High Plan Participation from Low Wage Workers
A common thread throughout this year’s group of Top Advisors by Participant Outcomes (TAPO) is their focus on traditionally underserved and marginalized communities—whether it’s immigrant populations in Southern California, the Navajo Nation in the Southwest, or religious organizations in the Northeast.
“I drove away with tears in my eyes. I really felt like I made a difference in these ladies’ lives.”
Kim Cochrane is no different. The Maryland-based Director of Client Services with Raffa Retirement Services, a division of HUB Retirement and Wealth Management, works with government contractors, nonprofits, and human services clients that hire foreign workers, many of whom intend to retire outside the United States.
“Everyone in D.C. is from somewhere else just because of the international nature of the work in the city,” she noted before describing a case of which she’s particularly proud.
The home healthcare industry in and around the Beltway primarily consists of older immigrant women. While they work hard for long hours, their income is not high, making it sometimes difficult to save, especially if they’re remitting part of their paycheck to family members in other countries.
Concerned over low participation rates with one company and looking to encourage enrollment, she and the Raffa team offered 20-minute, one-on-one meetings with each employee. It took about two weeks to meet with around 200 employees, and there was no shortage of participants willing to sign up for assistance.
“The employee base was mainly older women from developing countries in Africa, and they filled every one of our meeting times,” Cochrane said. “Every employee said, ‘Please, help me,’ and participated in the plan in extremely high deferral rates. Some decided to save 45% of their pay. I drove away with tears in my eyes. I really felt like I made a difference in these ladies’ lives.”
Getting workers to understand and save in employer-sponsored plans in countries with advanced economies is difficult enough. We rightly wondered how she could get such a high participation rate with employees from emerging economies with no formal retirement plan system.
Like many of this year’s TAPOs, it involved understanding and respecting cultural differences.
“Instead of trying to fit our standard replacement ratio and savings rate metrics on all employees regardless of their needs, we try to meet employees where they are and where they want to be in the future,” Cochrane explained. “Many are here to work, but they eventually want to retire to their homes and be with their families. The countries where they’re from have lower living costs. It might be as little as $5,000 saved, but it will be enough. They continually said they’re not looking to be rich but to have enough to be okay.”
Not surprisingly, environmental, social, and governance (ESG) investing is popular in the communities with which she works, especially with nonprofit clients in the D.C. area.
“It’s crucial to them that they are not ‘funding what they’re fighting,’ and ESG demand is very high.”
We noted the recent ESG pushback and how the strategy might be a bull market luxury that recedes with market performance, but Cochrane didn’t hesitate.
“We’re not seeing any decline in ESG adoption,” she concluded. “We act in either a 3(21) or 3(38) fiduciary capacity and have extremely strict screens, just as we would with any other type of plan investment. The funds we choose still have to be top performers compared to the standard benchmarks. Many of the funds now aren’t even marketed as ESG; they’re integrated funds that focus on the diversity of boards and inclusion of organizations that are good stewards of their communities and employees. Companies appear to fare better financially and do well from doing good.”
Kim Cochrane, QPA, TGPC, is Director, Client Services with Raffa Retirement Services, a division of HUB Retirement and Wealth Management in Rockville, Md.
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.