May 8, 2024

2024 RPAY – Sean Kelly, Heffernan Financial

Reported by

Business at a Glance as of 12/31/23

Location: San Juan Capistrano, California
How many plan assets do you have under advisement? $1.12B
What is your median plan size (in assets)? $6.2M median; $23.8M average
How many plans do you have under administration? 47
How many participants in total do you serve? 20,610
Parent firm: Heffernan Financial

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

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters. 

Kelly: My focus is entirely on retirement plans, covering defined contribution, defined benefit and executive benefit plans. Starting my journey on the broker/dealer side in 2007 with National Retirement Partners and later acquired by LPL Financial, I’ve had the privilege of collaborating with top-tier retirement plan advisers and industry peers over many years. This continuous interaction with these men and women cultivated a comprehensive understanding of our profession’s intricacies and responsibilities. Being recruited by Blake Thibault and joining Heffernan Financial in 2016 as a retirement plan adviser has proven to be an incredible opportunity. Our tight-knit and growing team operates like a family, with each member an expert in the different facets of retirement plans. Over the last 8 years, developing a clientele, where each individual feels like a friend, has been immensely gratifying. I am deeply committed to providing unmatched support and building lasting partnerships with every client. Our profession holds significant weight, as we bear the immense responsibility of assisting people in adequately preparing for a stage in life that can be difficult to envision. It is crucial for them to grasp the reality and importance of this phase and recognize the critical role today plays in planning for it. As a pillar of our practice, we are dedicated to addressing participants’ needs at every stage of their lives. My career and practice do not feel like work; I genuinely love what I do every day.

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

Kelly: Our uniqueness and competitiveness in the marketplace are underscored by our tag line, “because you’re different.” We understand each client and participant is different, crafting tailored solutions at both the plan and participant levels. By collaborating closely with committees and team members, we go above the role of traditional investment adviser, becoming trusted partners and often forming lasting friendships. We serve as a consultant, financial coach, investment adviser, and constant advocate for every client. Our approach of deeply embedding ourselves within each client’s team not only provides a competitive edge, but also assures our clients that they can always rely on us for personalized assistance, guidance, and solutions. The same principle applies when working with participants. Recognizing the uniqueness of everyone’s financial situation, we prioritize listening to and meeting employees where they stand. Our guidance extends beyond the realm of retirement plans, addressing their broader financial concerns. By incorporating behavioral traits into our communication and interactions, we foster more successful engagements with participants. Our ability to provide such a customized offering stems from our independence. This represents another distinct and competitive advantage, which is somewhat different to the industry trend over recent years. At Heffernan, we are employee-owned and remain beholden to our clients first and foremost. This independence allows us to prioritize client interests above all else, ensuring unbiased advice and decision-making. This deep understanding of each client’s uniqueness, coupled with our independence, sets us apart in the market and underscores our commitment to client success.

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

Kelly: In the evolving landscape of the retirement plan industry, several challenges stand out.

Participant Financial Literacy is one of the foremost challenges in our industry. Our strategy bridges these literacy gaps through comprehensive financial education initiatives. We provide group learning sessions and personalized 1-1 financial coaching, ensuring participants are equipped to make informed decisions at any stage of their lives. Our behavior-based communication approach facilitates a deeper connection with participants, enabling them to navigate their financial futures confidently.

Changing Demographics poses another significant challenge, needing tailored solutions to manage longevity risk and address evolving costs. Understanding demographic trends, we guide participants on strategies aligned with their unique needs, emphasizing the goal of maintaining their current lifestyle post-retirement. As life expectancy increases, it becomes imperative for participants to grasp the concept of income replacement during retirement, a concept we prioritize in our educational efforts.

Regulatory Changes presents an ongoing challenge, requiring continuous adaptation to ensure compliance with evolving mandates such as the CARES Act and the Setting Every Community Up for Retirement Enhancement Act of 2019 and the SECURE 2.0 Act of 2022. We remain exceedingly well-informed, monitoring regulatory developments, providing proactive guidance to help clients navigate these complexities while optimizing enhancements to meet the diverse needs of participants.

Litigation Challenges are always front and center. We provide thorough assessments of clients’ retirement plans to mitigate risks related to fees and fiduciary duties. Through diligent monitoring and proactive measures, we work to safeguard clients from potential litigation, ensuring plans operate smoothly and in the best interest of participants, with a documented process in place.

