June 1, 2022 • 24 mins
Listen in as we are excited to welcome back Jonathon Schultheiss, Managing Director with Strategic Retirement Partners out of Greensboro, NC. In this podcast hear Jonathon's passion as he shares how to bring value to employee education and some key insights to being successful in the 401k marketplace.
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Episode Transcript
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Ed Dressel (00:08):
Welcome, everyone to another podcast with Grow
RetireReady Clients. This isEdward Dressel. I'm excited to
have Jonathan Schultheiss back.
He was our first advisorinterviewed and the first time
I've had somebody back twice. SoJonathan, welcome. Great to have
you.
Jonathan Schultheiss (00:23):
Thank you.
I feel privileged.
Ed Dressel (00:25):
It's wonderful to have you. I hope things are
well. Just as a reminder, letpeople know a little bit about
what you do, and kind of whatyour role is.
Jonathan Schultheiss (00:34):
Yeah, so I'm a managing director with
Strategic Retirement Partners,SRP, here in the Virginia and
Carolinas area. And basically,our team--I have two other kind
of CO managing directors--and weall have different, I guess,
skill sets or passions, I guessyou could say, and mine is
employee education. So that'sreally where I focus most of my
(00:57):
time and efforts.
Ed Dressel (00:58):
So you're working 401k plans. Your focus is to do
retirement, employee education.
A lot of people would think Iwould never want your job.
Participant education is thetorture chamber of a plan
advisor. They're not focused onit. And it's not where people
want to go. You seem passionateabout it. There's some tension
there.
Jonathan Schultheiss (01:20):
Well, I think if you feel like what you
just said, is because you'redoing it wrong. And I think the
whole value of employeeeducation is that it's valuable
for everybody. Valuable for theplan, because we get more people
engaged, which also reducesturnover. It's valuable for the
employees, because it gives themaccess to financial advice that
(01:41):
they couldn't get on their own.
And if you're doing it right, asan advisor, it also drives your
economic engine. So that's oneof the things that that we like
to do is we like to, we like tomake money, right? So that's why
we're in this business. I hearso many people at these
conferences, they go, oh, man,employee education is kind of a
loss, loss leader or whatever.
(02:04):
But I don't look at it that way.
To us, I mean, I feel like we'vecreated a process that through
delivering value actually makesus money at the same time.
Ed Dressel (02:15):
I might guess that if we've got any plan advisors
listen to this they're going toeither not believe you. And they
have a big doubt, becausethey've tried employ education,
six different ways. It doesn'twork. I don't want to do it. I
just want to work with the plansponsor. I hear that over and
over even as much pressure inthe industry as there is "Oh, we
(02:37):
need to do education!" I hear itover and over. It's taken a
backseat. What are you doingthat's different than maybe your
typical advisor that you can sayyou engage people, which is
going to be different. It drivesyour economic engine. What do
you mean by doing it right?
Jonathan Schultheiss (02:54):
So one of the things that we look to do
too, is how do we move beyondjust talking about the 401k.
Because if all you're doing iscoming in and telling people how
to invest in their 401k, that'sokay. But really, you need to go
more holistic. And so when wecome in, and we become holistic,
I always tell people, I say,imagine I got the side blinders
(03:16):
on here. All I know is what youhave in your 401k. If you want
to share with me what you haveoutside of the 401k, it helps me
do my job and give you betteradvice. And so a lot of times
when you say that people startsaying, "Oh, well, I got this
old 401k" or "I got this, I gotthis IRA with XYZ company and I
(03:37):
don't really know the guy. Idon't really talk to him that
much." And so it allows us tosay, "Oh, well, you know,
what,"--and this is my favoriteline that I say right here. I
say "Listen, you're alreadypaying me, right? So a small
percentage of the 401k fee comesto pay me, I'm more than happy
to take a look at those otheraccounts that you have." And so
they go, "Oh, great, well Jonlook at this"--and so I get lots
(03:58):
of opportunities, just fromancillary business, that people
have in old 401k's or old IRA'sthat they've just left laying.
And so we're, we're pickingthose things up left and right,
just because we're coming in andgoing a little bit deeper. It
doesn't take just a second tosay that and get somebody to
basically show you everythingthey got.
Ed Dressel (04:20):
So for people that may have not heard your first
podcast, they think that they'regoing to--you just dont' walk in
the room and say, "Hey, tell meabout your other assets."
Jonathan Schultheiss (04:29):
No. So one of the things that we do--and
I'm a huge fan is the the OnTRAK reports. And we actually
rebrand them. So we created afull employee education
campaign. And we call itbecoming a 401k Superhero. And
so we're trying to help peopleimprove their finances and we'd
(04:52):
get off on another topic, but Iwrote a book about it and it has
a kind of a curriculum aroundthe book of budgeting and
getting out of debt. And so wetalk about those things. But
really, we want to provide a lotof value. But what really makes
us a lot of money is that OnTRAK tool. We've actually
rebranded the tool to say, "Areyou on track to become a 401k
(05:12):
Superhero?" And when we deliverthose reports, one of the things
I think is brilliant that youguys did, is at the bottom of
it, it says "other possiblesolutions." And so one of the
other possible solutions is ifyou have a lump sum of x amount
of dollars. And so I'm neverdone a meeting, a group meeting
(05:33):
with TRAK reports, where Ihaven't had at least one person,
raise their hand, say, "Hey,Jonathan, I got, I got that much
money," or "I got more than thatin my old 401k." And I always
say, "Listen, I got this, giveme a statement, and I'll help
you." They'll give me astatement and usually, if it's a
small amount, I'll roll into the401k. If it's a larger amount,
(05:53):
it makes sense to actually haveit professionally managed, then
we put it on our managed models.
