Grant Ellis, founder of advisory and consulting firm Ellis Retirement Services, describes his relationship with private equity-backed biotechnology research company Transnetyx as “serendipitous.”
The advisor first learned of the Memphis, Tenn.-based organization through a mutual connection, and decided to send a cold email introducing himself and offering a retirement plan review in the case the company was interested. He never heard back.
It wasn’t until he tried a second time that Transnetyx responded. It was perfect timing—the company was in the process of reviewing their 401(k) options but already had a few advisor teams in mind. However, they invited Ellis to come in for a meeting and throw his hat in the ring.
The consultation couldn’t have gone better. “Our CEO came out of his meeting with Grant and said to me, ‘I want you to meet this guy. I really think we should move our 401(k) to him in terms of advisement,’ recalled Karen Woelke, chief people officer at Transnetyx, who hired Ellis as advisor to the plan. “He said to me, ‘I’ve never met somebody who’s so knowledgeable and so passionate, but also very aware of how complex retirement planning can be and therefore making it very digestible and attainable for people.’”
However, Ellis credits client feedback for his hiring, noting that any advisor could praise themselves for offering X number of products or attaining X rates, but ultimately, a client’s recommendation is worth gold when prospecting. “We could tell them about how good we are in what we do, but our clients that we work with are the ones who can give you the real answer,” Ellis remembered. “We ended up getting selected. They basically said that once they spoke to our clients, they knew the answer was pretty clear.”
Ellis was hired, and him and his team were off to work.
Revising a Plan Amidst Quick Growth
Transnetyx had gone through a period of swift growth, and the company was struggling to keep up. The organization had initially started out smaller, but through recent acquisitions, it had grown exponentially. Additionally, the company was failing testing every year and they had low participation rates since they did not offer an employer match to workers.
“We knew pretty quickly that there was a lot of work that needed to be done and that’s why they brought us in,” Ellis noted. “They said they recognized that they had grown rapidly, that their team was not getting what they needed, and they knew there were some issues.”
The company had always provided a retirement plan, but now they wanted—and knew they had to—offer a match to their participants. Employees were heading to competitors with more robust retirement packages, and Transnetyx was ready to evolve to meet the needs of their workers.
Ellis started by changing recordkeepers, which added significant cost reductions for employees and investors and provided an appropriate chassis to add a group better aligned with the organization, who could support employees with tools, resources, investment options, and flexibility.
He also set up a due diligence committee to aid in the fiduciary decision-making process, and educated members on recordkeeping arrangements, fee arrangements, and incorporated plan design consultations.
Ellis and his team added employee education programs, which included group meetings in person and through Zoom or Microsoft Teams, webinars, virtual office hours, and communication via multiple mediums that spanned emails and newsletters.
“We wanted to meet employees where they’re at based on their current situation. So much of it is just starting to create that relationship and hopefully that trust over time,” Ellis said.
Initially, Transnetyx wanted to add the employer match in 2023, but due to budget constraints along with complexities in private equity ownership, the company moved the change to 2024. In the meantime, Ellis, along with the help of third-party administrator (TPA) Suzy Ward at Ellis and Ward Consulting Group, worked through different strategies that would appease investors and ultimately let owners sign off on a budget that includes employer contributions.
“In the end, they installed a qualified automatic contribution arrangement with the match. That, combined with the education efforts of the last two years, bolstered the plan significantly.”
Grant Ellis, Ellis Retirement Services
Neither party knew how investors would react to the idea of incorporating a match, therefore it was vital that the feature start out small.
“I had made it clear to Grant and Suzy that it needed to be a modest step in, it needed to be like a toe dip in the water,” Woelke said. “If I could get the match over the line, it wasn’t ever going to get back out and it would just turn into an opportunity to improve the feature.”
Ellis and Ward modeled out several approaches, including switching percentages and removing highly compensated employees from being match-eligible, to make the change digestible for company owners. Because of their diligence, the match was approved in the company’s budget for the following year, to start on January 1, 2024. The end result was a qualified automatic contribution arrangement (QACA) match, that included 100% for the first 1% deferred and 50% for the next 6% deferred. The maximum matching rate for the plan is 3.5%.
Ellis recalls the effort that he and Ward put towards finalizing the benefit: It included running through multiple scenarios like understanding different arrangements for several classes of employees, cross-testing, and splitting contributions into various levels, in order to present the most effective business case that would make sense for the organization and provide a benefit to employees.
“In the end, they installed a qualified automatic contribution arrangement with the match,” Ellis said. “That, combined with the education efforts of the last two years, bolstered the plan significantly.”
Ellis looks back on the two-year process, and notes that slowly revising the workplace plan was ultimately essential to Transnetyx’s success. While the employer match was incorporated in January 2024, Ellis and his team had already seen a jump in participants from 93 to 181 once they incorporated their employee education offerings 14 months prior. Looking further into 2024, he’s excited to see how their efforts will pay off.
“It’s been it’s been a couple of years of just taking it piece by piece,” he concludes. “It kind of leads us to where we are just now, almost two and a half years later. It feels like we’ve gotten this plan on the right road. Now, we’re seeing the fruit of our labor.”
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