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

Kelly: Working with plan sponsors who offer retirement benefits is crucial. Through my profession, I have the opportunity to help people while building a career, embodying the noble core of our field, which is dedicated to building and safeguarding individuals’ financial futures. We play a critical role in providing peace of mind and guidance to a diverse range of employees, each with varying levels of investment expertise who will rely on these benefits for retirement. Retirement benefits are not simply perks, but fundamental aspects of an employee’s financial landscape, and often the most substantial.

The responsibility of assisting people to retire with dignity on their own terms after a lifetime of hard work inevitably falls on the employer, whether right or wrong. Therefore, partnering with plan sponsors becomes key in guiding them through the complexities of any retirement plan. Retirement benefits are governed by a myriad of rules, regulations, government agencies and laws. Navigating through this regulatory landscape requires expertise and true attention to detail. Working closely with plan sponsors helps ensure that they remain compliant with these regulations while also being aware of the latest retirement plan benefits available, protecting and advancing the interests of both the employer and the employees.

By fulfilling our professional and fiduciary duty to our plan sponsor clients, we assist in preserving their best interests, mitigating liability and contributing to the broader goal of enabling individuals to retire with dignity on their own terms after a lifetime of hard work.

PLANADVISER: What are three of the most important issues your plan sponsor clients face with their retirement plans? What actions do you take to assist them in overcoming those issues?

Kelly: Three critical issues that plan sponsors face are participant engagement/financial literacy, creating a healthy retirement plan with changing demographics and adherence to regulations and regulatory reforms.

Addressing participant financial literacy is a key challenge for plan sponsors. Our comprehensive education initiatives empower participants to make informed financial decisions, boosting engagement and ensuring active involvement in the retirement plan benefit and process. Through targeted communication methods like group sessions and individual meetings, we tailor support to suit participants’ needs, fostering confident financial decision-making at every life stage.

Plan sponsors must navigate complex regulatory landscapes encompassing ERISA, DOL, and IRS regulations, with non-compliance risking penalties, lawsuits, and reputational damage. We conduct thorough reviews of investments, plan design, and documents to ensure compliance, providing proactive guidance amidst regulatory changes. Thorough assessments mitigate litigation risks, ensuring plans operate in participants’ best interests with a well-documented process. In the ever-changing regulatory environment, we remain vigilant in providing proactive guidance to help clients navigate these complexities while optimizing plan enhancements for both employers and employees.

Designing a retirement plan with impactful features, low fees, and provisions that promote active employee participation is essential for ensuring the long-term financial well-being of plan participants. We partner with plan sponsors to offer specialized plan designs unique to each client and culture. By understanding the culture of a client and changing demographic trends as life expectancy rises, we guide plan sponsors to offer the latest resources to help employees reach the ultimate goal of income replacement during retirement.

May 8, 2024

2024 RPAY – Philip Sherman, Deschutes Investment Consulting

Reported by

Maria Kofman

Business at a Glance as of 12/31/23

Location: Portland, Oregon
How many plan assets do you have under advisement? $1.7B
What is your median plan size (in assets)? $5.4M
How many plans do you have under administration? 79 plans
How many participants in total do you serve? 38,000
Parent firm: Not applicable

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

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters. 

Sherman: Our firm was started in 1997, and our founder, MacGregor Hall, has been involved with retirement plans his entire career. He likes to remind our team that he helped set up one of the first 401(k) plans in the state of Oregon. I personally joined the firm in 2019 and specifically was drawn to Deschutes due to their work with retirement plans and focus on education. When I first entered the financial services industry, I started as a wealth adviser working solely with families and individuals. Less than a decade into my career, I started losing my zest for the industry and was becoming burned out after a series of client meetings in which I saw individuals unprepared for retirement who were forced to leave the workforce due to age or health reasons. This was incredibly frustrating for me, as these families needed time more than anything else, but I couldn’t provide it. Instead, I knew I needed to find a way to pivot my frustration into action, and that is when I found Deschutes. As a firm, Deschutes is and always will be deeply dedicated to providing participant education and resources. This provided the opportunity I was seeking, allowing me to connect with participants whom I could assist not only in the present, but also for years to come, providing the financial education and support they deeply require.

PLANADVISER: Are you connected to a wealth management division? If so, please explain how you work for them and your goals for coordination. If not, please explain whether you plan to be in the future, or not, and why.

