Gerald Wernette | Rehmann

Gerald Wernette draws upon 35 years of experience at Rehman to share how they have used TRAK to distinguish themselves from competitors. He shares stories and strategies of how they justify higher fees that are valued by plan sponsors and trustee members.  

Episode Transcript

Edward D (00:01):
It's exciting today, welcome to a podcast with
RetireReady Solutions.
I have with me Gerald Wernettewho focuses in the 401(k) world
and I'll let him tell a littlebit of that.
Welcome Gerald, good to have youhere today.

Gerald W (00:13):
Yeah, thank you Ed, I look forward to our conversation
today and happy to be here.

Edward D (00:19):
So tell me before we get started, you work for
Rehmann.
Tell me a little bit about theorganization, company you work
for.

Gerald W (00:27):
Rehmann has been around, I think this year is 77
years, founded on a traditionaltax accounting, auditing CPA
practice.
I t was pretty much nontraditional right out of the
gate, a very entrepreneurialspirited firm, always looking

(00:48):
for ways to serve our clients.
And as the firm has grown andevolved over the years, that's
exactly what's happened.
We've grown certainly throughstrategic business combinations,
but we've also grown verydramatically through organic
growth.
And a lot of that has beenfueled by what I would call no

(01:13):
ntraditional C PA fi rm services.
Maybe that's a misnomer today asthe industry itself has evolved,
bu t t hat has certainly beenthe case for Rehmann.
Like the area I'm in withRehmann financial, in o ur
retirement wealth managementservices.

Edward D (01:33):
How long have you been with Rehmann and tell me a
little bit more about your role,what you do for Rehmann
specifically?

Gerald W (01:39):
Sure.
So the beginning of this year Icelebrated my 35th anniversary
with the firm.
So I've, I've been with thisfirm my entire career and that
in and of itself has been kindof a neat thing to be able to
tell people, and it's beencertainly really exciting to
just be part of this evolution,revolution that the firm has

(02:02):
gone through.
I started out as a traditionaltax practicing CPA and very
early on in my career gotinvolved with retirement plans
via 5500 returns and, and whatwe finally called in the

(02:22):
industry, a balanced forwardaccounting for retirement plans,
saw an opportunity very early onfor us to improve how we were
doing that and turn it intoanother business offering at the
firm.
So started to grow ourretirement plan administration

(02:44):
and consulting practice.
And fast forward to right aroundthe year 2000 the firm had been
putting its toe in the water inthe wealth management space and
we had an opportunity to bringsomebody on board and merge his
advisory practice into the firm.

(03:05):
And that really gave us thefoundation then to build an
advisory wealth managementpractice.
And I started then very quicklyto get involved in the advisory
side of retirement plans then,about 2006 we basically merged
our plan administration practiceinto to Rehmann Financial and

(03:30):
really started full bore tobuild the investment advisory
side of that practice and asthey say, the rest is history.
And specifically what's your jobtitle or your role?
My specific job title isdirector of retirement planning
consulting.

(03:50):
My role is really one ofleadership in the area combined
with business development andthen just being a technical
resource to the entire group,whether it's on the investment
advisory side or the plan designplan, administration side.

Edward D (04:13):
Kind of backing up, where do you see the 401(k)
world today and working withparticipants?

Gerald W (04:20):
I think It's at a very exciting place from the
standpoint of an opportunity tograb people's attention and
truly affect their lives.
We have, through certainly theefforts of the department of
labor, through just howinformation is assimilated these

(04:47):
days.
It's pretty much a given thatyou're going to have a 401(k)
plan if you want to be able totake care of your employees and
be competitive in the workforceenvironment and that sort of
thing.
You're going to have some sortof 401(k), 403(b), 457(b)
depending on what kind of anemployer you are.

(05:08):
And with that being said, Ithink employers have really
grown up in this arena from theperspective of, you know, we
have this plan because we haveto have it and we really don't
care that much about it.
Or we have it just for theowners and key employees.

(05:30):
Virtually every one of ourclients looks beyond those goals
and also looks at, we have thisplan because we want to improve
the financial lives of ouremployees and we want them to be
able to be better prepared forretirement.
So with that being said, it haselevated the opportunity for us

(05:54):
to be able to go in and reallyshow employers where value can
be added in a retirement planand areas like participant
education and communication,really participant engagement
and being able to move theneedle for people so that we've
seen as a real opportunity.

