Business at a Glance as of 12/31/22
- Plan assets under advisement: $240 million
- Median plan size (in assets): $4.5 million
- Plans under administration: 53
- Total participants served: 2,031
PLANADVISER: Tell us about your practice and how you got into advising retirement plans.
Reiniger: Currently, I am a solo shop with two staff members. My staff are the backbone and support system for Reiniger & Associates. They perform the service, prep work, RFP and reviews. My 26-year-old daughter, Alexa, has recently joined my firm and is in the process of getting licensed. When she is fully licensed, her role will be to assist 401(k) participants in the enrollment process, answer questions on rollovers and help them decide what is in their best interest. My role is to spend 100% of my time with prospects, clients and their participants. I started my career at the age of 24, right out of college. My first sales manager was an ex-Marine drill sergeant. He mandated I do activity rather than sales. He insisted that if I did not have a client meeting, I needed to go cold-calling businesses about SARSEPs and health plans. I quickly learned health insurance was not a passion, but helping people save and invest was. If I could meet 10 people instead of one, I would be more effective in helping people invest. I still have my first customer from 39 years ago. From the beginning, I had several advisers who were mentors to me and encouraged me to learn a little more and work a little smarter each day. They taught me two philosophies I still hold dear today. One: that no opportunity will ever exist unless value is given first. Two: Successful people do the things unsuccessful people don’t want to do. In the first week, one of those mentors pulled me into his office and said, “If I knew at your age what I know now, I sure would do things differently.” At the time, he had been in the business for 30 years. Those late-night conversations with him and others gave me great insights to help me form who I am today. Without those mentors encouraging and giving me tips, I may not have made it out of those early days.
PLANADVISER: How is your team/process/structure unique? How has it evolved? Where will you be in five years?
Reiniger: My role is to be the front person for our clients, prospects and participants. I do enrollment and education meetings for the participants, both in groups and one-on-one, using mostly Zoom. I also do quarterly reviews with our employer clients to update them on the plan, fees and legislative changes. My staff, Bonnie (who has been with me 27 years) and Juli (who has been with me 17 years), do all the service and paperwork and opening of new accounts. Bonnie works with the employers, and Juli works with individuals and participants. With onboarding new plans, the staff gathers all the paperwork and documents, assets, census, fee disclosures, amendments and 5500s for a smooth transition. If there are issues/challenges with the administration of a plan, my staff works with clients and the TPA to fix the problems.
In five years, I see my 26-year-old daughter being active in the business, with her role taking on more of the education and participant meetings either on a group or one-on-one basis. Currently, if an employee has questions, we do a one-on-one Zoom meeting and have them log into the 401(k) website where they can share their screen and we can go through it with them. Technology has made my practice evolve to where our process has become much simpler, and it has saved a number of hours to enable us to provide more services for our clients and participants.
PLANADVISER: As a retirement plan adviser, what do you take the most pride in?
Reiniger: Education of my participants and our employers. I look at my role as a teacher to help them get started and understand investing and planning, which will help them reach their goals. My favorite story is when we had an education meeting, and a young lady came up after a session and said she had no money to put away and she wished she could. I asked her how many Cokes she drank a day, and when we did the math, she could save 1% of her pay if she just cut back a little. Every year I would go back and do our meetings and explain that when you get a raise, if you take 1% of that raise and increase your 401(k) you would still get more take-home pay, but now you would be saving more for retirement. After 10 years, she stood up unsolicited and told her story to the group. She explained to them she had more money saved than she ever thought possible and now was saving 10% by taking that simple advice. It almost made me cry.
For our employers, I am very proud of the low-fee, high-service model that we have created. 401(k)s are confusing and can be overwhelming. We are extremely proactive with the plan sponsors we work with, and if any issues do arise, we work with the 401(k) provider and TPAs to get it fixed.
PLANADVISER: What challenges do you think the retirement plan industry faces and what role do you have in addressing and confronting those challenges?
Reiniger: I see three challenges:
- Poor legislation coming out of Washington;
- 401(k)s are too complicated and too expensive; and
- Not enough young advisers coming into the business.
