October 22, 2019 • 23 mins
Bob Newton and Michelle Cannan share how their focus on Plan Sponsors and participant education lead to considerable growth in deferrals with those they had the opportunity to meet with. Beltz Ianni & Associates experienced a 16% increase in deferrals in 2016, 26% increase in 2017, and a 40% increase in 2018.
This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Edward D (00:00):
Welcome everyone, this is Ed Dressel with another
podcasts about the 401(k)participant education solutions
we have, and I have MichelleCannan and Bob Newton with Beltz
Ianni& Associates.
I hope I said that right.
Welcome to both of you.
Good to have you here today.
Thanks for being here.
Bob & Michelle (00:21):
Hi Ed.
You're welcome.
Thanks for having us.
Edward D (00:23):
Tell me a little bit about what Beltz Ianni&
Associates does.
Bob N (00:27):
Beltz Ianni& Associates LLC is a financial services firm
and we're located in Rochester,New York.
We've been providing servicesthroughout Western New York
since 2001.
Our primary focus is on helpingpeople as they prepare for and
strive to maintain a successfulretirement.
In addition to managing thewealth concerns of employees
(00:49):
through our retirement planbusiness services, we also
provide retirement insurance andinvestment planning on an
individual basis for ourindividual clients.
The majority of our retirementservice advisors have
significant backgrounds inretirement plan services,
including being formerrecord-keepers and CPAs.
(01:10):
Our groups professionalexperience includes fiduciary
consulting, investmentmanagement, record keeping,
third-party administration,participant education and
guidance, ERISA compliance andplan design.
Edward D (01:23):
How many employees work there?
Bob N (01:27):
I think right now about 15.
Edward D (01:30):
A lot of great experience.
It sounds like.
Tell me a little bit about bothof your experiences and your
role at the company.
Michelle C (01:38):
Well, Bob and I are part of the retirement plan
consulting group at Beltz Ianni&Associates.
We guide our plan sponsors onthe management of their company
retirement plans.
In many cases, we act in a 321co-fiduciary role regarding the
plans investment management.
Additionally, we help planadministrators understand the
various vendors that supporttheir retirement plan and this
(02:01):
involves assisting our clientswith plan design, payroll data
delivery, annual compliancetesting, and record keeping
platform technologies.
Our goal is to help plansponsors operate their
retirement plans as smoothly aspossible and in the best
interest of all parties,sponsors and participants.
Edward D (02:19):
Are you both licensed advisors?
Michelle C (02:23):
Yes, we are.
Edward D (02:24):
What brought my attention to your company, I saw
some statistics or heard somestatistics about how well you're
doing, and I got some from yourcompany.
The data showed that you had a13% increase in deferrals in
2016 at 26% increase in 2017 anda 40% increase in referrals in
(02:45):
2018.
That's great numbers.
How'd that happen?
Bob N (02:49):
Yeah, it is Ed, one thing I want to point out on those
numbers.
Those are percentages based onthe people that we had the
opportunity to with, not acomplete plan level, but in each
organization whether we met with10 people, 20 people, 50 people,
those where the percentages andthey continue to increase, but
(03:12):
at the end of the day, and thatall comes about from education
and we just keep pounding thateducation, education and more
education for all parties.
And it really starts with plansponsors.
We help provide the bestpractice information to help
educate them and their role.
And that includes data that maycome from many different sources
(03:34):
such as our own experiences, thedepartment of labor, the IRS,
plan sponsor magazine,investment companies, or record
keeping firms just to name afew.
We believe it's very importantfor the business owner to be
aware of planned managementrules and regulations as well as
what's going on in theretirement plan industry.
They can't be expected to knowevery retirement plan, benefit
(03:57):
nuance, because they're kneedeep in running their business
on a day to day basis.
And we see that with allclients.
Part of educating the plansponsors also involves educating
plan participants and for eachclient we build a schedule for
this frequency of staffeducation meetings and
individual one on one meetings.
After each employee educationalevent.
(04:19):
We always document the resultsand deliver it to the plan
sponsor.
We have a firm belief that plansponsors need to know what is or
is not working for theiremployee group.
And then this followupinformation is a tool that helps
both planned sponsors andourselves make sound decisions
on further support that theiremployees need.
Michelle C (04:40):
And then following each calendar year, we hold
review meetings with each clientto discuss the results of the
prior year as well as what ournew goals are for the current
year.
Documentation and goal settingare really key if plan sponsors
are going to be successful inbuilding an offering, a
retirement plan, that's apositive benefit for their
employees.
Documentation and goal settingare the greatest influences we
(05:03):
bring to plan sponsors andparticipants.
No one can succeed if they don'tknow where they are today and
where they want to be in thefuture.
