Understanding Nonprofit Nuance
“RETIREMENT PLANNING IN the nonprofit world gets complicated fast, which is probably why many advisors shy away from it,” Eduardo Gimenez says.
But Gimenez’s firm, Raffa Retirement Services based in Rockville, Maryland, loves helping clients get the right plan in place.
“I’ve worked with nonprofits since 2009, when regulations changed overnight,” Gimenez notes. “There was this massive block of trillions of dollars in 403(b) plans that suddenly went from being unregulated to having stringent compliance requirements.”
A common problem was that many nonprofits had multiple plans, which confused employees and created headaches for employers. For example, there might’ve been one plan for the employer contribution and another for the employee contribution, necessitating separate 5500 filings and possibly separate audits, not to mention extra fees. And participants needed to manage their money across two plans.
“Since the regulations were new to everyone, there was a steep learning curve,” Gimenez explains. “But we immersed ourselves, and through repetition, got very good at the process of converting these plans into compliant ones.”
As a result, nonprofits now make up 40% of Raffa’s business.
One nonprofit client in Washington, D.C. had 45 employees and two plans, which Gimenez was able to merge into one. He also established an education program so that both current and new employees automatically meet with one of his advisors, which increased plan participation.
“When we first came in, participation was around 30%,” he explains. “It’s now over 90%. The key is that we engage with every new employee when they come on board. And despite the nonprofit having a 6% nonelective rather than a match, the average deferral is about 9%. So, our outreach and education are definitely having an impact.”
Gimenez’s hands-on style is complemented by technology. Participants are provided with resources like webinars and financial coaching tools, while employers benefit from the Raffa team tracking all sorts of metrics. Reviewing these statistics with the plan sponsors gives everyone insight into how to be more effective.
“We track all kinds of features: how many times we engage with participants, increases in participation, changes in deferral amounts, what’s going to Roths versus pre-tax, etc. When we do client reviews, we’ve got these specific metrics to show them what’s happening with the plan. We can track our progress from meeting-to-meeting and year-to-year to see where we need to devote more attention.”
His team is also growing. He recently added a director of retirement services with 26 years of experience in recordkeeping and compliance to round out his group of experienced and personable advisors.
Ultimately, having the right people and the right tools allows Gimenez to help the underserved nonprofit sector.
“People don’t go into philanthropy for the money, but rather to contribute to social good. So, it feels great to be able to help them prepare for their retirement years.”
Eduardo Gimenez is Vice President with Rockville, Maryland-based Raffa Retirement Services.
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.