(06:16):
We've frankly positionedourselves to be able to
capitalize on it and grow ourbusiness.

Edward D (06:24):
Oh, you bring up a lot of issues that are pertinent,
germane to the industry todayand I'm excited to pull some of
that apart.
When I think of participantengagement affecting their
lives, there is so many studiesout there showing that people
are not participating, they arenot engaged and they're not
prepared for retirement.
That affects real people in ourlives.

(06:46):
I know several people who havenot participated and it's hard
to see them when they get closeto retirement, not having the
adequate resources.
What are you doing to help theindividuals get ready for
retirement?
Because when you're working witha group of 30 or 40 people,
that's a lot of work to helpthem.
How do you focus on retirementreadiness?

Gerald W (07:06):
I think it really comes down to two things.
One, and you kind of keyed on itwith your question and that is,
it's got to start with theemployer.
So part of our job is reallyeducating a plan sponsor on
where the opportunity is hereand really talk to them about

(07:27):
what this concept is, what doesparticipant engagement mean and
what value can it provide?
Not just a participant but tothe employer.
And once we're able to kind ofpaint that picture for the
employer, the value that theycan gain from having a solid

(07:48):
participant engagement programwithin the 401(k) plan, then
it's a matter of taking it downto the participant level.
And that's where it really comesto having a really good resource
to engage the participant andmake it meaningful to them, put

(08:09):
it in their terms, make it allabout them and make it very,
almost simplistic but certainlyvery understandable and that has
been a key for us.
If you're going to engage theseemployees and you k now, no
knock on anybody out there, butthey fall on all across the

(08:32):
spectrum as far as their levelof financial understanding.
You've got to be able to do itin a way that's going to take
all these confusing terms, takethe scariness of what all that
means, once you start talkingabout it and bake it down into
little bite sized pieces.

(08:53):
I love the analogy, how do youeat an elephant?
The elephant of being preparedfor retirement is huge, but for
a lot of people it's just breakit down into that one bite at a
time concept and it, it justchanges the whole perspective.
When people can look at it upclose and wrap their arms around

(09:15):
some numbers and some meaningfulchanges they can make
themselves.
And see how it's go ing t o impact them on an ongoing basis.
So the tool has to be able todeliver not only a current
picture but allow you to comeback and up date i t a year from
now and show them the progressthat they're making.

Edward D (09:36):
So I don't want to interact in both.
Both aspects of youth of theemployer and the participant
with the employer.
How do you see employersresponding to,"we're going to
engage participant"s.
Is that something you canprospect with?
Does that differentiateyourself, are they excited once
you explain it to them?

Gerald W (09:54):
I think it really does you know, when we're able to
show them the resources we use,which is RetireReady Solutions
gap and contribution analysisreports and walk them through
what those things look like andhow we interact.
Give them some live examples ofother interactions we've had

(10:15):
with participants.
I have not had an employer yetthat isn't excited about what
we're able to put in front ofthem.
Now we've had some where theylook at there personal
environment if you will.
We've got multiple locations andhow are we going to get in front
of in front of our people andthat sort of thing.

(10:38):
But those are all obstacles thatI think we can deal with.
If I've got that standaloneemployer with 30, 50, 150, 250
employees, that is like anideal, perfect world for us in
this tool because we know we cango sit down with people, walk

(11:02):
them through these resources andreally be able to provide an
impact.
Our average competition isn'tdoing this and if they are,
they're kind of stuck intraditional world.
They're not bringing a resourcelike this to the employer and

(11:26):
the employee on a proactivebasis, they're pointing
employees to the record keepingwebsite and yeah, you can put
your information in here.
And the problem is people aren'tusing those tools.
They're not doing it.
Certainly not at the level thatwe come to the table with, which

(11:48):
is we're going to put somethingin front of 100% of your
employees.
That's a difference.
Every single interaction thatwe've been having, I'm kind of
blown away, but we have not runinto anybody yet that is doing
what we're doing.

Edward D (12:06):
You made a comment and working with the participants,
you say make it all about them,and when you're dealing with 250
employees, that sounds like aton of work.
How can you justify all the timethat that would require based on
compressed fees and all of theother parts that go with it?
How can you make it all aboutthem?