And and we were getting morebusiness than we can handle.
Ed Dressel (06:03):
The On TRAK report you're referring to is our what
we call our participant GapReport showing a one page
overview of where they're at.
You're saying participants liketo see that analysis?
Unknown (06:15):
Participants love it.
And you know, what's interestingis everybody goes, "Oh, another
boring 401k meeting." And so thething is, is how do you go from
another boring 401k meeting todelivering something that's
important to them? Because mostparticipants don't care about
the correlation of large cap andsmall cap stocks and
diversification. But what theydo care about is "Can I retire?"
(06:37):
And what's interesting is, I'llusually start a meeting where we
give everybody an on TRAK reportwith saying, you know, I heard a
statistic the other day, and thestatistics says that the average
person spends more time planningfor one annual vacation than
they do their entire retirement.
And when I say that, there'll beat least three or four people in
(07:01):
the room that start noddingtheir heads going, "Oh, my gosh,
that's me." And then I say,"Listen, guys, when you leave
this meeting, today, you're nolonger going to be a part of
that statistic, because I'mgoing to share something with
you that's going to show youwhat you need to do to be able
to have a comfortableretirement." And so then I pull
up on the screen, and I showthem the report. And I say, I
walk them through here's how youread it. And I tell stories,
(07:23):
because we've been doing thislong enough, I've got stories to
tell. And and we just kind of gothrough and we tell some stories
about different situations.
Because that helps them relateto it. I'm a big believer in
stories. So you tell a storyabout how somebody wanted to
rerun their calculation andretire early. And everybody
goes, "Oh, my gosh, I'd like toretire early. So what do I got
(07:44):
to do?" So it's all about tryingto create engagement. So the
problem with employee educationis, if you don't have any
engagement, and you're showingup, and nobody wants to meet
with you, because you're notproviding value, you can't make
money. And the problem that weall have as advisors is we all
have what we call the curse ofknowledge. We get this stuff.
(08:05):
And we come in and we talk aboutRoth IRAs and diversification
and taxation and all thesedifferent things that we get,
because we talk about it everyday. The average participant
doesn't have a clue. But if Ican keep it simple and say,
"Look, Mr. Participant, you'reonly saving 3%, you need to be
saving 6% to be able to retire."They understand that more than
(08:31):
they understand all thediversification and how it's
taxed and everything else, whereus as advisors, we all sit
around and want to talk abouthow smart we are and talk about
these other things, where yougot to keep it simple, and you
got to deliver value becausevalue is what they perceive,
right? If they don't understandall these other things, they
don't perceive it as valuable.
(08:52):
But if you can give themsomething that they understand,
then they perceive it asvaluable.
Ed Dressel (08:57):
So bringing value to the room, do you see you've
talked about getting outsideassets? What do you see in
contribution levels? How's itimpacting contribution levels in
the plan?
Jonathan Schultheiss (09:07):
So here's the other thing that we always
look at as a measurement ofengagement, we will look at what
is the participation rate andwhat is the average deferral. I
love the look at theparticipation and average
deferral before we deliver theseOn TRAK reports. And then we can
see how much has changed. And sothat to me is is a lot of value.
(09:29):
Because here's the other thingtoo. Even though on the larger
side of the market, we movedmore towards like a flat fee. On
the smaller side of the market,we're still asset based fee. And
we always explained that asemployee education because the
more involved we are with theplan, the more successful we're
making it. We want to be able tobe rewarded in the playing
(09:52):
group. And so you know, we lookat it in that way. So I'll give
you an example here. Here's aninteresting conversation. I just
I had this morning with aprospect. And we came in and we
pitched them all of ourservices, our fiduciary services
and everything else. But then wealso show them our employee
education services. And we tellthem about the whole campaign,
which include using the On TRAKreports. And one of the
(10:14):
executives in there. He's like,he said something like, "Could
we get it for any less?" And Isaid, "Yeah, we could just
remove services." I said, "Youjust tell me which one you'd
like for me to remove. Would youlike me to remove the fiduciary
piece or the employee education"piece?" And then the other,
like the president of companiesspoke up. He's like, "We
(10:35):
definitely want employeeeducation." And then the the
delegate is like, "Well, wedefinitely need fiduciary
services." So that was funny,because they were both going
back and forth. I was like,yeah, we can always reduce the
fee, we'll just reduce services,but but I've already pitched the
services. And so what we did asa compromise this is--this is
(10:55):
funny--because it's an assetbase fee--it's like a $5 million
plan--so it's gonna be 50 basispoints or something. So I said,
"Well, let's, let's do this.
We'll do it for 45 basispoints." So that way, we're
going to come in and we'resaving a little bit of money,
and we're going to deliver morevalue. But honestly, if you
think about it, they had arelatively okay, participation.
But if we started doingeducation, we're going to--we're
(11:16):
going to drive participation,we're going to drive deferrals,
which if we're at an asset basedfee, which means our revenues
can go up. So it makes sense forme to give them a small
concession on the fee because Iknow the plan is going to grow.
