A Defined Contribution Concierge
Is it possible to be too good at what you do?
David Kulchar comes about as close as we’ve seen.
The former Principal Financial Group wholesaler took over the company’s Cleveland and Columbus, Ohio offices in the 1990s and quickly realized there were very few specialists in the 401(k) space (at the time).
“I built them to be very large offices,” Kulchar, Managing Director of Cleveland-based Oswald Financial, explains. “We did the enrollment, plan design, and handled any problems.
The last two years of my time there consisted of questions about why the plan sponsors were paying advisors to then simply call us and have us return their phone calls.”
Sensing a need for a “401k concierge group,” he opened Oswald in 1999. A key to the firm’s success is its customization, and he points to its enrollment videos as an example; the link is sent to new employees and non-participants to encourage them to join. It contains the company logo and specifics about their plan.
“We also have a custom library built from employee questions received by our communication specialists,” he adds. “We saw a lot of confusion, for example, with Roth vs. traditional 401(k)s. We have a short, three-minute video presentation that explains it, the advantages/disadvantages of each, how they differ, etc.”
Oswald’s “money coaches” also perform group meetings and one-on-ones, which are almost all virtual today, something Kulchar notes is more effective because they don’t have to travel.
Any action items that occur in the group and one-on-one meetings are recorded and reviewed with the company to gauge their effectiveness and detect trends from employee requests.
Kulchar recounts one case, in particular, of which he’s especially proud. A nationwide com[1]pany with 260 locations and 14,000 employees had a participation rate of about 34%. The Oswald team convinced them to begin automatic enrollment and moved the participation rate to 90%.
“It was a retail-type shop, so that’s an excellent participation,” he says. “Since then, they’ve gone through three acquisitions and, with one, dropped the match. Participation only fell from 90% to 89%. In other words, once we got them into the plan, it wasn’t necessarily the match that was keeping them enrolled.”
But it was the reversal of two major 2020 success stories that got our attention and what we mean when we wonder if an advisor can be too good. The companies in question didn’t expect Kulchar and the team to deliver, and as a consequence, weren’t ready.
“They didn’t believe the statistics we were throwing out to them,” he concludes. “They went from a 50% participation rate to 100%. They had to stop the auto-enrollment at the end of the year and wanted to reenroll people. We tried to talk them out of it, but they met with the attorney, and it was just too big of a spend for them. We warned them and gave them forecasts and estimates, which we do with all our clients. But those were two companies that just didn’t believe we could do what we did.”
David M. Kulchar, AIF®, CPFA, is Managing Director, Retirement Plan Services with Cleveland, Ohio-based Oswald Financial, Inc.
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.
