Servicing 401ks for the Right Reason
“Most plans I work with are small, mom-and-pop safe harbor plans. Many began as startups, and I have grown them through the 18 years I’ve done this.”
Tony Powers told us why he got into the 401(k) business. It sounded smart enough—a wealthy, accredited investor was unlikely to give a 20-something advisor that’s fresh out of college a significant portion of their assets.
However, keeping them out of compliance trouble by identifying potential administrative pitfalls was something else, so he studied up on all things ERISA, all the boring legalese and minutiae no one else would touch. It worked, and business owners flocked.
“Many small businesspeople don’t have the time to know what they need to know, so they pretty much put it all on me,” Powers explained.
Today, the Wisconsin-based KerberRose Retirement Plan Services team manages 180 plans and $500 million as of July 31, 2022, as part of a larger CPA and wealth management firm.
It wasn’t until further in the interview that Powers felt comfortable enough to reveal why he really gravitated to 401ks so early in his career.
“You asked what makes me different, and we discussed my strategic entry into 401k out of college,” he said. “It was much easier to show technical knowledge of 401k and ERISA than to get a 50-year-old to trust me with their life savings. We didn’t really touch on that my parents split when I was young. I was raised by a single mother with four children that was just trying to make ends meet. A big reason I work with 401k plans is that it allows me to help those that need it the most.”
He rightly noted that most wealth management firms won’t work with a single mom with four kids trying to put food on the table and pay bills.
“401k plans give my team and me the ability to help those that wouldn’t get the personalized services anywhere else.”
He gave us a great example; a barbershop/hairstylist plan started in 2016. The average annual wage is $24,000, and the storefront temporarily closed due to COVID.
Of the 140 employees, 127 are currently enrolled, a 91% participation rate. The plan has $1,188,648.12 of assets, and deferrals average 6.18%.
“I admit I have some work to do on the deferral rate to get to my goal of 10%, but I’m proud of our success,” Powers humbly added.
With the M&A activity currently happening in 401k, we wondered why he and the team hadn’t yet been acquired.
“I think I’m staying off most people’s radar, for the most part, sitting up here in northern Wisconsin,” he initially concluded before, true to form, revealing the truth. “I got into 401(k) because I think I can help a lot of people, and that’s why I’ve been focusing on bringing on more advisors. Frankly, we still do a lot of startup plans because I think a lot of people need help, and that’s the best way to go about it.”
Tony Powers, AIF/CFP/CRPS, is with KerberRose Retirement Plan Services, a division of KerberRose Wealth Management.