Gerald W (12:25):
Well I think there's a couple things.
One is if you're reallypresenting this right and the
value that it can bring, we'veactually been able to go in and
raise fees rather than have tolower our fees to get the
business.
So right out of the gate we'rebringing value to the table that

(12:48):
our competitors aren't and we'rejustifying that we deserve to be
paid for it.
Being able to leverage a solidteam is certainly critical.
If an advisor's a one man show,he's going to have to look at

(13:09):
the investment that it's gonnatake to make a tool like this
work.
But here's where I think we'vegarnished some added
justification in what we'redoing.
And it really, in this business,it's really all about taking
your time and extrapolating itdown to, okay, how much revenue

(13:30):
can I generate on?
What's an hour of my time?
When you're taking that hour andgetting in front of four or five
participants in a 401(k) planand you're walking away from
that hour and you're gettingfour out of five of them to
increase their contributions andmaybe two out of five of them to

(13:53):
say, Hey, I've got assetsoutside the retirement plan, can
you help me figure out what Ineed to do with those monies?
Now you're generating additionalrevenue, whether you're
increasing assets in the plan orgarnishing outside assets that
you're either rolling into theplan or managing separately.

(14:17):
And this thing really startspaying for itself and paying
dividends in the long run.
That's what's really justifiedthe investment of time and
energy for us.

Edward D (14:31):
How much satisfaction do you get from helping average
American, m iddle-incomeAmerica?

Gerald W (14:38):
Yeah, that's frankly the other part of it Ed, I
didn't w ant t o over embellishthat, but that's a big deal for
us, i t's definitely a big dealfor me personally.
At the end of the day we got t ocover our overhead, I g ot t o
pay my associates.
I w ant t o make a good living,but I w ant t o be able to do

(15:01):
that in a way where we canimpact people's lives.
And I can't tell you how manytimes we've had interactions
with participants where we'veliterally, at least from their
perspective, changed theirlives.
We've helped them see moreclearly, g ain an understanding

(15:24):
they never had before on thepath that they need to follow
financially in order to be ableto reach retirement and do it
with dignity and do itsuccessfully.
And it's been really neat tohave somebody literally give you
a hug and cry on your shoulderthat t hey're going to be able

(15:46):
to retire.
So that part of it is, I meanthat's the icing on the cake and
y ou k now to take that thatback then to your client, I mean
you're building an emotionalconnection that you can't buy i
n that kind of an environmentand we're just seeing the, the
opportunities and the dividendfrom that multiply as these

(16:09):
participants then move intoretirement phase and t hey're
like, just turning to us saying,o kay, what can you do to help
me?
So it's k ind o f the gift thatkeeps on giving both ways.

Edward D (16:26):
I want to go back to that phrase you said, we raise
our fees, not lower them, whichis completely contrary to what
you're hearing in the industryand fee compression.
I'm just thinking of walkinginto a committee meeting and
saying my fees are higher.
What's the response of acommittee meeting when you go,
I've got higher fees, I'm goingto do a little education on the
side, but I might say fees arehigher.
What does that look like?

Gerald W (16:47):
Yeah, let me give an example of a situation we've had
within the last year that Ithink will really kind of paint
the picture.
So we had brought on a clientswho's a fairly large medical
practice plan and they hadpreviously been direct with the
record keeper.

(17:08):
So they weren't used to payingadvisory fees at all.
So we came in, we showed themwhat we could do for them and
then everything was fine.
And now it's a couple of yearsinto the relationship and one of
the committee members reallywanted to make sure that I spent
some time at the meeting talkingabout our fees and basically

(17:28):
what we're doing to earn them.
And I felt going in that thiswas gonna potentially be a
situation where we could getbeat up a little bit.
And a little bit of what haveyou done for me lately kind of a
thing.
So we just went at the j ugglerand we took the opportunity to
really show the value of what webrought to the table and how we

(17:53):
utilize our participantengagement on top of the other
services we were providing andwhat it was doing for their plan
and for their associates.
And by the end of that meetingit was just absolutely
refreshing because thisparticular trustee member did a

(18:14):
total 180 and he was kind ofslobbering all over us from the
standpoint of pointing out tothe rest of the committee how we
had really earned our keep andyou know, little joking, but I
think there was a littleseriousness to a statement he
made as to you guys should begetting paid more for what

(18:38):
you're doing.
You should be raising your fee.
And it was really cool, in mymind and to the other associates
of mine that were there reallyshowed them we're doing
something different.
We don't need to be makingexcuses.
We just need to be doing a goodjob continuing to deliver.

(19:01):
And showing the plan sponsor,trustees, whomever they may be,
the value that they'regarnishing with its roots in
this participant engagement.
So very, very refreshing.