Edward D (05:12):
I like what you said when it started and you said it
comes from education, thesuccess, but that is, there's so
many definitions of what itmeans to educate and I think the
plan sponsor, you know,understanding how the 401(k)
works and some of the DOL IRSregulations, what's happening in
the industry.
But as far as it comes toparticipants, I've got a stack
on my desk of what it means toeducate a participant and it's
(05:35):
really all over the map.
Sometimes I feel like some ofthe articles are way off the
map.
What are you doing to educateparticipants so that they're
engaged in it because it seemsto be difficult to get
participants engaged in theeducation process?
Bob N (05:49):
Well, I think at a high level we keep it as simple as
possible.
Help them to understand theirplan, the plan parameters and
the investments.
And then we use the TRAKprogram, we call it pathway to
success.
Michelle C (06:06):
Our pathway to success meetings are all about
helping employees on anindividual basis.
We discussed how the RetireReadySolutions TRAK system is set up.
It's really a combination ofdefault information.
So their age at retirement,retirement income needs, social
security projections, plus theirbasic payroll withholding
information.
Bob N (06:26):
And from that point, as we go through the process, we
point out the four areas thatindividuals really have control
that we often find they don'trealize and they can or they
can't influence it.
And most people are reallysurprised.
Out of the four areas, the firstone is how much income do they
(06:48):
need and do they need 80%, 70%income replacement or something
else?
And most of the time themajority of participants, it's
really an educated guess andthey're looking for guidance.
The secondary that we focus onis what age do they believe
they'll start taking socialsecurity and many individuals
again make an educated guesswhen they want to start
(07:10):
receiving social security at age62, at the beginning age or all
the way to 70.
And when they give us the age,which is often 62, we ask why.
And their responses vary, but weoften hear,"I don't know" or
will hear"I thought that waswhen everyone started taking
their checks" or"I was supposedto take it" or often you hear"my
(07:32):
brother, sister, father, mother,neighbor, coworker, that's when
they took it.
So I thought I had to take it".
And often we'll hear,"I want toget every penny out of social
security.
I paid into it all my life and Iwant to get everything back".
The third area is the amount orpercentage of their pay and
that's what they're savingcurrently in the retirement
(07:54):
account.
That's an area where they havethe most control and oddly
enough participants really don'trealize that.
So we point that out and theyshould own that.
And then fourth is thepercentage of return that
they're receiving on theirinvestments, which is an area
that they had the least controland that's where we try to help
them with the investment actionsare available in their plan.
Michelle C (08:17):
And after we walk through that 10 minute
discussion, we show theindividual with our current
strategy will likely provide asincome at age 65 assuming they
make no adjustments and thevariables are fixed.
The TRAK program has a reallypowerful visual screen that
illustrates the individual'sretirement income using a bar
chart and shortfalls andretirement income derived from
(08:39):
their retirement account assetsare shown in red on the bar
chart.
Many participants unfortunatelyare going to deplete their
retirement account assets bytheir mid seventies and that
excludes of course any ongoingstream of income from social
security, maybe some corporatepensions, annuity accounts the
participants may have.
But then we pause and wait fortheir reaction, which usually
(09:01):
takes about three to fiveseconds and then they ask, what
can I do to get rid of that red?
Bob N (09:06):
And that's when we go back to the four areas that they
have influence.
And we asked them if they wantto change your future income
needs.
And usually there's a chuckleand most often the answer is no.
They feel they need to have 70%or 80% or whatever the
percentage they elected.
We then review social securityage, which very interestingly,
(09:30):
it always delves into a deeperconversation and then we're
looking to get the conversationgoing in the basics of social
security and the various agesthey can choose to receive
payments.
Most people don't realize thatthey have options there.
It's their choice.
Then we'd go to the deferralpercentage and that's where we
(09:52):
use the TRAK paycheckcalculator, a very powerful
program that helps theparticipant actually see the
effect of any change.
So we help participants find acomfortable increase without
hurting their household budget.
This really is, in our opinion,one of the most powerful tools
of the TRAK system.
And it helps employees realizethey can increase their
(10:13):
deferrals quite often by morethan 1% without hurting their
budget.
And then finally we discussedthe diversification and the
allocation, the investments andput all four together
Michelle C (10:26):
And then after that we actually assist participants
in an area we feel most advisorsnever venture into.
We guide them on how to maketheir desired changes before
they leave us, time permitting.
We show them how to log ontotheir retirement plan website,
how to establish usernames andsecurity protocol, and we coach
them on how to enter theirdeferral percentage, set up
(10:47):
their beneficiary information,and navigate their account
online.
