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July Top Advisor By Participant Outcomes (TAPO)—Vince Morris

Quit talking and start doing

401k, retirement, TAPO, participant outcomesVince Morris, Bukaty Companies Financial Services.

Get ‘Er Done

July being a time to celebrate the nation’s independence, it’s appropriate to include a well-known quote (allegedly) from a founding father, in this case Ben Franklin: “Well done is better than well said.”

Vince Morris, this month’s top advisor, has one of his own, and it’s just as relevant for what we’re trying to accomplish.

“We have a motto in our shop; don’t be a problem identifier, be a problem solver.”

Sounds obvious, but too many industry surveys, tools and techniques that are geared to addressing specific retirement readiness issues do little more than point them out. Far fewer assist in finding a solution, which of course is job No. 1 for the advisor.

But how is it done?

“It’s where effective engagement comes in,” says Morris, co-founder of Kansas-based Bukaty Companies Financial Services. “We know financial literacy is a problem in the United States, but we have to figure out how to take that next step with participant outcomes and financial wellness to effectively deal with it.”

It means engagement over education; don’t ignore the latter but concentrate on the former.

Measure traditional metrics like participation and deferral rates and average account balances. But include others as well, like those that measure debt reduction over time, basic budgeting tools, account aggregation and a multitude of extended benchmarks that can be gained from incorporating a holistic financial approach to participant outcomes “that are over-and-above what a traditional advisor brings to the table.”

“You can try to educate them all you want, but it’s behavior and engagement through auto-enrollment and auto-escalation programs that have worked. It also means encouraging them to act immediately. If they need an emergency fund to cover unforeseen expenses that could negatively impact retirement savings, put the payroll deferral in place immediately to get it going.”

The firm tries to “move the needle” on participation rates by 10 percent, which Morris calls a lofty goal for those currently at 90 percent and looking for another nine.

“We have call center capabilities to handle both inbound and outbound calls, and we monitor activity, volume and how many participants we touch on a proactive outbound as well as a reactive inbound basis.”

Morris offers two outcome anecdotes that resulted from all the engagement; one traditional and one more holistic.

“The first was a consultative approach that involved a very low income earning base. The client really cared about their employees and pushed the envelope with automatic enrollment and escalation and did a stretch match as well as a target-date re-enrollment. They got their participation rates up over 90 percent. They did so much that they actually received national recognition for their efforts.”

Yet many employees were only earning $30,000 to $35,000 a year, and despite the company’s efforts, many were still dealing with significant obstacles when it came to retirement readiness beyond what a traditional defined contribution plan could do for them.

“We put an overlay on the financial wellness side and really took a lot of inbound calls on debt counseling, setting budgets and the importance of emergency funds while working with the company’s payroll department to really alleviate a lot of those household issues.”

The second involved an examination and re-allocation of household resources to optimize the amount of 401k contributions.

“A family of four is on a corporate medical plan which covers 90 percent of the premium cost for the employee, but nothing towards the premium for the spouse and children. Through proactive engagement, we realized that it was cheaper to move the other family members to individual policies (at least when compared with the group rate), thus creating a savings stream they could then use to deposit it back into the 401k plan. Net household income did not change, it was simply redistributed.”

Vince Morris is a co-founder of Overland Park, Kansas-based Bukaty Companies Financial Services.

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