Getting Retirement Right With Roth 401ks
IN AN INDUSTRY overwhelmingly “male, pale and stale” that constantly frets about its future while desperately searching for the next generation of advisors, Jeanne Fisher and her team at ARGI Investment Services stand out.
They’re perfectly positioned to capitalize on the current service-model sea change, and their digital expertise and diversity of product offerings is a differentiating factor.
“We’re a young team, and I’m in that weird in-between generation of aging millennials,” Fisher, Senior Financial Advisor with the Kentucky-based firm, says. “I’ve been here long enough to learn and know the industry. At the same time, I’m young enough to make use of technology and social media and new things in our practice to make it operate much more efficiently.”
A major presence in social media, as well as a seemingly natural press ability, has her well-branded in local markets, and the team’s tech-savviness translates to heavy use of video messaging and interactive mobile apps while leveraging recordkeeping platform technology to provide financial education and improve participant outcomes.
It’s all part of what Fisher says is their adaptability.
“It’s what feeds our new business development as well. We meet our clients where they need to be met, and it means our conversations with law firms in Louisville are very different than a manufacturing facility in rural Kentucky.”
It’s therefore no surprise that they have specific expertise in Roth 401(k)s, a product that’s proven itself to be incredibly effective but, for a number of reasons, is still maddeningly low in overall adoption.
“We pay a lot of attention to Roth utilization rate in our plans. Something we have to constantly combat is that most automatic enrollments default pre-tax, so you’re trying to walk up a down escalator when it comes to that.”
They also address Roth misconceptions, which, when dispelled, make for a powerful story.
“To optimize outcomes, you have to focus on the time horizon and tax-free growth. Everybody says they’ll be in a lower tax bracket in the future, but they’re completely forgetting all the tax-free growth. I use the Rule of 72 and how frequently our money will double. A $100 investment today will become $800 dollars in 21 years. So you’re telling me you’ll take a tax deduction on $100 and pay taxes on $800 dollars because you’re so worried about an increase in tax rates that you’ll forgo $700 of tax-free growth.”
A plan they took over last year did not offer a Roth, but in 12 months they took the company’s Roth utilization rate from 0% to 42%.
“If they’re aware of it, they often have a misconception around it. They think that they earn too much money to contribute to it, or they’re too focused on the fact that they’re in a higher tax rate today and a lower tax rate in retirement, so you have to constantly hammer home the tax-free growth portion of it. From the standpoint of participant outcomes, the adoption of the Roth is really important, but you have to educate to it.”
Jeanne Fisher is Senior Financial Advisor with ARGI Investment Services in Bowling Green, Kentucky.
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.
