2024 RPAY – Domenic DiPiero, Newport Capital Group

Business at a Glance as of 12/31/23

• Location: Red Bank, New Jersey
• How many plan assets do you have under advisement? $16.2B
• What is your median plan size (in assets)? $119.8M
• How many plans do you have under administration? 135
• How many participants in total do you serve? 155,000
• Parent firm: N/A

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

DiPiero: Newport Capital Group has been assisting plan sponsors in meeting their obligation to prudently monitor and select investments for nearly 20 years. Our roots can be traced back 40+ years, beginning as a family office established to monitor, manage and advise one family’s assets and investment needs. As more people approached us for advice, we believed our unique situation was attractive to outside clients. The enthusiasm of these “outside” investors was fundamental to the establishment of Newport Capital Group.

Newport Capital Group has specialized in working with ERISA retirement plans since the firm’s inception. We realized early there was a need for fiduciary consulting on retirement plans and uncovered many plans that were being underserved by brokers who were being paid but providing little support or service.

Our in-house team of credentialed CFAs, CFPs, and AIFs, comprises numerous investment and consulting professionals relying upon 150+ years of combined relevant experience providing institutional investment consulting for foundations, endowments, high-net-worth clients and Fortune 500 companies.

The values that started over a quarter century ago continue to direct us today. We believe that if we hold our clients’ needs as our own, we can significantly improve their financial well-being.

PLANADVISER: How is your team: unique/competitive in the marketplace?

DiPiero: Newport Capital Group highly values our ability to serve our clients without having to answer to any other parties while serving as 3(21) and 3(38) fiduciaries, providing a collaborative and consultative service model. With the uptick in M&A activity in the advisory space, many firms are owned by large national brokerage and insurance firms and have been quoted as having this strategy to gain access for cross-selling and increasing their revenues. In our opinion, this creates a conflict of interest that can impact fiduciary duty. In our experience, some committees unknowingly include an adviser affiliated with a larger service provider or global benefit conglomerate to provide investment management services; we believe this presents a conflict of interest and allows these affiliated advisers/brokers to cross-sell financial products. Newport Capital Group does not receive compensation from any third party, and there are no additional revenue streams outside the direct compensation stated in our service agreement.

Newport Capital Group takes great pride in having no allegiances to anyone except for our clients. Our strength lies in being able to see each plan sponsor’s individual qualities and how they translate into an overall plan design that is uniquely tailored, seeking to maximize retirement readiness and participant outcomes. As an independently owned and operated firm, we have the flexibility to accommodate the culture and needs of plan sponsors and plan participants, which, in our experience, integrates with the specific requests of our clients.

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

DiPiero: The overwhelming challenge in the retirement plan industry is ensuring participants are ready to retire and have sufficient savings to retire comfortably. Retirement means different things to different people, so maximizing readiness and participant outcomes is imperative. Participants need to understand that the actions they take today will have a direct correlation and lasting effect when they are no longer in the workforce.

Helping plan sponsors recognize that participants who may not be ready for retirement often choose to work later in life, which has a very real financial impact on a firm’s well-being. As healthcare costs explode and the average age of participants rises, corporations are experiencing a very real strain in keeping health and disability insurance costs manageable. Plan sponsors face difficult issues regarding retirement readiness, talent retention and black and white corporate finances. The role of a retirement plan is viewed through several prisms: it helps participants prepare for retirement as a moral obligation; it is an added benefit for employees as part of a larger package; it helps attract and retain the best talent; or it is an administrative headache where best practices are adopted solely to meet obligations under ERISA. Newport Capital Group helps the plan sponsor create a sound, well-functioning retirement plan that is not only good for the participants but also for the company’s bottom line.

Newport Capital Group sees our role as helping to build a bridge between plan sponsors and their respective recordkeepers, mitigate fiduciary responsibility through oversight and governance best practices and keep the participants at the forefront of all decision-making. We engage with the recordkeeper to create a calendar of rotating education initiatives that consider the current demographics of the participant base. Well-managed plans with educational initiatives stressing the importance of plan contributions give participants the best chance of success in saving for retirement. Based on our experience, we have found that merging plan design components and scenario analysis with employer contributions has been the most effective approach to achieve the seemingly contrasting objectives of retirement readiness and the current expenses required by both the sponsor and participant. This combination has resulted in significant success in bringing the participants’ and sponsors’ interests and goals in line with each other. We perform an extremely thorough analysis considering projected employee retention, the increased costs associated with the recommended plan design elements and the very real and significant costs associated with losing top-tier talent. Using this analysis, we are able to appeal to both the personal nature of HR’s desires and the mathematical and analytical concerns of finance.

Our analysis gives credence to the apprehensions of both HR and finance. In most instances, HR is satisfied to offer additional benefits and meet talent retention goals, and finance can understand that it’s DC’s role to contribute to the continued aim of keeping the company “in the black.” Newport Capital Group endeavors to align the goals of both groups while continuing to advocate for participants.

PLANADVISER: Please tell us about an important issue that your 403(b) plan sponsor clients face and what actions you have taken to assist them in overcoming those issues.