If the account website isn'taccessible or we don't have
internet access, we can alwayscall the record keepers 800
number and help them that way,but guiding participants on how
to make their deferral changesmight be one of the most
important components of themeeting.
Edward D (11:05):
Bob, one of your comments was that the paycheck
calculator is one of the mostpowerful calculators and I don't
think people who've never usedthe paycheck calculator
understand that.
I think it's a great tool andI've heard about the responses.
Tell me a story of working t hepaycheck calculator where s
omebody got the aha moment rightin front of you w here they
connected.
Bob N (11:26):
Often whether someone's contributing a 0% or even 10%
when you walk through thepaycheck calculator and you talk
pretax and Roth and you showthem what 1% represents, that's
(11:47):
when suddenly people reallyfigure out that,"wow, I can make
a big change" in that 1% idea Ifocus on leaving every
participant with.
So if they have a gross incomeof$1,000, 1% is$10 an d p retax
an d m ight be the effect of$8.50 on th eir p ayroll.
(12:09):
And when you show them that theyin crease 1%, quite often people
will go, well, gosh, I can dothat.
What if I did two?
Or what if I did five?
And quite often people then makethat type of change.
They don't go up one.
I think most advisors accept o rHR people as well, accept people
(12:30):
moving one, nobody pushesanybody to their benefit to look
at can they actually afford todo more, which everybody needs
to do.
We all know in the retirementplan world we should be doing
10-5% but we allow people tojust hover in that 2%, 3%, 4%
range.
And then one other thing thatjust popped in my mind is as we
(12:53):
go through that, I can't tellyou how it being in the business
30 years, there used to be rulesthat you couldn't contribute
more than 10% or maybe 15% andthose days are long gone.
But I can't tell you how manytimes I still have a participant
tell me, well I didn't realize Ican contribute more than 10%, I
(13:13):
thought I was limited to thatand that's where both Michelle
and I reemphasize to them, it'snot a percentage, it's a dollar
amount.
The annual dollar amount thisyear is$19,000, 49 and under and
25,000, 50 and older.
And that's that aha momentyou've talked about is where you
(13:33):
just see their eyes open up andum, they kind of jump on it and
make, make some significantchanges.
Michelle C (13:39):
I think sometimes people get paralyzed by the math
too.
They hear the word percentageand they have no idea how that
equates to a dollar amountcoming out of their paycheck.
Just this morning I was meetingwith someone and she came in the
room and said, I really want tobe able to contribute as much as
I can is what am I as my budgetallows to the retirement plan.
(14:02):
But I have no idea what thatamount is in a percentage.
So we went through the paycheckcalculator, tried out different
percentages and came up withsomething that worked for her.
So it's a great experience to beable to kind of translate that
and help somebody make sense ofit and make positive changes.
Edward D (14:24):
Tell me what story issues you've seen about
participants satisfaction.
Bob N (14:29):
Participants, we find are very appreciative of the time
spent and often will speak thatto us.
They appreciate the fact thattheir employer gave him the time
at work.
Almost all of these meetings areat the employer's business and
appreciate the fact that theemployer allowed them to meet
with us.
And then the support that wegive them to setup and access
(14:52):
the retirement account.
Many participants can't believeit's as easy as it is to manage
their retirement account as weshowed them.
We often hear participants tellus that this is the first time
they actually understand theirretirement plan and why they
should take more of an interestin this company benefit.
And we often hear that theindividual was afraid to meet,
(15:13):
they didn't want to hear wherethey were financially or more
importantly and didn't know howor what to do to improve their
potential retirement incomeoutcome.
We hear from participants thatthey thought we were doing this
to sell them other products,which is quite common and you'll
see where participants are veryquiet and we have to prod them.
Beltz Ianni doesn't do that, ourfeeling is if we crossed that
(15:36):
line, our credibility goes outthe window and we are fully
committed to the planparticipants and the education
that they need to be confidentwith the management of their
personal retirement planaccount.
Edward D (15:49):
Any specific stories about participants responding to
the education process?
Bob N (15:56):
One, I actually tell quite a few participants, I had
the opportunity to sit withsomebody, I was at a business
all day and it's about fouro'clock and this older lady taps
on the door and says, you know,I heard you're done, you're
packing up and I didn't sign upfor this.
(16:16):
Would you be able to do anythinggood?
Could I talk to you for a fewminutes?
I said, sure.
Our file that we collected hadeverybody's data so I had her
information in the TRAK system.
So we sat down and she startstearing up and she's telling me
that she's a widow.
She had to go back work and fulltime.
(16:37):
She doesn't have anything.
She and her husband reallydidn't pay attention, they
didn't put anything away.
She's just about 60 and shefeels she's going to have to
work til she dies.
