A 6-Step Process to Hitting the Retirement Bullseye
What could be more important than helping people have the kind of lives they want after they retire? This is exactly what a retirement plan (and by extension a retirement advisor) should accomplish.
Indeed, it’s the primary duty for both.
Our retirement bullseye process helps plan sponsors develop long-term objectives that can be broken down into more measurable goals, both for the plan as a whole and for each participant. How can these goals be accomplished?
My firm has a six-step process:
- The Plan Evaluation Tool: We begin with a general evaluation of the company’s current plan using several industry benchmarks. This provides the plan sponsor with a basic idea of where they stand in relation to these benchmarks. They include contribution rates, deferral rates, fees, and expenses.
- The Plan Organization Report: We then present the results of this evaluation to the company. Once engaged, we spend time identifying all the parties to the plan, the role that each party has and we organize the various plan and governing documents.
- The Plan Vision Statement: This is where we really nail the plan’s goals and objectives. We discuss the reasons for having the plan, the desired participant outcome, the minimum income replacement ratio, and any plan design motivators they hope to implement. We particularly encourage the use of auto-enrollment and auto-escalation.
- The Fiduciary Protector: This is where we engage in the Four D’s (duty, delegation, diligence, and documentation). We implement a rigorous process designed to cover all the bases a fiduciary must cover. We help the plan sponsor understand exactly what their duties are when running a retirement plan. We determine how the plan sponsor will delegate responsibilities to within the company, as well as to us and to any other service providers. We perform due diligence to determine the investment options and service providers that are part of the plan. Finally, we document those decisions so they can be defended, if necessary.
- The Employee Engagement System: We then discuss how we will teach and educate the company’s employees on the fundamental retirement plan principles.
- The Plan Evaluation and Measurement Program: The last step is an ongoing process of evaluating the company’s plan in terms of what has been established in the preceding three steps. We provide feedback on where the company stands for each of the goals discussed in Step 3, review the fiduciary process, any outstanding items, and outline where their employees currently are in relation to where they started and where they want to be. The combination of all six steps ensures not only successful participant outcomes, but an awareness of necessary course corrections along the way.
Mario C. Giganti is president and chief investment officer of Cornerstone Capital Advisors.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
