A ‘Blue Ribbon’ Kinda Plan
Who wouldn’t want to win a blue ribbon? It signifies excellence and success in pretty much everything—retirement plans included. And that’s what we seek to achieve with clients (literally) when hired to provide plan oversight.
The biggest challenges we face are getting plan sponsors to understand we are completely conflict-free, and then getting committees to think beyond what’s traditionally expected.
We don’t have broker-dealer or product-provider affiliations, so we couldn’t “sell” a particular product even if we wanted to because we’re not structured that way—a decision that was deliberate and one central to building trust.
As for the second challenge, receiving the necessary understanding and buy-in from retirement plan committees that boardroom decisions have a major impact on participant outcomes, is an ongoing and evergreen issue.
We needed a way to paint a picture of what the plan could be if only the committee were to think more progressively. This led to the development of a pioneering plan health assessment tool almost a decade ago.
The diagnostic tool we created, called the BPG Plan Health Smartcard, measures critical components that drive plan success from both a retirement readiness standpoint, as well as from a fiduciary oversight perspective.
The second point is, of course, important, because while plan sponsors have trouble explaining the specifics of the fiduciary rule, they are more aware of the overall increase in fiduciary governance, and the legal liability with which it’s associated.
The Smartcard’s scoring methodology helps propel better conversations with our committees about opportunities for improvement, which then leads to financially healthier plans and, consequently, plan participants.
A typical plan initially scores 47 out of a possible 100. During the first year of engagement, we see an increase of about 30 percent in plan success metrics.
However, the goal is to push the plan health score into “Blue Ribbon” status, which means the plan health score is greater than 85.
A Blue-Ribbon plan simply means the sponsor has one of the best-designed retirement plans possible, regardless of size or industry. It also means it’s given its participants the best chance for positive outcomes, meaning they’re able to retire on time.
The tool has helped us to continually raise and frame ideas that help to move the needle. A recent example is found in a Texas-based hospital with 4,000 employees and $90 million in plan assets.
In 2015, when Blue Prairie Group was retained, its Smartcard score was 35 out of 100. After a complete overhaul—one that included a new recordkeeper, a streamlined investment lineup, a strengthened fiduciary process and an engaging financial wellness campaign—the plan’s score soared 90 percent within two years.
The open-mindedness of the committee, and the ability to illustrate the results associated with different scenarios, was the driving force. It proved that we can truly have an impact (and a significant one at that) in a relatively short period of time. Today, the overwhelming majority of the hospital’s employees are on track for retirement, which is a very satisfying feeling for all involved.
Ty Parrish is managing partner and senior ERISA consultant with Chicago-based Blue Prairie Group.
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.