Sherman: Yes, Deschutes has a wealth management division. I started in this industry as a CFP professional, so I am deeply rooted on both [retirement and wealth] sides based on experience and the fact that I have legacy financial planning clients I still work with. From a firm perspective, the two sides are integrated and work together to support each other for overall success. We are fortunate to have a team of CFP professionals that we can use to assist our education efforts, whether in the form of creating content or attending participant meetings that we know are covering more advanced topics. In our experience, once most participants understand how to log in to their account and what the company match/contribution amount is, their questions tend to focus on specific topics related to their personal financial situation that often have nothing to do with the retirement plan. Having a wealth management division allows us to have a direct line into what financial issues are keeping our clients up at night. We are completely independent, and that allows us to run our firm in an ethical-conflict-free manner. We do not have account minimums on the wealth management side, so the idea that we only work with the ultra-wealthy is not indicative of our firm’s practice. We also have built in guardrails, like requiring participants to go through our free Retirement Assistance Program and required fee disclosures that clearly lay out costs before working with the wealth management team.

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

Sherman: In my opinion, the biggest challenges our industry faces are financial literacy and income replacement. For years, you could have argued it was plan design or entry to retirement plans, but recent legislation on national and state levels has alleviated this hurdle for many Americans. The old mantra, ‘Fees, Fiduciary and Funds’ has been relegated to advice of the past. Today, as advisers, much more of the work we do should be directed on how we help participants. Participants want help and are looking for guidance that relates to their situation. That’s why we created a series of educational webinars designed to meet participants where they are in their career/financial stage. This helped us tackle financial education and literacy, but what about income replacement? To address this, we focus on Social Security and the idea of working backward to fill the gap. We work directly with our HR contacts to get average company salaries and build custom education presentations that illustrate what participants need to have saved in retirement. We can then back out what Social Security will cover and provide examples of how they can ‘fill the gap’ through their retirement plan and personal savings. Taking it one step further, we then encourage those who are 50 or older to go through our ‘Retirement Assistance Program,’ which partners them with a CFP professional to go through our proprietary financial gap analysis and provide direct feedback on their family’s retirement readiness and other considerations.

PLANADVISER: Why do you feel it is important to work individually with plan participants?

Sherman: I feel it is important to work individually with plan participants because of how the financial services industry is structured and rewards advisers. The system is inherently built to drive and reward advisers who serve those with the most wealth accumulated, often leaving those who need help the most left to fend for themselves. For prior generations, they had the comfort and confidence to know that if they stayed with a company for long enough, they would walk away into retirement with a pension intended to support them and their families until they passed away. When pensions went away, individuals were left to fend for themselves, and now the only ‘pension’ left for Americans is Social Security, which is under much scrutiny and pressure in its own regard. If companies historically provided a safety net via pensions in the past and are now moving forward with defined contribution plans, one of the few ways we can work to provide that same sense of comfort is through education and the opportunity for consultations. I don’t blame companies for disbanding pensions. A manufacturing plant is generally pretty darn good at prefab or logistics, but asking them to also be experts in financial markets is an impossible task; just take a look at certain governmental pensions with some of the brightest financial minds working on their team that are under duress. When we put that same financial management pressure on individuals and their families, how can we expect them to succeed without help?

PLANADVISER: What are three of the biggest challenges that plan participants face today? How are you helping to address them?

Sherman: Income replacement, access to quality education and industry jargon and paperwork.

Remember when annuity was a bad word? Now, in-plan retirement income and creating your own ‘pension’ are presented at every industry conference. But we cannot ignore the very real fear participants have of Social Security’s solvency. ‘Will Social Security be there for me?’ was our No. 1 question asked last year (besides ‘Can you reset my password?‘). We work hard to remind participants to control what they can and focus on finding ways to set aside even the smallest amount to get started on building savings.

For quality education, it boils down to meeting participants where they are. That means media format and the topics that matter to them. We take participant feedback seriously, and our best education presentations aren’t some wildly creative ideas we had, but come directly from consistent participant questions on the topics that matter most to them. We are so ingrained in this industry to talk about retirement that we sometimes forget to listen to those we serve.

Lastly, it is our jargon and the frustrating process participants have of completing our industry’s paperwork. When’s the last time you sat on hold to help someone with a rollover? Banking has so many advances that participants are now accustomed to that it makes the retirement industry standards seem antiquated and unnecessarily difficult, even if they are in place for sensible security reasons. Cut through the jargon and create helpful ‘How to‘ flyers; trust me, it will go a long way!