Ed Dressel (11:34):
Do you see--I mean, obviously, you've seen growth in
the past. Do you have any dataon what kind of growth you've
seen?
Jonathan Schultheiss (11:44):
You know, we do, like I said, we track the
increase of deferrals and thesekinds of things. One of the
things that we try to do atevery meeting that we have is we
always bring the vendors planhealth report. And the plan
health report will show ususually quarter over quarter the
improvement of participation,and deferral rates and things
(12:09):
like that. And so I actually hada meeting last week with a
company that we've had for aboutalmost two years now. And I was
able to show them what theirdeferral rate was in dollars
when we first took over theplan, which I think was like--it
was like, $200,000 worth ofcontributions between the
company and employees. And whenwe had our meeting last week,
(12:34):
the deferral dollars were over,I think it was $570,000.
Ed Dressel (12:40):
It's almost tripled.
Jonathan Schultheiss (12:41):
And so, you know, you think about that,
and you know, it's reallybecause we've been hands on.
We're there and we're showing upand we're delivering value. But
at the same time, the ancillarybusiness that's come out of that
plan is, has been amazing. Ithink we've done probably six or
$700,000 worth of managed assetsthat came from accounts that
(13:08):
other people had other 401ks andthings like that. So you talk
about driving the economicengine, it's--we're valuing in
two ways from employeeeducation. We're valuing on the
growth of the plan, whichincreases revenue. We're valuing
on the ancillary business thatwe get out of the plan, which
(13:29):
drives revenue. But yeah, soreally, I mean, we look at those
things. And we try to track whatkind of revenue we're getting
from the plan and rollovers fromoutside things and things like
that, too, because we want tomeasure the value that we're
bringing in and what the valueto us is.
Ed Dressel (13:49):
Participant GAP reports. You're talking about
doing that, and people getexcited. But is that something
you can do? I mean, the secondyear, the third year, the fourth
year. Does that have--do theyget tired of that report?
Jonathan Schultheiss (14:02):
You know, that's funny. I was just telling
a story today to this clientthat we're pitching. I've got
one client where we've beendelivering these reports for
like, five years now. So wedeliver them every single year.
And I had one lady that showedup to the meeting. And she had
four reports in her hand,including the one that just gave
(14:23):
her and she lays it out. Andshe's like, "Jonathan, look
where I was four years ago, andlook where I'm at today." And
she can actually see theimprovement that she's made over
time. So you know, you thinkabout that, and I think employee
education too is--it's moreof--it's more farming than
hunting. If you deliver thevalue to these people, then
(14:47):
whenever they leave or wheneverthey need something else,
they're gonna come to youbecause you've delivered value.
And I think that's, that's theproblem. Have you--do you know
Don Barton?
Ed Dressel (14:59):
No.
Jonathan Schultheiss (15:00):
Don Barton wrote the book, The Perfect
Plan. He's a 401k guy. And so hetalks about survey and the top
1% of successful people in theworld. And he says, there's one
thing that really sets the topof the top 1% apart. That's that
they are all about service. Soif you think about how can you
(15:23):
be about service, and sometimesI'm meet with folks--I spent 30
minutes on a phone call theother day talking to a lady
about--she needed to renegotiateher payday. I don't get paid
anything for that, but that wasvalued, because she needed that.
But the thing is, is she's gonnago and tell somebody she works
with the value that I providedfor. For all I know, one of her
(15:44):
co workers has money that thatneeds to be managed. There's,
there's another guy who--he'snew at his company--he's called
me up. Matter of fact, I wasjust emailing him right before
this call. And he's asking abouthow to set up his investments.
He's got another financialadvisor, but I'm delivering it
because I know one of his coworkers. I'm talking to them
(16:04):
about a million dollar rollover.
So I'm want to make sure thatwhen they both talk about me,
you know, they both have goodthings to say. To look at this
and say you got to be aboutservice. Employee education is
truly about service. And themore you can serve the market
and deliver value, then you'regonna get all the other
(16:24):
ancillary business. If you comeinto it, and think, hey, I'm
going to do employee educationjust because I'm gonna make more
money--that's transparent. Imean, they can see that. You
think that you might be hidingit, but you're not. People can
see through it. But if you'retruly there to deliver value,
then you'll get the business.
(16:44):
And that's what has reallyserved us well. I really want to
help participants become better.
And if I help enoughparticipants, yeah, there'll be
several that I helped that Idon't make anything for other
than the fee that we charge onthe plan. But because I'm
helping them, enough otherparticipants will come to me
that have money to manage. Andthat right there, we'll make
(17:05):
make me enough money to pay forall the other folks that didn't
really make me.
Ed Dressel (17:14):
Something that you highlight here is your ability
to move them over to the retailside as they leave the 401k
plan. You know, record keepersare trying to gain their
business. They don't promoteadvisors. they're not saying
Jonathan Schultheiss is a greatadvisor. You need to look at him
if you move into retirement. Itsounds like you may be winning
those accounts, because you'reaging participants towards
(17:36):
retirement readiness.
Jonathan Schultheiss (17:37):
A hundred percent. A hundred percent. That
goes back to really justdelivering the value and being
of service. Because when thosefolks leave--you think about
it--they're going to be gettingcalled from the record keepers
and everybody else, but ifyou're the person that they
know, this is a relationshipbusiness. With your money,
(17:57):
people have a specialrelationship with their money.
