Easy and Academic
Making money simple, or “money simplified.”
It’s a message that absolutely resonates with plan sponsors and participants. The overwhelming—and too often—needlessly complicated nature of retirement planning is one reason for the well-documented inertia in the space.
It’s also the reason that simplifying the process is central to Two West, a Kansas City-based retirement planning and financial wellness firm.
Indeed, it’s their tagline.
“If retirement income is our mission, then helping participants achieve the highest probability of success toward that objective should be our primary focus,” says Two West CEO Marko Ungashick.
Heavily steeped in academia, Two West has had a laser-like focus on addressing the issues first raised by Nobel Laureate and MIT Professor Robert Merton. Merton’s work in lifecycle asset management and improving outcomes within the U.S. retirement system is, of course, legendary, and in Harvard Business Review in 2014, he plainly stated how he believes “our approach to saving is all wrong.”
Two West agrees, and it drives their approach.
“A 2017 study from the National Institute on Retirement Security found that 88 percent of Americans say the nation faces a retirement crisis, so we aren’t getting too much pushback as we try to address this issue,” adds Vern Cushenbery, the firm’s CIO.
“The typical target date glide path begins to de-risk about 20 to 25 years before retirement, but not all 40-year-olds are alike,” Ungashick acknowledges. “Statistically speaking, some may be highly funded. Others have some blips along the road and would benefit from a custom approach.”
Two West “makes it easy” (i.e. simplifies) it for participants to customize their glide path beyond just looking at age, and include readily available data like current wage, current account balance, and contribution rates. The participant can also include outside assets to influence their allocation.
The firm was recently hired to improve a $25 million plan with 315 participants that had not benefited from a re-enrollment, plan health assessment, or recent fee benchmarking.
Two West was able to improve key measurements including:
- Re-enrollment into a custom QDIA yielding 86 percent usage almost one year later
- 65 percent decrease in QDIA expense
- Fee transparency and detail for each participant
“When we are able to lower fees, provide more fee transparency, and improve the probability for participants to reach a sustainable income, we know that we are on the right path,” Cushenbery says.
Two West will soon roll out a Plan Outcome Assessment Report that will allow plan sponsors dynamic reporting such as:
- Average funded status relative to income goal by participant age
- Auto-enroll and escalate impacts on funding ratios relative to average income goal
- Average participant age expected to retire fully funded
- Average funded ratio of the plan
Low cost, diversification, while steering participants toward allocations with the highest statistical probability of reaching a target income goal… unless I am mistaken, that was the plan all along,” Ungashick concludes.
Marko Ungashick is chief executive officer with Kansas City, Missouri-based Two West.
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.
