with financial wellness programs are critical to helping the majority of Americans accumulate savings, build wealth, and plan for their future. Many plan sponsors are well-intended, but company benefits are an alphabet soup of plans, services, and features. HR and benefits professionals need help to quantify their value to the C-suite and rank their importance and get the most out of their benefits dollars. Advisers need to see the whole benefits picture from the employer’s perspective to better help sponsors, even if our focus is only on the retirement plan. We need to see what employers are trying to achieve and help them line up the retirement program within the corporate culture and the benefits strategy.

In contrast, participants need help trying to understand their employer-provided benefits and how to allocate their limited, precious resources to get the most value out of them. Employees likely have little else outside of their work benefits and maybe their homes as tangible assets. It’s our job to help them manage these resources effectively, improve their credit scores and budgets and get them addicted to saving instead of spending.

Many years ago, the role of the adviser was to help plan sponsors manage their fiduciary duties under ERISA. Today, our role is more of a shepherd, or a guide, helping employers and employees navigate their challenges side-by-side. Helping employees reduce their debt and save for the future reduces their stress and makes them better employees. Helping employers build better wellness programs along with retirement plans that meet the fiduciary standard translates into providing employees with the best tools to help them reduce their debt and save. One simply cannot exist effectively without the other.

PLANADVISER: What are the most important issues that your plan sponsor clients face with their company retirement plans, and what particularly effective or unique actions do you take to assist them in overcoming those issues?

Massa: While I’ve already discussed many of these above (ESG, HSAs, cyber, liability insurance, student loan debt, etc.), I’d like to talk about a few of the services we provide our clients to help them with some of the other challenges they face that we haven’t covered yet.

• Compliance support. One of the unique services we provide to our clients is plan compliance support in a number of ways. This includes EPCRS and VFCP support. Clients that encounter operational failures often look to their recordkeeping vendors for support. Sometimes, the vendors are either unavailable to help due to time and resource constraints, or the costs for support are exorbitant. QPA Houston often steps in and provides correction support where possible to help clients resolve a compliance issue and even file with the IRS or DOL as needed to get the plan back into compliance.
• True-up calculations. Many plans offer an annual employer match true-up to ensure employees receive the maximum match, regardless of the speed or frequency of when deferrals were funded throughout the year. We noticed clients were being quoted fees ranging from $1,000 to $20,000 to perform what is a very simple calculation. We solved that problem by offering this service at no cost.
• Compensation ratio testing. When employers elect to exclude certain elements of compensation, we often provide a review of their compensation to determine whether the proposed exclusions may be discriminatory.
• General Testing calculations under 401(a)(4). For clients that have unique designs and need to know if the provisions may be discriminatory, QPA Houston can provide rate group testing, nondiscriminatory classification, and average benefits testing to illustrate whether the plan may pass or fail.
• Coverage testing. Running hand in hand with general testing, plan coverage issues under 410(b)(1) (Ratio Percentage) and or 410(b)(2) (Average Benefits) can illustrate if the exclusion of a group or groups of employees will result in a coverage failure and require remediation. QPA Houston can provide this testing as needed.
• Controlled group review. We commonly come across plans that have common ownership and yet some of the commonly owned groups aren’t covered under the plan or plans sponsored by other common employers. We have often provided controlled group testing to evaluate whether there is a controlled group and a compliance issue that needs to be addressed. However, we do refer affiliated service group evaluations to legal counsel.
• Mergers and acquisitions (M&A) reviews. Plan sponsors often engage us to conduct M&A due diligence on retirement plans that may be acquired as part of a transaction. It is common for QPA Houston to be given access to the deal room and make recommendations to the acquirer or acquiree on the steps to consider before the merger.
• 5500 and ADP/ACP Testing review. QPA Houston also takes the time to review the work of the recordkeeper or TPA to ensure the 5500 data is accurate and matches the auditor’s report. We also review the ADP/ACP testing results to ensure they are correct and will look to see if there are ways to reduce or eliminate the refunds of a failed test result.
• Plan design consulting. I believe our plan design is superior to most because of our knowledge of the tax code and the treasury regulations. We often consult employers on the differences between W-2, 3401(a), and the Includible compensation definitions to help them choose which one might be best for them. We also look for unique needs, such as leveraging new comparability designs to help create a student debt matching benefit, eliminating safe harbor matching for plans that pass so we can maximize a backdoor Roth benefit, and opening after-tax sources to help employees build an emergency savings account. If an employer is failing the ADP/ACP test and safe harbor, or automatic enrollment aren’t practical options, we can examine whether it is feasible to exclude a classification of employees from the plan, which if it passes might ameliorate the situation.
• Benchmarking versus corporate comparators. While most advisers benchmark plans versus national data (e.g., PLANSPONSOR Magazine’s annual survey), leveraging tools like Fiduciary Benchmarks and even obtaining custom quotes to benchmark fees, we take benchmarking a step further. We ask our clients to name several companies that they compete against for employee talent. We then scour 5500 reports and the internet to find out as much about the plans of those companies on that list as we can. We use that data to help our clients compare their plan designs versus their comparator group. This provides them with unique intelligence that they can then use to customize their plans and help the company stand out from the competition
• Health and welfare coordination. QPA Houston makes it a point to try and partner with our client’s health and welfare vendors to provide a cohesive benefits guide and strategy. Knowing what H&W benefits are offered and the costs committed to those help us better understand the company’s benefits policy and the challenges they face in meeting it.

Everyone in the QPA Houston office takes our role as the trusted fiduciary advisers of our clients very seriously. We believe that clients need tangible insights from trusted professionals on all manner of retirement plan issues. While fees and investments are important, they are only the beginning of the role advisers must play in the servicing of ERISA and non-ERISA retirement plans. As the leader of our team and the mentor of so many others in my career, I have always believed that our role is not limited to showing up every 90 days at a client’s office to tell them about the stock market and their investment performance. The role of a plan fiduciary is a 365-day-per-year job. The fiduciary duty never sleeps, never takes a day off, and doesn’t shut down, or even get a reprieve during a pandemic. Instead, fiduciaries must understand that when they know of an issue or potential breach, they have a responsibility to address the problem, regardless of what their advisory contract may say their role is. As fiduciary advisors, we also know that most human resources and benefits professionals, as well as most of the plan’s fiduciaries, are often overworked, under-resourced, and not well versed in retirement plan fiduciary issues. They need guidance they can rely on from someone they can trust. If not us, then who? As I always tell my clients, “I will always tell you what you need to know, even if it isn’t what you want to hear.”

I want to thank you again for your consideration. It is truly an honor to be nominated and, if I should be selected as the winner, it will no doubt be the pinnacle achievement of my career. I’m looking forward to seeing all of you in New York City.