If you built that relationshipwith them, and they have a
relationship with you, and therecord keepers calling them,
then a lot of times that's goingto make them think of me. And so
when that record keeper iscalling them saying, "Hey, you
got this money," then you know,they're gonna think about me
(18:19):
too. So I'm going to be therehelping them build
relationships. This business isabout relationships. If you
develop the relationships withthe employees, that is also I
think the key to it. If you'rehelping these folks and you're
delivering true value, thenthey're going to want to do
(18:39):
business with you becausethey're going to trust you.
They're gonna know you, like youand trust you when it comes to
their retirement. Theywant--people want to work with
somebody they know, like, andtrust.
Ed Dressel (18:49):
And I agree with you that we need to bring value. I
just think most advisors don'tknow how to do it to the
participant. They don't thinkthere's any money there. And
they suffer with what youalluded to or what you spoke
of--the curse of knowledge. Theyfeel like they need to educate
the participants to become miniadvisors.
Jonathan Schultheiss (19:08):
Exactly.
Well, here's, here's a funnything. I got to get
philosophical on you. So I readthis amazing book called Psycho
Cybernetics. In PsychoCybernetics it talks about
mindset, and most people areintimidated by numbers. If you
think about it, if you keephitting them with numbers
because you want to teach themto be an advisor, but they don't
(19:28):
like numbers and don't likebeing in those things. It's a
hard thing to overcome. So Ithink that's the issue is you
got to keep it simple. ln PsychoCybernetics it talks about how
do you create a mind shift? Howdo you get participants to see
themselves as somethingdifferent? If they say, "I'm bad
at numbers. I'm bad at 401k thenI'm not gonna go to a 401k
(19:51):
meeting," then you've lostalready. So you got to create
something that is fun, excitingand engaging for that employee.
And that's where we created theBecome a 401k Superhero
campaign. And so now it's aboutthat identity shift. It's not
about, "Oh, I'm bad at numbers."It's about, "Hey, I want to
become a 401k superhero. I wantto have a successful retirement.
(20:14):
What do I need to do to have asuccessful retirement?" So then
we deliver those On TRAKreports, and we call them On
TRAK to become a 401k superhero,to your futureself. And so they
know now what they gotta do, andwe take, we take all the
complicated stuff out of it. Sowe're not trying to teach them
to become advisors. I'm theadvisor. I'm the expert. You've
(20:35):
come to me and ask me. I don'tneed to teach you all the things
that I know. I need to be ableto bring you things at your
level that you can engage with.
And that is where they seevalue, because otherwise you
bore people. If you're sittingthere and you start talking
about things that you and Imight be excited about--about
the economy, and you know,what's going on with the Fed
(20:57):
meeting and stuff likethat--it'd be of interest to us,
but the average participantcould care less. So if you're
trying to make your employeeeducation meetings around those
things, you're losing people.
Where if you come back, and youjust keep it as simple as you
possibly can and give themenough value, it's better.
Here's an example. We did acampaign where we have an email
(21:17):
series that goes out toemployees. And we said, anybody
who asks a financial questiongets in a drawing to win a free
401k Superhero t shirt. And soall you had to do was ask a
question. I got some of the mostbasic elementary questions from
participants. Like one personsaid, "How do I take money out
(21:38):
of my 401k when I retire?" Wedon't think about that, because
we go, "Duh, that's how you doit." But the fact that I got
that question three times, tellsme that if you're much higher
than that, you're losing people.
You gotta keep it super, supersimple. So that's really where I
(22:01):
think you have to go with anemployee education is you got to
be able to give them somethingthat resonates with them. That's
how you show value. Not beingabove everybody's head.
Ed Dressel (22:13):
And I say we're always talking about derivative
issues. Non core issues. Thecore issue is, can you retire?
How do you get there? If revenueissues are, let's talk about
asset allocation? Wellthat's--once we figure out how
to get into retirement, assetallocation becomes important.
But if you're not getting intoretirement, asset allocation,
maybe better to spend the moneyon a lottery.
Jonathan Schultheis (22:34):
Absolutely, well, that's the thing. If
you're only saving 2% of yoursalary, it don't matter how
diversified you are, how greatyour investments are, you're not
going to be able to retire. So Ithink that's the important part
is to get people to save enough.
I love--Putnam did a white paperseveral years ago. It's called
The Forest for the Trees. Itshowed this example of if you
had best investments, and thenyou have a crystal ball, and
(22:58):
they showed your crystal ball ifyou made every investment
decision right every singleyear, how much money the
participant would have had. Thenit said, if they had just
average investments and saved 1%more, it was better than the
crystal ball.
Ed Dressel (23:13):
Wow.
Jonathan Schultheiss (23:14):
And so you think about this, and I love to
share that story. I say I thinkI'm a good advisor, but I don't
have a crystal ball. But one ofthe things I can help you do is
I can't help you say 1% more.
And so we try to make all theemployee education meetings not
around investments, not aroundthese kinds of things, but
really around increasing yoursavings. You're increasing your
(23:36):
deferral rate, becauseultimately, that's what's going
to help you retire more thananything else.
Ed Dressel (23:45):
Well, Jonathan, it's been great to have you today. I
really appreciate you taking thetime. I wish you success in this
marketplace. It sounds likeyou're having having a lot of
fun bringing value. Stay awayfrom the curse of acknowledge
and really engaging participantstoward retirement readiness.
Thanks for taking your timetoday.
