How to Demonstrate True Value with a ‘Better’ Benefit Package
We’ve heard it for some time—the importance of breaking through silos, straying from lanes and looking holistically at the plan sponsor’s total benefit needs to more accurately develop retirement plan recommendations.
It’s something Jamie Greenleaf is all over, not only because it’s the right thing to do, but because it’s the future of the industry.
“Participant outcomes are changing,” Greenleaf, lead advisor and principal of benefits powerhouse Cafaro Greenleaf, says. “We’ve been siloed for so long with participant outcomes in the retirement program. Today, our plan sponsors are viewing benefit dollars more holistically. When I think of participant outcomes, I think of the success of the population not just from their retirement standpoint but from building a better benefits package.”
A better benefits package (and participant success) means designing meaningful and relevant packages for the unique needs of the company, the industry it occupies and the demographics of the employee population.
“In the past, we’ve always designed benefits that were for the masses. Now, people are looking for that personalized package and we’re dealing with multiple generations across the organization. While retirement programs and planning are huge components, they’re not necessarily the only component that we’re analyzing.”
It begins with a “gap analysis,” but not as traditionally defined.
“If I’m only making $25,000 a year, retirement is not the gap that I’m looking to fill,” she explains. “The reality is most of my benefits are going to come from Social Security. So, the company doesn’t need a package that’s going to auto-enroll that person, but it may need a package that gives additional life insurance to that employee. What we’ve really done is take a look at the population and the demographics within the organization, tried to identify the gaps and then, ultimately, helped build packages using the benefit dollar in a more efficient way.”
It’s going to lead to more successful outcomes, she argues, because it will retain the employee population, thereby reducing human capital costs from turnover.
It’s increasingly important as CFOs get more involved in the “dollar spend.”
“You need to show more value than just being a retirement consultant; that’s only one part of the benefit dollar they’re looking at. If you can show that by designing more targeted, successful benefit packages, you’re getting their population to retirement at an age of 67, and you’re reducing their future health care costs and future liabilities, you become a real partner to them.”
CFOs then see the value in adding more money to the retirement plan, setting up student debt reduction programs or moving to HSA plans.
“These are the types of things we’ve really adopted at Cafaro Greenleaf when it comes to that participant success.”
Like most forward-thinking 401k advisors, there’s a heavy emphasis on analyzing the data, and she points to one situation in particular where it made a major difference.
“Data drives decisions, but it’s often not scrubbed or complete. So, we begin with a committee mission statement and determine what the employee population looks like, whether there’s a higher concentration of older people or whether they’re trying to transfer talent. Where are we today? Where do we want to be tomorrow? We can then take the data and start to make some assumptions to come back with tangible solutions.”
A longtime client with which Greenleaf and the firm have worked for 17 years started small and grew significantly, to the point where it now has 3,500 employees at multiple locations across the country. Management expressed that it was having difficulty recruiting and retaining employees in certain geographical areas.
“We did an analysis on the total group and wondered if they should increase wages in those areas, or maybe institute signing bonuses. What the data told us is that, at the locations in question, there was a high concentration of student loan debt. Because student debt programs are not under an ERISA umbrella, we were able to design a repayment program, which is going to help them keep employees that are valuable to them.
“So I go back to my original statement—we used to build benefits for the masses, but today we really have to make them more personalized. This is a prime example.”
Jamie Greenleaf is lead advisor and principal of Cafaro Greenleaf.
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.
