Helping HR Reps Help Themselves
IT’S A BIT OF “physician, heal thyself.”
After 18 years in the business, Daniel Tacktill recently came across a 401k plan with a heaping dose of irony.
“A current client referred a plan to us that happened to be an HR outsourcing company,” Tacktill, a New York-based advisor with Oppenheimer & Co., says with a chuckle. “They also provided administrative assistant and staffing services.”
HR reps—of all people—shouldn’t need as much help as they did (he described the plan as “on fire,” and not in a good way), but Tacktill diplomatically explained that they were busy running their own business and engrossed in day-to-day operations.
“We met with the plan trustee and peeled back the layers of the onion. We saw there was a negative return on the money market alone because of the fees that were being assessed.
So, even if you were in the most conservative investment in the plan, you were still losing money.”
Financial education hadn’t taken place in years and, unsurprisingly, some sort of formal financial wellness program had yet to be implemented.
“It was on an insurance platform with 40 funds, so there was confusion around the lineup. The plan was set up in a way that the advisor was making 50 basis points, which, for the level of assets, should’ve been half that at best, and they were well-hidden and disguised.”
Tacktill and the Oppenheimer team changed the platform and fund menu, instituted education meetings with employees, “whittled” the menu down to 20 low-cost funds and—as a result—doubled the enrollment rate while significantly lowering fees.
“They didn’t have a formal investment committee, so one now meets on a regular basis. Education on, and understanding of, their fiduciary obligations was obviously a priority.”
While initially scary to come across, with litigation and regulation exposure at seemingly all-time highs, it was fulfilling to identify and address the plan’s deficiencies.
“It’s happened with so many plan sponsors that we’ve been able to help, where they have these egregious advisory fees and ridiculous investment fees that have never been renegotiated,” Tacktill says. “A simple side-by-side comparison of what they’re paying versus what they could and should be paying always wins.”
With Oppenheimer for 12 years and an advisor overall since 2001, he’s seen his share of market cycles and maddening 401k plan mistakes, which he addresses through his client-centric, Ritz Carlton, white-glove service model.
“It’s why we have a 94% client retention rate. We had a woman in her mid-fifties who didn’t have much saved. She was apprehensive about the 401k only because she didn’t understand it. It was a bit mindboggling, but through employee education and a bit of handholding, she amassed almost $180,000 in a relatively short period of time. Still a long way to go, but it was $180,000 that she otherwise wouldn’t have had. Combine it with Social Security, and she’s in a much better position.”
Daniel Tacktill is senior director with The Stanger Tacktill Group of Oppenheimer & Co. in Melville, New York.
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.