Too many bills coming out of Washington are ill-conceived and poorly thought through. There is nothing coming out to make it easier for employers to offer plans. The trends have been toward automatic enrollment and to provide tax credits for participants. There is no doubt that auto-enrollment works, but at what cost to the employer? That is never addressed in any study or bill. A tax credit to start a plan is attractive, but it doesn’t even come close to the actual costs an employer must bear with in-house administration, matching, testing and compliance. Employers do not start a plan due to a tax credit, and now with the SECURE 2.0 Act, they must do auto-enrollment to start a new plan. Once the employer looks at the total costs, especially with a match, it will be a disincentive to offer a plan.
Our industry seems to be focused on participant outcomes, but if an employer doesn’t offer the plan, then it really doesn’t matter, does it? I have three plans that do auto-enrollment, and at the end of the year, something wasn’t done correctly, and it was the employer who had to fix it with money out of their pocket. We had a new client a few years ago, and when I did an initial review of their old plan, I found out they had had auto-enrollment for 10 years and didn’t know it. It cost them $100,000 in back contributions and fees. All this does is make employers resist offering a plan. SECURE 2.0 is nothing short of a disaster for the 401(k) industry. The fact that it was just thrown in at the last minute to the omnibus bill illustrates the point. State-run retirement plans can be a challenge to our industry, but most business owners I work with do not want any government in their business.
The main problem I see with the 401(k) industry is there are too many complexities, rules and expenses to start and maintain a 401(k). Startup plans are not embraced by our industry (advisers and providers), because no one can make money, or they charge too much or they try to hide fees in the funds/wrap fees to get paid. We started five startup plans last year with a 50 bps fee. Now they all cost more than $250,000. We have created a boilerplate startup 401(k) with not many bells and whistles, but it keeps costs down. If our industry really wanted to make major changes in the 401(k) industry, then we need to get rid of testing and complicated rules which add to costs and employer complexity. If we can come up with a plan with which an employer doesn’t think they are going to be bankrupt due to mandated matching or get fined due to mistakes or that takes little administration by their one-person HR team, then we can really make headway on participant outcomes.
I have been part of my congressional representative’s retirement reform committee in Washington, D.C., and I have discussed concerns with our firm’s political action committee and my firm’s lobbyists. All has pretty much fallen on deaf ears. The last time I went to D.C., the problem was clear: The majority of our politicians do not understand the 401(k). They look at it as a way for the wealthy to hide their income and not pay taxes. I explained to a group on my representative’s committee that most employers offer a 401(k) to help their employees save for retirement and as a benefit, but when you put so many restrictions and testing and complexity into a plan, employers will say, “Screw it.” They didn’t care. The politicians were more worried about not letting the wealthy take advantage of a tax shelter. Our industry needs to educate these lawmakers that to improve 401(k) outcomes, you need to lift some of the restrictions, complexities and testing on the employers who offer it, and if they benefit from the plan, then so be it. I even suggested that highly compensated employees put their contributions in as Roth with no testing, and they just laughed at me and said that would never happen. We need to educate them on who offers the plan, instead of solutions that will hurt the very party that offers them. Tax credits don’t help. Of the five startup plans we did, the credits were not part of the decisionmaking process. The most common statement was, ‘Do I still have to pay that administration fee?’ We have to be smarter at solutions that help the very ones who offer these benefits.
Finally, I go to conferences, and I see older advisers like me. We have to mentor and bring more young people out of college into this industry. We need to show them the excitement of how to invest and the benefits it provides. We need to get more involved in the finance programs of our colleges. My alma mater, Miami University in Oxford, Ohio, has an entrepreneurial program, and I am on the alumni list to present being a business owner on what we do and how we do it. We need to have a three-year training program to help young people learn what we do. There are so many ideas to help our industry become the career of choice when graduating.
PLANADVISER: Please tell us about an important experience you have had as either a mentor or mentee.
Reiniger: My first mentor was an ex-Marine drill sergeant sales manager. He taught me how to take responsibility for my own actions, and at the age of 24, that was not an easy task. He explained that not everything is about money; it is about creating value and solving problems. He instilled on my first day that, to be successful, you MUST ALWAYS ACT in your client’s best interest, and everything else will follow. He wrote it on the blackboard, which tells you how many years I have been in the business. Isn’t that the basis of being a fiduciary? We should not have to have the government tell us how to do this. After three years, he had such confidence in me that he put me in charge of a small office in Mansfield, Ohio, with five older advisers. Historically, this team consistently qualified for conference levels, and in the previous couple of years, not one qualified. They did not think too kindly of a 27-year-old running the office, but they realized I was there to assist them in becoming the advisers they used to be. With a little encouragement and support, they became a team again and started qualifying for those conferences. I’m not sure I was as much a mentor as I was a coach to get them to their potential again. After that, I was asked to come to Cleveland and develop a team of young advisers. It was so much fun doing education meetings to help them solve problems and challenging them to go outside their comfort level. It was also about mandating activity and teaching them part of my value philosophies and to always act in the client’s best interest, and everything else will follow. After a couple of years, our team became one of the top teams in the country. It was my first experience of being a mentor to younger advisers, and to this day, I still check in to see how they are doing.