DiPiero: ESG is a growing trend, and many of our 403(b) participants are demanding that ESG products be included as investment options in their plans. These organizations vary in mission and vision, but many feel a moral obligation to direct investments to impact from a higher perspective. Newport Capital Group’s investment team must help vet and evaluate whether an ESG investment is prudent and can be added to lineups.

We think it’s still too early to embrace active ESG funds. However, we have added a number of index-based products into our client lineups, low-cost ESG funds from Fidelity and Vanguard. Most importantly, we capture the highlights of the discourse in the Committee meeting minutes to archive that a meaningful review took place to determine if the Committee completed the necessary due diligence to justify and document why these choices were made. We are prepared to ramp up ESG compliance for future investment changes if the proposed U.S. Department of Labor rule passes as currently written. Assuming the rule becomes law, the analysis and review of investments would most often require a new, supplemental review of ESG factors.

Additionally, Newport Capital Group has been and will continue assisting clients with SECURE 2.0 Act of 2022 compliance and implementing the various provisions over the next 18-24 months. We have been reviewing plan design and optional future design enhancements with our clients. We are working closely with 403(b) clients on the current CIT limitation. We are actively monitoring the potential legislation update now that the House has approved the usage of CITs. We are waiting for U.S. Senate and presidential approvals for the bills to become law. Once the change has been officially adopted, we will make CIT recommendations to our 403(b) clients.

PLANADVISER: How did you get started advising 403(b) plan sponsors? What advice would you give other advisers wanting to enter this market?

DiPiero: Newport Capital Group has specialized in working with DC plans since the firm’s inception almost 20 years ago. As 403(b) plans came under the same fiduciary scrutiny as 401(k) plans, we were able to adapt our service model to treat 403(b) plans with the same high standard of care applied to 401(k) and Defined Benefit plans; this approach has proven to be successful, especially given the litigation issues faced by many large name 403(b) plan sponsors. Our non-profit client base attributes to 25% of our total Assets Under Advisement. Our firm has helped numerous healthcare and educational institutions and other not-for-profits become more hands-on and understand the implications that are associated with their fiduciary responsibility under ERISA. Through analysis of our client’s plans, we have successfully consolidated multiple plans to reduce overall fees to the plan sponsor and participants.

I would recommend serving on 403(b) boards to understand the inner workings of a non-profit since they are exceedingly different from a corporation. Newport Capital Group has built our experience working with both investment committees and boards of trustees alike. Although many of the day-to-day decisions related to retirement plans are delegated to Investment committees, it is often the case that the board of trustees serves as the final arbiter on matters of pay or broader governance strategy. For these situations, Newport Capital Group is often asked to present analysis or offer additional due diligence to substantiate change. We invite the opportunity to work with the boards of trustees and offer our experience and expertise in matters requiring the approval of a higher authority.

Disclosures: SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Please remember that different types of investments involve varying degrees of risk, and that there can be no assurance that the future performance of any specific investment or investment strategy (including those that may be recommended to the Plan by Newport Capital Group and/or subsequently selected by the Plan’s participants), will be profitable, equal any corresponding performance level(s), or be suitable for any specific participant’s portfolio. Please remember to contact Newport Capital Group, in writing, if there are any changes in the Plan’s financial situation or objectives for the purpose of Newport Capital reviewing/evaluating/revising its previous recommendations and/or services. A copy of Newport Capital Group’s current written disclosure statement discussing its advisory services and fees remains available upon request. The terms and conditions of the services to be provided by Newport Capital Group to the Plan shall be set forth in a written Retirement Plan Advisory and Consulting Agreement between the parties. Please Note: Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Newport Capital Group is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of Newport Capital Group by any of its clients. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. The rating is not indicative of future performance. No fees were paid to participate for all of the awards listed. The CERTIFIED FINANCIAL PLANNER™, CFP® and federally registered CFP (with flame design) marks (collectively, the “CFP® marks”) are professional certification marks granted in the United States by Certified Financial Planner Board of Standards, Inc. (“CFP Board”). The CFP® certification is a voluntary certification; no federal or state law or regulation requires financial planners to hold CFP® certification. It is recognized in the United States and a number of other countries for its (1) high standard of professional education; (2) stringent code of conduct and standards of practice; and (3) ethical requirements that govern professional engagements with clients. The Chartered Financial Analyst (CFA) designation is a globally respected, graduate-level investment credential established in 1962 and awarded by the CFA Institute, the largest global association of investment professionals. To earn the CFA designation, candidates must (1) pass three sequential, six-hour examinations, (2) have at least four years of qualified professional investment experience, (3) join the CFA Institute as members, and (4) commit to abide by, and annually reaffirm, their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct. The Accredited Investment Fiduciary® (“AIF®”) designation certifies that the recipient has specialized knowledge of fiduciary standards of care and their application to the investment management process. To receive the AIF® designation, individuals must complete a training program, successfully pass a comprehensive, closed book final examination under the supervision of a proctor and agree to abide by the AIF® Code of Ethics. In order to maintain the AIF designation, the individual must annually renew their affirmation of the AIF® Code of Ethics and complete six hours of continuing education credits. The certification is administered by the Center for Fiduciary Studies, LLC (a Fiduciary 360 (fi360) company).