I said to her, let's look at theinformation.
Let's see where you're at.
And often I find that people area lot better than they think
(17:00):
they are.
So we start going through it andshe was saving 2% and we went
through the TRAK payroll and shewas able to easily, she thought,
m ove h er d eferrals up to 10%a nd actually thinks that she
could go to 15% within a fewyears or within a year I should
say.
(17:21):
And so w e go through that.
So I'm 60, we talk about socialsecurity, obviously 62 for her
or her husband's benefit wasn'tg oing t o be large enough for
her to live in a retirementlifestyle.
So we started talking aboutholding out t il later.
And by the time we get done andwe project out to age 70 and I
(17:45):
had her spouses social securitystatement, with her work in
these 10 years, she actually wasgoing to create a larger payment
for herself.
So her social security at age 70plus what she would've put away
based on her current lifestyle,we figured about 71, 72 she
could stop working and beretired for the rest of her
(18:07):
life.
And when that ended, she got allchoked up, broke down, she's
like,"Oh my God, you just showedme something I never thought was
possible.
And when I lost my husband, Ithought that that was the end of
the world and I'd have to workuntil I died.
And now I have a hope and aprayer that I'd be able to
(18:28):
retire".
Oddly enough or not oddlyenough, but I go visit that
client the next year and shecomes racing into the meeting
and she's already at 15% and sheincreased to 20% and she has a
much better understanding of theaccount and the benefit of the
program.
And she was as happy as I'veseen somebody in a long time.
(18:50):
So it was quite a coolexperience.
Edward D (18:53):
Michelle, do you have any stories that resonate with
you?
Michelle C (18:57):
Yeah.
You know, a lot of them areright along that same line where
we meet with people who havenever taken a look and planned
for their retirement.
One of the questions I ask ingroup meetings is, how many
people have planned for avacation this year?
(19:17):
And almost all the hands in theroom go up and how many people
have planned for theirretirement, which is hopefully
the longest vacation ofsomeone's life.
Nobody has.
So a lot of people really have afear, they feel like they've
under prepared for retirementplanning a n d don't want to see
(19:41):
it that first time.
They can come in the room with alittle bit of trepidation, but
by the end of the meetingthere's a huge sigh of relief.
It's nice for them to know wherethey are.
If they're off track, you know,what steps they can take to get
where they need to be.
(20:02):
I really feel that meeting withindividuals and using the TRAK
program is one of the jobfunctions that we have the most
impact on pe ople's l ives with,and it's really rewarding to be
able to see that.
Edward D (20:17):
What do you hear from plan sponsors about their
satisfaction?
Michelle C (20:21):
Most plan sponsors tell us that that's the first
time they've actually seenparticipants actually interested
in the retirement plan benefits.
Plan sponsors report greatersatisfaction and knowing their
employees are being served andin a better position to
understand what they need to doto help themselves be prepared
for retirement.
(20:41):
Participants actually come up toplan sponsors and thank them for
allowing them time to meet withus and go through the program
together.
And participants comment that'sthe first time they actually
understand what the companyretirement plan benefit is and
the value of that benefit.
Bob N (20:59):
The interesting thing that happens with a number of
our clients that become newclients, anybody and any
salesperson will know that it'sdifficult to get new business.
And when you do, you're excited.
But when you come in and yourprospecting, everybody always
has the best advisor.
(21:19):
They always have the bestprogram.
And that's often the case whenwe have new opportunities and
about six months to a year inalmost every client will tell us
that they didn't realize whatthey didn't know and they really
appreciate the fact that thetime is spent with their
(21:40):
participants.
They never thought they couldget participation rate as high
or participant satisfaction andengagement as fully experienced
as they're getting now.
And we don't mean that certainlyegotistical or whatnot it's just
a process.
And we do that for every singleclient, whether it's a small
(22:04):
million dollar plan or a$40million plan, but at the end of
the day, everybody thinksthey've really got everything
covered.
And that's not quite the casefor an awful lot of plans.
And both Michelle and I get alot of satisfaction out of
helping both plan sponsors andparticipants achieve far more
(22:26):
than they thought they reallywere getting.
Edward D (22:30):
Well, Michelle and Bob, thank you for taking the
time today to interact.
Tell us a little bit about yourstory.
I appreciate the engagement andhow you're helping participate
and helping plan sponsors beingsatisfied, I wish you the best
in today's marketplace.
Disclaimer (22:53):
this information was developed as a general guide to
educate plan sponsors, but isnot intended as authoritative
guidance or tax or legal advice.
Each plan has uniquerequirements and you should
consult your attorney or taxadvisor for guidance on your
specific situation.
