Using 401ks to Aid Frontline Workers
Burnout was a significant issue in 2020, especially among front-line healthcare workers and their heroic attempts to treat and cure patients afflicted with COVID-19.
Syed Nishat and Aadil Zaman, partners with New York-based Wall Street Alliance Group, witnessed it firsthand as specialists in retirement plans and planning for physicians.
“Our target market is startup to midsize because we are financial advisors,” Nishat says. “Financial planning is a big component for us, as is the 401(k). Asset protection and tax savings are important for physicians, and because of that, the 401(k) is an obvious choice.”
Last year was the firm’s best year in terms of AUM and client satisfaction, but it didn’t come easy, and a particular case with which they wrestled illustrates why.
“We have a small family medical practice in Maryland as a client,” Nishat explains. “They were struggling to keep a key employee, who was a nurse practitioner, because morale overall was down due to exhaustion and mental fatigue. We were tasked with somehow motivating employees in challenging circumstances, which was the goal.”
They developed a series of monthly webinars focused on the COVID-19 selloff and resulting market volatility. A separate CARES Act series was also produced.
“We normally do webinars about fees and costs, or fiduciary responsibility, but last year we changed everything,” he adds. “The goal was to show how the employee could be part of the company and feel empowered.”
The response was intense, with not only employees joining the presentations but also their friends and family. Topics like hardship distributions and diversification were covered, but importantly, also mental health.
“Overall, plan sponsor and participants felt that someone cared. The information was technically coming from their employer because they were the ones sending it, so the employees felt that they were part of the company and team.”
Nishat and Zaman thought people would panic sell because of the market drop. They prepared themselves to mitigate any damage, but because of the webinars and separate video they made, not one employee in the Maryland practice pulled money from the market or their 401k. Quite the opposite; their participation and deferral rates increased last year.
“Initially, the participation rate was only 35%,” Nishat notes.” We saw it jump to almost 70%. It’s a small company, and it helped them stay in business and retain all the necessary equipment and staff. I’m positive that when the pandemic ends, the practice will thrive. It’s a win-win situation for all of us, and the nurse practitioner will eventually become a private wealth client, as well.”
Success with the digital model means they’ll branch out, and they plan to launch a podcast soon.
“The biggest thing is that front-line workers were worried about getting COVID from treating patients and what would happen to them, especially in New York City, because it was very tough,” he concludes. “So, we spoke to that—how to be in control of their finances. What, if anything, happens to them, and what would happen to their families? What if they get laid off? We saw a lot of questions related to their health and how to protect themselves. Because we spoke about different topics unrelated to the 401(k), but then brought it into the 401k at the end, it helped them better understand all of it.”
Syed Nishat is a Partner at Wall Street Alliance Group and author of an eminent Physician Financial Planning Blog where he analyzes important and timely investment, tax, and estate planning strategies.
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.