Jonathan Schultheiss (24:01):
Yeah, thanks for having me.
Ed Dressel (24:02):
Thanks, everybody, for listening. Hope you have a
great day. Thanks much!
Welcome, everyone to another podcast with Grow
RetireReady Clients. This isEdward Dressel. I'm excited to
have Jonathan Schultheiss back.
He was our first advisorinterviewed and the first time
I've had somebody back twice. SoJonathan, welcome. Great to have
you.
Jonathan Schultheiss (00:23):
Thank you.
I feel privileged.
Ed Dressel (00:25):
It's wonderful to have you. I hope things are
well. Just as a reminder, letpeople know a little bit about
what you do, and kind of whatyour role is.
Jonathan Schultheiss (00:34):
Yeah, so I'm a managing director with
Strategic Retirement Partners,SRP, here in the Virginia and
Carolinas area. And basically,our team--I have two other kind
of CO managing directors--and weall have different, I guess,
skill sets or passions, I guessyou could say, and mine is
employee education. So that'sreally where I focus most of my
(00:57):
time and efforts.
Ed Dressel (00:58):
So you're working 401k plans. Your focus is to do
retirement, employee education.
A lot of people would think Iwould never want your job.
Participant education is thetorture chamber of a plan
advisor. They're not focused onit. And it's not where people
want to go. You seem passionateabout it. There's some tension
there.
Jonathan Schultheiss (01:20):
Well, I think if you feel like what you
just said, is because you'redoing it wrong. And I think the
whole value of employeeeducation is that it's valuable
for everybody. Valuable for theplan, because we get more people
engaged, which also reducesturnover. It's valuable for the
employees, because it gives themaccess to financial advice that
(01:41):
they couldn't get on their own.
And if you're doing it right, asan advisor, it also drives your
economic engine. So that's oneof the things that that we like
to do is we like to, we like tomake money, right? So that's why
we're in this business. I hearso many people at these
conferences, they go, oh, man,employee education is kind of a
loss, loss leader or whatever.
(02:04):
But I don't look at it that way.
To us, I mean, I feel like we'vecreated a process that through
delivering value actually makesus money at the same time.
Ed Dressel (02:15):
I might guess that if we've got any plan advisors
listen to this they're going toeither not believe you. And they
have a big doubt, becausethey've tried employ education,
six different ways. It doesn'twork. I don't want to do it. I
just want to work with the plansponsor. I hear that over and
over even as much pressure inthe industry as there is "Oh, we
(02:37):
need to do education!" I hear itover and over. It's taken a
backseat. What are you doingthat's different than maybe your
typical advisor that you can sayyou engage people, which is
going to be different. It drivesyour economic engine. What do
you mean by doing it right?
Jonathan Schultheiss (02:54):
So one of the things that we look to do
too, is how do we move beyondjust talking about the 401k.
Because if all you're doing iscoming in and telling people how
to invest in their 401k, that'sokay. But really, you need to go
more holistic. And so when wecome in, and we become holistic,
I always tell people, I say,imagine I got the side blinders
(03:16):
on here. All I know is what youhave in your 401k. If you want
to share with me what you haveoutside of the 401k, it helps me
do my job and give you betteradvice. And so a lot of times
when you say that people startsaying, "Oh, well, I got this
old 401k" or "I got this, I gotthis IRA with XYZ company and I
(03:37):
don't really know the guy. Idon't really talk to him that
much." And so it allows us tosay, "Oh, well, you know,
what,"--and this is my favoriteline that I say right here. I
say "Listen, you're alreadypaying me, right? So a small
percentage of the 401k fee comesto pay me, I'm more than happy
to take a look at those otheraccounts that you have." And so
they go, "Oh, great, well Jonlook at this"--and so I get lots
(03:58):
of opportunities, just fromancillary business, that people
have in old 401k's or old IRA'sthat they've just left laying.
And so we're, we're pickingthose things up left and right,
just because we're coming in andgoing a little bit deeper. It
doesn't take just a second tosay that and get somebody to
basically show you everythingthey got.
Ed Dressel (04:20):
So for people that may have not heard your first
podcast, they think that they'regoing to--you just dont' walk in
the room and say, "Hey, tell meabout your other assets."
Jonathan Schultheiss (04:29):
No. So one of the things that we do--and
I'm a huge fan is the the OnTRAK reports. And we actually
rebrand them. So we created afull employee education
campaign. And we call itbecoming a 401k Superhero. And
so we're trying to help peopleimprove their finances and we'd
(04:52):
get off on another topic, but Iwrote a book about it and it has
a kind of a curriculum aroundthe book of budgeting and
getting out of debt. And so wetalk about those things. But
really, we want to provide a lotof value. But what really makes
us a lot of money is that OnTRAK tool. We've actually
rebranded the tool to say, "Areyou on track to become a 401k
(05:12):
Superhero?" And when we deliverthose reports, one of the things
I think is brilliant that youguys did, is at the bottom of
it, it says "other possiblesolutions." And so one of the
other possible solutions is ifyou have a lump sum of x amount
of dollars. And so I'm neverdone a meeting, a group meeting
(05:33):
with TRAK reports, where Ihaven't had at least one person,
raise their hand, say, "Hey,Jonathan, I got, I got that much
money," or "I got more than thatin my old 401k." And I always
say, "Listen, I got this, giveme a statement, and I'll help
you." They'll give me astatement and usually, if it's a
small amount, I'll roll into the401k. If it's a larger amount,
(05:53):
it makes sense to actually haveit professionally managed, then
we put it on our managed models.