Edward D (19:17):
Oh, that just sounds like a lot of fun to be in that
room.
A little pressure in thebeginning.
A lot of big smile at the end.

Gerald W (19:23):
Yeah, that was cool.

Edward D (19:25):
So you talked about finding outside assets in the
plan that seems, you know, inand through the participant
engagement.
Pull that apart.
Why or why do you think that theprocess you're using is finding
outside assets versus assets youmight not find about, what's the
difference that you're bringingto the table that helps them
talk about those assets?

Gerald W (19:46):
I think it really comes down to being able to
frankly build instant rapportwith the participant.
Because I thought about that inthe beginning as, as we were
getting involved in this.
And what I was quickly findingout is the financial area is one
of those areas that peoplearen't just gonna sit there and

(20:09):
talk about to anybody andeverybody.
And when you come into a meetingand you clearly show this
employee, you've got a bunch ofinformation about them and you
just start asking a fewquestions.
In order for this to be realeffective for them, they need to

(20:30):
kind of put their heart on thetable, all of a sudden you're
talking to people about theirdreams for retirement, the fact
that their spouse passed away orthey got divorced and you know,
tough life challenges thatyou're going through and right
out of the gate you'reempathizing with them.

(20:53):
You're showing them, here's yoursituation, here's things that
you can think about to help makea difference.
And voilà, I mean that's likethe keys to the kingdom, you
know, they're handing you theroadmap to instant relationship
with them.
And I haven't found a tool yetthat is this easy, this an

(21:17):
expensive to give us thatinstant rapport and position us
to be a trusted advisor to thesepeople very, very quickly.
That's powerful in this business.

Edward D (21:30):
A lot of advisors tell me they don't focus on the
smaller plans because there's nomoney in them.
What would you, how would yourespond to somebody saying that?

Gerald W (21:40):
Well for starters, I'd love to know their definition of
a smaller plan.
The sweet spot for our businessis that one to$10 million space
of which with a lot of advisorsout there that's smaller plans,
they can be the perfect client.
For us, that type of employerreally, really needs our help.

(22:03):
They've got a workforce that isnot so large that we can't
engage it on a one on one basis.
You build a block of business onthe backbones of that, it has
just a tremendous amount ofbenefits.
Obviously you've got to be anadvisor that is going to want to

(22:23):
engage with individualparticipants, but if that's not
your model, I frankly stillthink you could leverage this.
You're delivering it more in agroup setting, which we have to
do with some of our larger plansthat are spread around the
country.
So we don't necessarily get theone on one interaction with
people.

(22:44):
But I still think a tool likethis can deliver a higher touch
rate than just cutting peopleloose with the resources that
the record keeper has available.
So even in that environment, I'ma proponent of this, but when
you look at the profitabilitylevels that can be available in

(23:05):
these smaller plans becauseyou're building those
relationships and you've gotthings to gain outside the
retirement plan from that.
For the advisors that arewilling to work in that
environment, I think it can behugely profitable and therefore
bring you way down the radarscreen when it comes to working

(23:29):
with smaller plans and stillbeing able to make a good living
and also take you in anenvironment where there's
probably less competition, orless sophisticated competition.
So definitely some benefits fromthat standpoint.

Edward D (23:49):
So in getting to engage these participants, do
you find that those that aregetting close to retiring, you
have a better relationship withso you can move them into the
wealth management side?
Has that helped with that atall?

Gerald W (23:59):
It has for us, it is certainly positioned us from the
standpoint of, you know, beingthat trusted advisor, somebody
to go to.
In fact it's, it's kind of adouble edged sword in that you
may find yourself in a positionof being too successful and you

(24:22):
better think about it going in,people are going to want your
help and they're going to turnto you.
And if you don't have astructure to accommodate that,
then frankly could create aproblem, a problem of having too
much business come your way.

(24:43):
And we've actually been vettingout opportunities to better
position ourselves to takeadvantage of these sorts of
opportunities that are comingout of these plans because
10,000 baby boomers a day arereaching age 65 and retiring and

(25:03):
the money's moving.
And we're actually looking atthat within our own client base
in doing some things to positionourselves to be able to handle
more and more of that kind ofbusiness.
Basically trying to come up withour own robo IRA solution, if
you will, because we just seethe opportunity to fill a need

(25:28):
and want to ride the wave ofthat goodwill we've established
within the retirement plans.