In no way does adviser assurethat by using the information
provided plan sponsor will be incompliance with ERISA
regulations, securities andadvisory services offered
(23:16):
through LPL financial, aregistered investment advisor
member, FINRA SIPC.
Welcome everyone, this is Ed Dressel with another
podcasts about the 401(k)participant education solutions
we have, and I have MichelleCannan and Bob Newton with Beltz
Ianni& Associates.
I hope I said that right.
Welcome to both of you.
Good to have you here today.
Thanks for being here.
Bob & Michelle (00:21):
Hi Ed.
You're welcome.
Thanks for having us.
Edward D (00:23):
Tell me a little bit about what Beltz Ianni&
Associates does.
Bob N (00:27):
Beltz Ianni& Associates LLC is a financial services firm
and we're located in Rochester,New York.
We've been providing servicesthroughout Western New York
since 2001.
Our primary focus is on helpingpeople as they prepare for and
strive to maintain a successfulretirement.
In addition to managing thewealth concerns of employees
(00:49):
through our retirement planbusiness services, we also
provide retirement insurance andinvestment planning on an
individual basis for ourindividual clients.
The majority of our retirementservice advisors have
significant backgrounds inretirement plan services,
including being formerrecord-keepers and CPAs.
(01:10):
Our groups professionalexperience includes fiduciary
consulting, investmentmanagement, record keeping,
third-party administration,participant education and
guidance, ERISA compliance andplan design.
Edward D (01:23):
How many employees work there?
Bob N (01:27):
I think right now about 15.
Edward D (01:30):
A lot of great experience.
It sounds like.
Tell me a little bit about bothof your experiences and your
role at the company.
Michelle C (01:38):
Well, Bob and I are part of the retirement plan
consulting group at Beltz Ianni&Associates.
We guide our plan sponsors onthe management of their company
retirement plans.
In many cases, we act in a 321co-fiduciary role regarding the
plans investment management.
Additionally, we help planadministrators understand the
various vendors that supporttheir retirement plan and this
(02:01):
involves assisting our clientswith plan design, payroll data
delivery, annual compliancetesting, and record keeping
platform technologies.
Our goal is to help plansponsors operate their
retirement plans as smoothly aspossible and in the best
interest of all parties,sponsors and participants.
Edward D (02:19):
Are you both licensed advisors?
Michelle C (02:23):
Yes, we are.
Edward D (02:24):
What brought my attention to your company, I saw
some statistics or heard somestatistics about how well you're
doing, and I got some from yourcompany.
The data showed that you had a13% increase in deferrals in
2016 at 26% increase in 2017 anda 40% increase in referrals in
(02:45):
2018.
That's great numbers.
How'd that happen?
Bob N (02:49):
Yeah, it is Ed, one thing I want to point out on those
numbers.
Those are percentages based onthe people that we had the
opportunity to with, not acomplete plan level, but in each
organization whether we met with10 people, 20 people, 50 people,
those where the percentages andthey continue to increase, but
(03:12):
at the end of the day, and thatall comes about from education
and we just keep pounding thateducation, education and more
education for all parties.
And it really starts with plansponsors.
We help provide the bestpractice information to help
educate them and their role.
And that includes data that maycome from many different sources
(03:34):
such as our own experiences, thedepartment of labor, the IRS,
plan sponsor magazine,investment companies, or record
keeping firms just to name afew.
We believe it's very importantfor the business owner to be
aware of planned managementrules and regulations as well as
what's going on in theretirement plan industry.
They can't be expected to knowevery retirement plan, benefit
(03:57):
nuance, because they're kneedeep in running their business
on a day to day basis.
And we see that with allclients.
Part of educating the plansponsors also involves educating
plan participants and for eachclient we build a schedule for
this frequency of staffeducation meetings and
individual one on one meetings.
After each employee educationalevent.
(04:19):
We always document the resultsand deliver it to the plan
sponsor.
We have a firm belief that plansponsors need to know what is or
is not working for theiremployee group.
And then this followupinformation is a tool that helps
both planned sponsors andourselves make sound decisions
on further support that theiremployees need.
Michelle C (04:40):
And then following each calendar year, we hold
review meetings with each clientto discuss the results of the
prior year as well as what ournew goals are for the current
year.
Documentation and goal settingare really key if plan sponsors
are going to be successful inbuilding an offering, a
retirement plan, that's apositive benefit for their
employees.
Documentation and goal settingare the greatest influences we
(05:03):
bring to plan sponsors andparticipants.
No one can succeed if they don'tknow where they are today and
where they want to be in thefuture.
Edward D (05:12):
I like what you said when it started and you said it
comes from education, thesuccess, but that is, there's so
many definitions of what itmeans to educate and I think the
plan sponsor, you know,understanding how the 401(k)
works and some of the DOL IRSregulations, what's happening in
the industry.