And and we were getting morebusiness than we can handle.
Ed Dressel (06:03):
The On TRAK report you're referring to is our what
we call our participant GapReport showing a one page
overview of where they're at.
You're saying participants liketo see that analysis?
Unknown (06:15):
Participants love it.
And you know, what's interestingis everybody goes, "Oh, another
boring 401k meeting." And so thething is, is how do you go from
another boring 401k meeting todelivering something that's
important to them? Because mostparticipants don't care about
the correlation of large cap andsmall cap stocks and
diversification. But what theydo care about is "Can I retire?"
(06:37):
And what's interesting is, I'llusually start a meeting where we
give everybody an on TRAK reportwith saying, you know, I heard a
statistic the other day, and thestatistics says that the average
person spends more time planningfor one annual vacation than
they do their entire retirement.
And when I say that, there'll beat least three or four people in
(07:01):
the room that start noddingtheir heads going, "Oh, my gosh,
that's me." And then I say,"Listen, guys, when you leave
this meeting, today, you're nolonger going to be a part of
that statistic, because I'mgoing to share something with
you that's going to show youwhat you need to do to be able
to have a comfortableretirement." And so then I pull
up on the screen, and I showthem the report. And I say, I
walk them through here's how youread it. And I tell stories,
(07:23):
because we've been doing thislong enough, I've got stories to
tell. And and we just kind of gothrough and we tell some stories
about different situations.
Because that helps them relateto it. I'm a big believer in
stories. So you tell a storyabout how somebody wanted to
rerun their calculation andretire early. And everybody
goes, "Oh, my gosh, I'd like toretire early. So what do I got
(07:44):
to do?" So it's all about tryingto create engagement. So the
problem with employee educationis, if you don't have any
engagement, and you're showingup, and nobody wants to meet
with you, because you're notproviding value, you can't make
money. And the problem that weall have as advisors is we all
have what we call the curse ofknowledge. We get this stuff.
(08:05):
And we come in and we talk aboutRoth IRAs and diversification
and taxation and all thesedifferent things that we get,
because we talk about it everyday. The average participant
doesn't have a clue. But if Ican keep it simple and say,
"Look, Mr. Participant, you'reonly saving 3%, you need to be
saving 6% to be able to retire."They understand that more than
(08:31):
they understand all thediversification and how it's
taxed and everything else, whereus as advisors, we all sit
around and want to talk abouthow smart we are and talk about
these other things, where yougot to keep it simple, and you
got to deliver value becausevalue is what they perceive,
right? If they don't understandall these other things, they
don't perceive it as valuable.
(08:52):
But if you can give themsomething that they understand,
then they perceive it asvaluable.
Ed Dressel (08:57):
So bringing value to the room, do you see you've
talked about getting outsideassets? What do you see in
contribution levels? How's itimpacting contribution levels in
the plan?
Jonathan Schultheiss (09:07):
So here's the other thing that we always
look at as a measurement ofengagement, we will look at what
is the participation rate andwhat is the average deferral. I
love the look at theparticipation and average
deferral before we deliver theseOn TRAK reports. And then we can
see how much has changed. And sothat to me is is a lot of value.
(09:29):
Because here's the other thingtoo. Even though on the larger
side of the market, we movedmore towards like a flat fee. On
the smaller side of the market,we're still asset based fee. And
we always explained that asemployee education because the
more involved we are with theplan, the more successful we're
making it. We want to be able tobe rewarded in the playing
(09:52):
group. And so you know, we lookat it in that way. So I'll give
you an example here. Here's aninteresting conversation. I just
I had this morning with aprospect. And we came in and we
pitched them all of ourservices, our fiduciary services
and everything else. But then wealso show them our employee
education services. And we tellthem about the whole campaign,
which include using the On TRAKreports. And one of the
(10:14):
executives in there. He's like,he said something like, "Could
we get it for any less?" And Isaid, "Yeah, we could just
remove services." I said, "Youjust tell me which one you'd
like for me to remove. Would youlike me to remove the fiduciary
piece or the employee education"piece?" And then the other,
like the president of companiesspoke up. He's like, "We
(10:35):
definitely want employeeeducation." And then the the
delegate is like, "Well, wedefinitely need fiduciary
services." So that was funny,because they were both going
back and forth. I was like,yeah, we can always reduce the
fee, we'll just reduce services,but but I've already pitched the
services. And so what we did asa compromise this is--this is
(10:55):
funny--because it's an assetbase fee--it's like a $5 million
plan--so it's gonna be 50 basispoints or something. So I said,
"Well, let's, let's do this.
We'll do it for 45 basispoints." So that way, we're
going to come in and we'resaving a little bit of money,
and we're going to deliver morevalue. But honestly, if you
think about it, they had arelatively okay, participation.
But if we started doingeducation, we're going to--we're
(11:16):
going to drive participation,we're going to drive deferrals,
which if we're at an asset basedfee, which means our revenues
can go up. So it makes sense forme to give them a small
concession on the fee because Iknow the plan is going to grow.
Ed Dressel (11:34):
Do you see--I mean, obviously, you've seen growth in
the past. Do you have any dataon what kind of growth you've
seen?