Edward D (25:35):
Do you have any fun stories of how you've used
RetireReady Solutions in one ofyour recent participant
meetings?

Gerald W (25:42):
I would say a few typical scenarios we kind of run
into.
We've had a few out there wherewe've gone into the meeting, in
fact, one of my associates toldme about this, he went into the
meeting plan was currently atabout 50% participation and he
could just tell from the lookson the employees faces that they

(26:05):
were just expecting anotherboring possibly over my head
retirement plan presentation.
"Okay, fine, we're moving toanother platform, whatever.
I don't understand any of thisstuff.
Oh by the way, mr.
Advisor, you're not going tochange my mind on anything.
I know what I'm doing and whatI'm not doing and so on and so

(26:28):
forth." And we were being toldby the end of the meeting that
they had never heard itpresented this way before.
It gave them a whole differentperspective on this.
We went from 50% participationto 96% participation and just

(26:52):
about everybody that was in theplan before was increasing their
deferral rates.
And we were just getting thankedleft and right from the
standpoint of us being able tohelp people understand what was
going on.
And my associate is telling methis and I could just hear in

(27:13):
his voice, you know, he'swalking on air.
So not only are we winning ahappy client and a more
successful relationship withthat client, I got an associate
that is loving what he's doinginstead of getting in front of a
group of people that don'tappreciate it and basically just
kick his butt.

(27:34):
Now he's walking out of therefeeling the love.
I mean, how cool is that?
So it's just win, win, win allaround.

Edward D (27:42):
So Gerald, with all that you've said, it's exciting
to hear.
Tell me a little bit about howmuch commitment your company has
made to this tool.
How much work is it?
Have you have a big team that'sfocused on this participant
education and how have you madeit successful?

Gerald W (27:59):
So couple of things.
One is we have some associatesthat it's their job to get the
data from the client and put itinto the tool.
And we've spent some timeworking with your folks said and
working with our retirement planadministration, people who

(28:20):
really understand the censusdata that is needed to drive
success in the data that thetool is going to produce, what
it's going to take to get thatfrom the client.
And we've refined a process.
So when we onboard a plan, wehave a transition team that
grabs a hold of this part of theprocess, interacts with the

(28:43):
client, gets the information.
We have some other people thatare trained on using the tool to
generate the reports.
We've been able to tweak thingsto build efficiencies when it
comes to printing them out,stuffing them in envelopes,
having people's names show onthe envelopes.
That just saved us tremendousamounts time.

(29:05):
So we've really nailed down aprocess for being able to
generate these reports.
So when it's all said and done,it's become pretty easy for us
to do it.
We've built it into our pricingon our clients.
So it's just, it's a given.
This is, this is what we'regoing to be doing.

(29:25):
We carve that pricing outseparately when we get to some
of the larger plans.
So that gives us the latitudeto, on the larger ones, get more
customized as to how we're gonnaapproach generating the reports.
Maybe we have to go to yourorganization Ed and have you

(29:46):
guys help us generate thereports, which you've got a
process set up to do that orwe're able to do it ourselves
and you know, determine how, howwe're gonna get it out there to
the audience if you will, and doit through a webinar or whatever
the case may be.
So we've been at this longenough that we've really nailed

(30:09):
the system down, but I cansafely say it wasn't one of
these situations where we werelosing money at developing this
process and that took us twoyears to get where we are.
No, we, we've been making moneyr ight out of the gate
leveraging this tool.
We've just over the last coupleof years, refined our processes

(30:33):
and made them even better andmore efficient.

Edward D (30:37):
Well, thank you Gerald.
I sincerely appreciate that.
It's really good for me to hear,put a smile on my face
throughout it.
I live to have people like yoube successful like you are that
it's what I'm passionate about.

Gerald W (30:49):
I owe you a lot.
You guys have helped build thecornerstone in our business when
it comes to participantengagements and sets us apart.
And yeah, it's filled a lot ofobjectives for me.
Like I shared, it's not justabout making a buck.

(31:10):
It's about being able to changepeople's lives.
And I thought going into thisthe only people that ever get to
do that are like doctors and,and so, Hey, I found out that is
not the case.
We get to do it too.
So that's cool.

Edward D (31:28):
Gerald, it was wonderful to talk today.
Thank you for your kind wordsabout our software and it's been
great to hear your success.
I love hearing aboutparticipants engagement success,
and I call it middle Americagetting ready for retirement in
a successful way.
I thank you and I wish you thebest in the marketplace today.
Have a great day.