But as far as it comes toparticipants, I've got a stack
on my desk of what it means toeducate a participant and it's
(05:35):
really all over the map.
Sometimes I feel like some ofthe articles are way off the
map.
What are you doing to educateparticipants so that they're
engaged in it because it seemsto be difficult to get
participants engaged in theeducation process?
Bob N (05:49):
Well, I think at a high level we keep it as simple as
possible.
Help them to understand theirplan, the plan parameters and
the investments.
And then we use the TRAKprogram, we call it pathway to
success.
Michelle C (06:06):
Our pathway to success meetings are all about
helping employees on anindividual basis.
We discussed how the RetireReadySolutions TRAK system is set up.
It's really a combination ofdefault information.
So their age at retirement,retirement income needs, social
security projections, plus theirbasic payroll withholding
information.
Bob N (06:26):
And from that point, as we go through the process, we
point out the four areas thatindividuals really have control
that we often find they don'trealize and they can or they
can't influence it.
And most people are reallysurprised.
Out of the four areas, the firstone is how much income do they
(06:48):
need and do they need 80%, 70%income replacement or something
else?
And most of the time themajority of participants, it's
really an educated guess andthey're looking for guidance.
The secondary that we focus onis what age do they believe
they'll start taking socialsecurity and many individuals
again make an educated guesswhen they want to start
(07:10):
receiving social security at age62, at the beginning age or all
the way to 70.
And when they give us the age,which is often 62, we ask why.
And their responses vary, but weoften hear,"I don't know" or
will hear"I thought that waswhen everyone started taking
their checks" or"I was supposedto take it" or often you hear"my
(07:32):
brother, sister, father, mother,neighbor, coworker, that's when
they took it.
So I thought I had to take it".
And often we'll hear,"I want toget every penny out of social
security.
I paid into it all my life and Iwant to get everything back".
The third area is the amount orpercentage of their pay and
that's what they're savingcurrently in the retirement
(07:54):
account.
That's an area where they havethe most control and oddly
enough participants really don'trealize that.
So we point that out and theyshould own that.
And then fourth is thepercentage of return that
they're receiving on theirinvestments, which is an area
that they had the least controland that's where we try to help
them with the investment actionsare available in their plan.
Michelle C (08:17):
And after we walk through that 10 minute
discussion, we show theindividual with our current
strategy will likely provide asincome at age 65 assuming they
make no adjustments and thevariables are fixed.
The TRAK program has a reallypowerful visual screen that
illustrates the individual'sretirement income using a bar
chart and shortfalls andretirement income derived from
(08:39):
their retirement account assetsare shown in red on the bar
chart.
Many participants unfortunatelyare going to deplete their
retirement account assets bytheir mid seventies and that
excludes of course any ongoingstream of income from social
security, maybe some corporatepensions, annuity accounts the
participants may have.
But then we pause and wait fortheir reaction, which usually
(09:01):
takes about three to fiveseconds and then they ask, what
can I do to get rid of that red?
Bob N (09:06):
And that's when we go back to the four areas that they
have influence.
And we asked them if they wantto change your future income
needs.
And usually there's a chuckleand most often the answer is no.
They feel they need to have 70%or 80% or whatever the
percentage they elected.
We then review social securityage, which very interestingly,
(09:30):
it always delves into a deeperconversation and then we're
looking to get the conversationgoing in the basics of social
security and the various agesthey can choose to receive
payments.
Most people don't realize thatthey have options there.
It's their choice.
Then we'd go to the deferralpercentage and that's where we
(09:52):
use the TRAK paycheckcalculator, a very powerful
program that helps theparticipant actually see the
effect of any change.
So we help participants find acomfortable increase without
hurting their household budget.
This really is, in our opinion,one of the most powerful tools
of the TRAK system.
And it helps employees realizethey can increase their
(10:13):
deferrals quite often by morethan 1% without hurting their
budget.
And then finally we discussedthe diversification and the
allocation, the investments andput all four together
Michelle C (10:26):
And then after that we actually assist participants
in an area we feel most advisorsnever venture into.
We guide them on how to maketheir desired changes before
they leave us, time permitting.
We show them how to log ontotheir retirement plan website,
how to establish usernames andsecurity protocol, and we coach
them on how to enter theirdeferral percentage, set up
(10:47):
their beneficiary information,and navigate their account
online.
If the account website isn'taccessible or we don't have
internet access, we can alwayscall the record keepers 800
number and help them that way,but guiding participants on how
to make their deferral changesmight be one of the most
important components of themeeting.