In 2000, I joined LPL. I quickly learned they didn’t know how to spell 401(k). They would not allow us to sell any fee-based 401(k) or allow us to be a fiduciary. They had a small group of home office employees that called themselves 401(k) experts but had no experience in the field. I had to coach them up to meet our basic needs. They came to me with an idea to start the Retirement Partners Consultant Program. This program allowed advisers to charge a fee instead of making commissions. I was one of the original advisers in that program and continue to help create better opportunities inside the program for other LPL advisers to improve their 401(k) business. I have been asked several times by my firm and members of the RPCP Group to assist other advisers in the 401(k) space. I have been asked to be part of panels to explain our systems and processes. We have shared all of our best ideas and how to implement them. We have coached advisers on the best way to present to prospects during both initial meeting and final presentations. My favorite part of being a mentor is watching these advisers take our ideas and close accounts and get them to grow their business.
One idea that has had great results for us and the advisers we mentor is the Letter of Information Only. During an initial introductory meeting, we do our normal presentation of what we do and how we do it, with examples. At the end of the presentation, we hand them this Letter of Information to put on their company stationery. All this letter does is give us authorization to get information directly from the 401(k) and the TPA. This way, I am not depending on an HR person getting us the information we need. If we get this letter, we close 90% of the opportunities. Why? Because we know the questions to ask and we know how to find problems that we can present to the client at the next meeting. It allows us, not the prospect, to get the data. If the fact-finding session reveals the plan is in good order, we let the prospect know and congratulate them. We move on. If we find a problem, we schedule a second meeting to present the results of our fact-finding session. Only after this second session do we go to the third and final presentation in which we bring specific solutions to the problems they have. I share this process with everyone and send them the generic version of our introduction presentation and a copy of the letter of authorization for them to use. Remember one of the rules I was taught 38 years ago: No opportunity will exist unless value is given first. This is my first value proposition to a prospect and one of the best ideas I have shared with other advisers to be more successful. I also have realized that most advisers do not have a process they can follow, so most of the initial mentoring is helping them shore up that system and process. An additional benefit of this letter is that we have improved so many 401(k)s for the participants and employers.
PLANADVISER: What advice can you give to your industry peers about developing successful experiences for both mentors and mentees?
Reiniger: Don’t be afraid to share ideas or ask for help. Pay it forward. For those of us that have been in the business, like me, for 38 years, we have had mentors that got us to where we are and are always looking to learn. Be involved in study groups with other 401(k) advisers. If you have younger advisers in your office, bring them with you on new appointments and existing client reviews. If you do education meetings, bring those young advisers with you. For our industry to continue to grow, we need to encourage the next generation of advisers about how great it is. The best part of what we do is helping individuals become millionaires, helping employers build a long-term benefit for their employees and being problem solvers, not salespeople.
A final thought from someone who has been in the business for 38 years. The 401(k) has become a great vehicle for creating wealth. We have created many millionaires, and I am very proud of that. The next step our industry needs to take is to make 401(k)s a great distribution vehicle. We have to make sure our firms embrace the 401(k) like I did with mine. We, as mentors, need to create relationships with the younger generations to explain the long-term benefits of becoming a 401(k) expert. Unfortunately, many advisers try to do 401(k)s without putting the effort into learning the 401(k). As I go to conferences, advisers look at the 401(k) to grow their individual business instead of the other way around. Finally, we as an industry need to continue to push for real changes to make it easier for employers to add 401(k)s. I do not mean this ill attempt at a starter 401(k) in the SECURE 2.0 Act, but real reform to make it easier. The best way to do that is ongoing education to anyone who would listen about how to improve outcomes without costing the employers all of their earnings.
Securities offered through LPL Financial – Member FINRA/SIPC