Jonathan Schultheiss (11:44):
You know, we do, like I said, we track the
increase of deferrals and thesekinds of things. One of the
things that we try to do atevery meeting that we have is we
always bring the vendors planhealth report. And the plan
health report will show ususually quarter over quarter the
improvement of participation,and deferral rates and things
(12:09):
like that. And so I actually hada meeting last week with a
company that we've had for aboutalmost two years now. And I was
able to show them what theirdeferral rate was in dollars
when we first took over theplan, which I think was like--it
was like, $200,000 worth ofcontributions between the
company and employees. And whenwe had our meeting last week,
(12:34):
the deferral dollars were over,I think it was $570,000.
Ed Dressel (12:40):
It's almost tripled.
Jonathan Schultheiss (12:41):
And so, you know, you think about that,
and you know, it's reallybecause we've been hands on.
We're there and we're showing upand we're delivering value. But
at the same time, the ancillarybusiness that's come out of that
plan is, has been amazing. Ithink we've done probably six or
$700,000 worth of managed assetsthat came from accounts that
(13:08):
other people had other 401ks andthings like that. So you talk
about driving the economicengine, it's--we're valuing in
two ways from employeeeducation. We're valuing on the
growth of the plan, whichincreases revenue. We're valuing
on the ancillary business thatwe get out of the plan, which
(13:29):
drives revenue. But yeah, soreally, I mean, we look at those
things. And we try to track whatkind of revenue we're getting
from the plan and rollovers fromoutside things and things like
that, too, because we want tomeasure the value that we're
bringing in and what the valueto us is.
Ed Dressel (13:49):
Participant GAP reports. You're talking about
doing that, and people getexcited. But is that something
you can do? I mean, the secondyear, the third year, the fourth
year. Does that have--do theyget tired of that report?
Jonathan Schultheiss (14:02):
You know, that's funny. I was just telling
a story today to this clientthat we're pitching. I've got
one client where we've beendelivering these reports for
like, five years now. So wedeliver them every single year.
And I had one lady that showedup to the meeting. And she had
four reports in her hand,including the one that just gave
(14:23):
her and she lays it out. Andshe's like, "Jonathan, look
where I was four years ago, andlook where I'm at today." And
she can actually see theimprovement that she's made over
time. So you know, you thinkabout that, and I think employee
education too is--it's moreof--it's more farming than
hunting. If you deliver thevalue to these people, then
(14:47):
whenever they leave or wheneverthey need something else,
they're gonna come to youbecause you've delivered value.
And I think that's, that's theproblem. Have you--do you know
Don Barton?
Ed Dressel (14:59):
No.
Jonathan Schultheiss (15:00):
Don Barton wrote the book, The Perfect
Plan. He's a 401k guy. And so hetalks about survey and the top
1% of successful people in theworld. And he says, there's one
thing that really sets the topof the top 1% apart. That's that
they are all about service. Soif you think about how can you
(15:23):
be about service, and sometimesI'm meet with folks--I spent 30
minutes on a phone call theother day talking to a lady
about--she needed to renegotiateher payday. I don't get paid
anything for that, but that wasvalued, because she needed that.
But the thing is, is she's gonnago and tell somebody she works
with the value that I providedfor. For all I know, one of her
(15:44):
co workers has money that thatneeds to be managed. There's,
there's another guy who--he'snew at his company--he's called
me up. Matter of fact, I wasjust emailing him right before
this call. And he's asking abouthow to set up his investments.
He's got another financialadvisor, but I'm delivering it
because I know one of his coworkers. I'm talking to them
(16:04):
about a million dollar rollover.
So I'm want to make sure thatwhen they both talk about me,
you know, they both have goodthings to say. To look at this
and say you got to be aboutservice. Employee education is
truly about service. And themore you can serve the market
and deliver value, then you'regonna get all the other
(16:24):
ancillary business. If you comeinto it, and think, hey, I'm
going to do employee educationjust because I'm gonna make more
money--that's transparent. Imean, they can see that. You
think that you might be hidingit, but you're not. People can
see through it. But if you'retruly there to deliver value,
then you'll get the business.
(16:44):
And that's what has reallyserved us well. I really want to
help participants become better.
And if I help enoughparticipants, yeah, there'll be
several that I helped that Idon't make anything for other
than the fee that we charge onthe plan. But because I'm
helping them, enough otherparticipants will come to me
that have money to manage. Andthat right there, we'll make
(17:05):
make me enough money to pay forall the other folks that didn't
really make me.
Ed Dressel (17:14):
Something that you highlight here is your ability
to move them over to the retailside as they leave the 401k
plan. You know, record keepersare trying to gain their
business. They don't promoteadvisors. they're not saying
Jonathan Schultheiss is a greatadvisor. You need to look at him
if you move into retirement. Itsounds like you may be winning
those accounts, because you'reaging participants towards
(17:36):
retirement readiness.
Jonathan Schultheiss (17:37):
A hundred percent. A hundred percent. That
goes back to really justdelivering the value and being
of service. Because when thosefolks leave--you think about
it--they're going to be gettingcalled from the record keepers
and everybody else, but ifyou're the person that they
know, this is a relationshipbusiness. With your money,
(17:57):
people have a specialrelationship with their money.