Edward D (11:05):
Bob, one of your comments was that the paycheck
calculator is one of the mostpowerful calculators and I don't
think people who've never usedthe paycheck calculator
understand that.
I think it's a great tool andI've heard about the responses.
Tell me a story of working t hepaycheck calculator where s
omebody got the aha moment rightin front of you w here they
connected.
Bob N (11:26):
Often whether someone's contributing a 0% or even 10%
when you walk through thepaycheck calculator and you talk
pretax and Roth and you showthem what 1% represents, that's
(11:47):
when suddenly people reallyfigure out that,"wow, I can make
a big change" in that 1% idea Ifocus on leaving every
participant with.
So if they have a gross incomeof$1,000, 1% is$10 an d p retax
an d m ight be the effect of$8.50 on th eir p ayroll.
(12:09):
And when you show them that theyin crease 1%, quite often people
will go, well, gosh, I can dothat.
What if I did two?
Or what if I did five?
And quite often people then makethat type of change.
They don't go up one.
I think most advisors accept o rHR people as well, accept people
(12:30):
moving one, nobody pushesanybody to their benefit to look
at can they actually afford todo more, which everybody needs
to do.
We all know in the retirementplan world we should be doing
10-5% but we allow people tojust hover in that 2%, 3%, 4%
range.
And then one other thing thatjust popped in my mind is as we
(12:53):
go through that, I can't tellyou how it being in the business
30 years, there used to be rulesthat you couldn't contribute
more than 10% or maybe 15% andthose days are long gone.
But I can't tell you how manytimes I still have a participant
tell me, well I didn't realize Ican contribute more than 10%, I
(13:13):
thought I was limited to thatand that's where both Michelle
and I reemphasize to them, it'snot a percentage, it's a dollar
amount.
The annual dollar amount thisyear is$19,000, 49 and under and
25,000, 50 and older.
And that's that aha momentyou've talked about is where you
(13:33):
just see their eyes open up andum, they kind of jump on it and
make, make some significantchanges.
Michelle C (13:39):
I think sometimes people get paralyzed by the math
too.
They hear the word percentageand they have no idea how that
equates to a dollar amountcoming out of their paycheck.
Just this morning I was meetingwith someone and she came in the
room and said, I really want tobe able to contribute as much as
I can is what am I as my budgetallows to the retirement plan.
(14:02):
But I have no idea what thatamount is in a percentage.
So we went through the paycheckcalculator, tried out different
percentages and came up withsomething that worked for her.
So it's a great experience to beable to kind of translate that
and help somebody make sense ofit and make positive changes.
Edward D (14:24):
Tell me what story issues you've seen about
participants satisfaction.
Bob N (14:29):
Participants, we find are very appreciative of the time
spent and often will speak thatto us.
They appreciate the fact thattheir employer gave him the time
at work.
Almost all of these meetings areat the employer's business and
appreciate the fact that theemployer allowed them to meet
with us.
And then the support that wegive them to setup and access
(14:52):
the retirement account.
Many participants can't believeit's as easy as it is to manage
their retirement account as weshowed them.
We often hear participants tellus that this is the first time
they actually understand theirretirement plan and why they
should take more of an interestin this company benefit.
And we often hear that theindividual was afraid to meet,
(15:13):
they didn't want to hear wherethey were financially or more
importantly and didn't know howor what to do to improve their
potential retirement incomeoutcome.
We hear from participants thatthey thought we were doing this
to sell them other products,which is quite common and you'll
see where participants are veryquiet and we have to prod them.
Beltz Ianni doesn't do that, ourfeeling is if we crossed that
(15:36):
line, our credibility goes outthe window and we are fully
committed to the planparticipants and the education
that they need to be confidentwith the management of their
personal retirement planaccount.
Edward D (15:49):
Any specific stories about participants responding to
the education process?
Bob N (15:56):
One, I actually tell quite a few participants, I had
the opportunity to sit withsomebody, I was at a business
all day and it's about fouro'clock and this older lady taps
on the door and says, you know,I heard you're done, you're
packing up and I didn't sign upfor this.
(16:16):
Would you be able to do anythinggood?
Could I talk to you for a fewminutes?
I said, sure.
Our file that we collected hadeverybody's data so I had her
information in the TRAK system.
So we sat down and she startstearing up and she's telling me
that she's a widow.
She had to go back work and fulltime.
(16:37):
She doesn't have anything.
She and her husband reallydidn't pay attention, they
didn't put anything away.
She's just about 60 and shefeels she's going to have to
work til she dies.
I said to her, let's look at theinformation.
Let's see where you're at.
And often I find that people area lot better than they think
(17:00):
they are.
