A Deep Dive into Plan Diagnostics
“Business wisdom delivered.”
It’s Rehmann Retirement Solutions’ tag line, and we’re not about to argue with Gerald Wernette’s knowledge about plan participants and retirement saving.
“We went from a 65% participation rate to 95% participation rate,” Wernette, the firm’s Director of Retirement Plan Consulting, notes when discussing a recent case, which he says is a typical jump when working with his team.
It all starts with a plan health review, he explains, which means a close examination of various plan components—fiduciary, administration, design, fees and participant engagement, among others.
“It gives them a feel for how the plan measures up against its own metrics of success,” he adds. “Usually, their current advisor hasn’t gotten that in-depth with all those elements, and because it’s so much more comprehensive in nature, plan sponsors want to know more. At that point, we do a deeper dive, but for a fee. It’s a plan health review they pay for, which is something of value.”
Yet, because he has access to all the plan information and does a deep dive into plan specifics, it has the added benefit of further solidifying the relationship, and they almost always become a client.
“We talk about areas of improvement across the board, but we really focus on participant engagement, because inevitably something is missing. Either the advisor just flat out wasn’t delivering, or the employees weren’t responding. There was some element or combination of elements missing in the process.”
Once the element or elements are identified, they sit with participants and explain what the plan means to their future, usually with the aid of RetireReady Solutions Gap and Contribution Analyses.
In the latest case, the sponsor had a solid platform with plenty of resources available to participants, but it only averaged a 10% to 20% utilization rate. The average employee wasn’t getting the necessary information to understand the positive impact that the 401k plan could have.
“To address it, we produced an analysis for every single employee, sat down, put the reports in front of them and let the games begin,” he says.
Recalling what he says is his “poster child for putting this process to work,” he describes one client that had a SIMPLE IRA plan.
“He had 25 employees and 12 were putting money onto the SIMPLE IRA. After we went through our process and moved it to a 401k, we took participation to 100%. Deferrals increased, and over three years it went from a start-up plan to with zero assets to $2.5 million, in addition to another $1.5 million in rollover assets.”
But it’s not only about the metrics—it’s about making a substantive difference in people’s lives, which he gauges on two levels; financial data and emotional impact. Claiming the financial data is the easier of the two, it’s where “his feet are held to the fire.”
“We’re now in year No. 3 of this process with the SIMPLE client. It’s cool to sit down with an employee and have reports from the first two years in front of them. We then set the third year down so they can see where they started, where they improved and how far they’ve come. It’s incredibly powerful.”
Just how powerful was something he witnessed firsthand.
“I recently met with a woman who is a divorced, single mother who felt there was no way on God’s green Earth that she would ever be able to retire, let alone be financially prepared for it. In our engagement with her and the reports we were able to produce, she could clearly see the path to get there. She broke down and started crying because she was so happy.”
Gerald J. Wernette, CPA, CEBS, AIFA, C(k)P, is Principal/Director of Retirement Plan Consulting with Rehmann Retirement Solutions in Farmington Hills, Michigan.
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.