If you built that relationshipwith them, and they have a
relationship with you, and therecord keepers calling them,
then a lot of times that's goingto make them think of me. And so
when that record keeper iscalling them saying, "Hey, you
got this money," then you know,they're gonna think about me
(18:19):
too. So I'm going to be therehelping them build
relationships. This business isabout relationships. If you
develop the relationships withthe employees, that is also I
think the key to it. If you'rehelping these folks and you're
delivering true value, thenthey're going to want to do
(18:39):
business with you becausethey're going to trust you.
They're gonna know you, like youand trust you when it comes to
their retirement. Theywant--people want to work with
somebody they know, like, andtrust.
Ed Dressel (18:49):
And I agree with you that we need to bring value. I
just think most advisors don'tknow how to do it to the
participant. They don't thinkthere's any money there. And
they suffer with what youalluded to or what you spoke
of--the curse of knowledge. Theyfeel like they need to educate
the participants to become miniadvisors.
Jonathan Schultheiss (19:08):
Exactly.
Well, here's, here's a funnything. I got to get
philosophical on you. So I readthis amazing book called Psycho
Cybernetics. In PsychoCybernetics it talks about
mindset, and most people areintimidated by numbers. If you
think about it, if you keephitting them with numbers
because you want to teach themto be an advisor, but they don't
(19:28):
like numbers and don't likebeing in those things. It's a
hard thing to overcome. So Ithink that's the issue is you
got to keep it simple. ln PsychoCybernetics it talks about how
do you create a mind shift? Howdo you get participants to see
themselves as somethingdifferent? If they say, "I'm bad
at numbers. I'm bad at 401k thenI'm not gonna go to a 401k
(19:51):
meeting," then you've lostalready. So you got to create
something that is fun, excitingand engaging for that employee.
And that's where we created theBecome a 401k Superhero
campaign. And so now it's aboutthat identity shift. It's not
about, "Oh, I'm bad at numbers."It's about, "Hey, I want to
become a 401k superhero. I wantto have a successful retirement.
(20:14):
What do I need to do to have asuccessful retirement?" So then
we deliver those On TRAKreports, and we call them On
TRAK to become a 401k superhero,to your futureself. And so they
know now what they gotta do, andwe take, we take all the
complicated stuff out of it. Sowe're not trying to teach them
to become advisors. I'm theadvisor. I'm the expert. You've
(20:35):
come to me and ask me. I don'tneed to teach you all the things
that I know. I need to be ableto bring you things at your
level that you can engage with.
And that is where they seevalue, because otherwise you
bore people. If you're sittingthere and you start talking
about things that you and Imight be excited about--about
the economy, and you know,what's going on with the Fed
(20:57):
meeting and stuff likethat--it'd be of interest to us,
but the average participantcould care less. So if you're
trying to make your employeeeducation meetings around those
things, you're losing people.
Where if you come back, and youjust keep it as simple as you
possibly can and give themenough value, it's better.
Here's an example. We did acampaign where we have an email
(21:17):
series that goes out toemployees. And we said, anybody
who asks a financial questiongets in a drawing to win a free
401k Superhero t shirt. And soall you had to do was ask a
question. I got some of the mostbasic elementary questions from
participants. Like one personsaid, "How do I take money out
(21:38):
of my 401k when I retire?" Wedon't think about that, because
we go, "Duh, that's how you doit." But the fact that I got
that question three times, tellsme that if you're much higher
than that, you're losing people.
You gotta keep it super, supersimple. So that's really where I
(22:01):
think you have to go with anemployee education is you got to
be able to give them somethingthat resonates with them. That's
how you show value. Not beingabove everybody's head.
Ed Dressel (22:13):
And I say we're always talking about derivative
issues. Non core issues. Thecore issue is, can you retire?
How do you get there? If revenueissues are, let's talk about
asset allocation? Wellthat's--once we figure out how
to get into retirement, assetallocation becomes important.
But if you're not getting intoretirement, asset allocation,
maybe better to spend the moneyon a lottery.
Jonathan Schultheis (22:34):
Absolutely, well, that's the thing. If
you're only saving 2% of yoursalary, it don't matter how
diversified you are, how greatyour investments are, you're not
going to be able to retire. So Ithink that's the important part
is to get people to save enough.
I love--Putnam did a white paperseveral years ago. It's called
The Forest for the Trees. Itshowed this example of if you
had best investments, and thenyou have a crystal ball, and
(22:58):
they showed your crystal ball ifyou made every investment
decision right every singleyear, how much money the
participant would have had. Thenit said, if they had just
average investments and saved 1%more, it was better than the
crystal ball.
Ed Dressel (23:13):
Wow.
Jonathan Schultheiss (23:14):
And so you think about this, and I love to
share that story. I say I thinkI'm a good advisor, but I don't
have a crystal ball. But one ofthe things I can help you do is
I can't help you say 1% more.
And so we try to make all theemployee education meetings not
around investments, not aroundthese kinds of things, but
really around increasing yoursavings. You're increasing your
(23:36):
deferral rate, becauseultimately, that's what's going
to help you retire more thananything else.
Ed Dressel (23:45):
Well, Jonathan, it's been great to have you today. I
really appreciate you taking thetime. I wish you success in this
marketplace. It sounds likeyou're having having a lot of
fun bringing value. Stay awayfrom the curse of acknowledge
and really engaging participantstoward retirement readiness.
Thanks for taking your timetoday.
Jonathan Schultheiss (24:01):
Yeah, thanks for having me.
Ed Dressel (24:02):
Thanks, everybody, for listening. Hope you have a
great day. Thanks much!
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