So we start going through it andshe was saving 2% and we went
through the TRAK payroll and shewas able to easily, she thought,
m ove h er d eferrals up to 10%a nd actually thinks that she
could go to 15% within a fewyears or within a year I should
say.
(17:21):
And so w e go through that.
So I'm 60, we talk about socialsecurity, obviously 62 for her
or her husband's benefit wasn'tg oing t o be large enough for
her to live in a retirementlifestyle.
So we started talking aboutholding out t il later.
And by the time we get done andwe project out to age 70 and I
(17:45):
had her spouses social securitystatement, with her work in
these 10 years, she actually wasgoing to create a larger payment
for herself.
So her social security at age 70plus what she would've put away
based on her current lifestyle,we figured about 71, 72 she
could stop working and beretired for the rest of her
(18:07):
life.
And when that ended, she got allchoked up, broke down, she's
like,"Oh my God, you just showedme something I never thought was
possible.
And when I lost my husband, Ithought that that was the end of
the world and I'd have to workuntil I died.
And now I have a hope and aprayer that I'd be able to
(18:28):
retire".
Oddly enough or not oddlyenough, but I go visit that
client the next year and shecomes racing into the meeting
and she's already at 15% and sheincreased to 20% and she has a
much better understanding of theaccount and the benefit of the
program.
And she was as happy as I'veseen somebody in a long time.
(18:50):
So it was quite a coolexperience.
Edward D (18:53):
Michelle, do you have any stories that resonate with
you?
Michelle C (18:57):
Yeah.
You know, a lot of them areright along that same line where
we meet with people who havenever taken a look and planned
for their retirement.
One of the questions I ask ingroup meetings is, how many
people have planned for avacation this year?
(19:17):
And almost all the hands in theroom go up and how many people
have planned for theirretirement, which is hopefully
the longest vacation ofsomeone's life.
Nobody has.
So a lot of people really have afear, they feel like they've
under prepared for retirementplanning a n d don't want to see
(19:41):
it that first time.
They can come in the room with alittle bit of trepidation, but
by the end of the meetingthere's a huge sigh of relief.
It's nice for them to know wherethey are.
If they're off track, you know,what steps they can take to get
where they need to be.
(20:02):
I really feel that meeting withindividuals and using the TRAK
program is one of the jobfunctions that we have the most
impact on pe ople's l ives with,and it's really rewarding to be
able to see that.
Edward D (20:17):
What do you hear from plan sponsors about their
satisfaction?
Michelle C (20:21):
Most plan sponsors tell us that that's the first
time they've actually seenparticipants actually interested
in the retirement plan benefits.
Plan sponsors report greatersatisfaction and knowing their
employees are being served andin a better position to
understand what they need to doto help themselves be prepared
for retirement.
(20:41):
Participants actually come up toplan sponsors and thank them for
allowing them time to meet withus and go through the program
together.
And participants comment that'sthe first time they actually
understand what the companyretirement plan benefit is and
the value of that benefit.
Bob N (20:59):
The interesting thing that happens with a number of
our clients that become newclients, anybody and any
salesperson will know that it'sdifficult to get new business.
And when you do, you're excited.
But when you come in and yourprospecting, everybody always
has the best advisor.
(21:19):
They always have the bestprogram.
And that's often the case whenwe have new opportunities and
about six months to a year inalmost every client will tell us
that they didn't realize whatthey didn't know and they really
appreciate the fact that thetime is spent with their
(21:40):
participants.
They never thought they couldget participation rate as high
or participant satisfaction andengagement as fully experienced
as they're getting now.
And we don't mean that certainlyegotistical or whatnot it's just
a process.
And we do that for every singleclient, whether it's a small
(22:04):
million dollar plan or a$40million plan, but at the end of
the day, everybody thinksthey've really got everything
covered.
And that's not quite the casefor an awful lot of plans.
And both Michelle and I get alot of satisfaction out of
helping both plan sponsors andparticipants achieve far more
(22:26):
than they thought they reallywere getting.
Edward D (22:30):
Well, Michelle and Bob, thank you for taking the
time today to interact.
Tell us a little bit about yourstory.
I appreciate the engagement andhow you're helping participate
and helping plan sponsors beingsatisfied, I wish you the best
in today's marketplace.
Disclaimer (22:53):
this information was developed as a general guide to
educate plan sponsors, but isnot intended as authoritative
guidance or tax or legal advice.
Each plan has uniquerequirements and you should
consult your attorney or taxadvisor for guidance on your
specific situation.
In no way does adviser assurethat by using the information
provided plan sponsor will be incompliance with ERISA
regulations, securities andadvisory services offered
(23:16):
through LPL financial, aregistered investment advisor
member, FINRA SIPC.
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