The tips and advice were flying fast and furious Thursday morning during an Excel 401(k) 2020 Digital Series session on how to effectively encourage 401k plan participants to get more engaged with their retirement plan, leading to that ultimate goal of better participant outcomes.
From how best to achieve scale by utilizing third-party vendors to memorable anecdotes culled from one-on-one meetings, the panel participants made up of three 2020 Top Advisor by Participant Outcomes (TAPO) finalists brought their “A” game by sharing real-world examples of what really works in the field for them.
Joe Brummel of Strategic Retirement Partners got the ball rolling by talking about how he made the move to his company two years ago for the specific purpose of gaining better scale.
“To survive in the industry, you have to have scale going forward,” Brummel said.
But he’s quick to note that what works for a large practice might not work for a smaller practice. For example, just adding new technology doesn’t build scale by itself.
“Achieving the effectiveness along with the scalability is, I believe, the challenge. But scalability and effectiveness usually clash with each other,” Brummel said. “I think the real answer if you really care about outcomes has to involve you and your people. The combination of technology and people is what builds scalability with effectiveness.”
He says advisors need to contemplate how to build scale, and figure out whether you want to build it yourself or rent it.
“What separates the best from others is process and details. You need a process to make anything work well, and it’s the details that make it work better,” he said. “Show me an advisor that does something to drive good participant outcomes—say auto enrollment, individual meetings with participants or whatever. I assure you I can improve their outcomes 100% of the time with a better process built around that activity. As much as we as fiduciaries know that process is essential to everything we do, I don’t believe it gets enough attention in the industry.”
Engaging new hires
Eduardo Gimenez of Raffa Retirement Services offered a tip about how he successfully engages with new hires. It starts with training clients to notify them every time someone is hired.
“We automatically set up a 30-minute meeting with every new hire to get them engaged in the plan,” Gimenez said. “This probably is the most important meeting that we have because we address, No. 1 making sure they’re savings rate is what it needs to be for their age and where they’re at. The second thing that we address is making sure that they understand the plan highlights.”
Among those highlights is often a Roth option. “Almost every plan that we have is offering a Roth, and a lot of the younger participants should be saving in a Roth.”
The last part is making sure their asset allocation is correct. “We get them started on the right foot, and that has been making a tremendous impact on participation.”
Ensure TPAs are partners
All the panelist mentioned the value of working with third-party vendors, such as Financial Finesse and Questis, with Gerald Wernette of Rehmann Retirement Solutions adding that having great relationships with providers like these—and even recordkeepers—often pays dividends as far as them referring business opportunities back to the advisor.
“Dig into what the recordkeeper [or other TPAs] can do, and how you can engage with it,” Wernette said. “Are they going to be a true partner to you and push opportunities back to you?”
He noted his firm is currently developing a relationship with a third party provider that’s going to allow them to tap into their resources when circumstances dictate it.
Reaching the blue-collar crowd
How can advisors effectively reach blue collar workers? You have to have a process for getting in front of them and making it easy for them to schedule a one-on-one meeting. But you also have to speak their language.
“I think what’s really important is that you have refined your messaging and delivery to really resonate with them, for comprehension and motivation,” Brummel said. “You can’t use the same terminology you would use with a doctor or a lawyer. You have to understand that certain words have a significant impact on participants.”
Another important tip, he added, is not to simply be a speaker when engaging the blue collar crowd, but be a motivational speaker.
“That is what’s going to really will get people fired up to follow through on their intended actions, whether it is to increase their savings rate, improve their asset allocation, set up their beneficiary; you name it.”
One-one-one anecdotes
All of the panelists shared some interesting anecdotes of memorable one-one-one meetings with plan participants.
Gimenez related that just last week in what he thought would be a regular 30-minute meeting with a new hire, it ended up she had three accounts from prior employers with more than $1.5 million in assets to roll over into the new plan. “It all happened right in this meeting,” he said, noting that his familiarity with the recordkeeper allowed for a smooth transition. “Another $1.5 million went into the retirement plan. It doesn’t happen every day.”
Wernette’s story was of a meeting with a young divorced mother of two. “She came into the meeting very uptight and unsure about her financial future. By the end of that meeting, she left crying, giving me a hug, because we were able to give her a vision of what the path was going to look like for her to attain her goals,” Wernette said. “She never thought she’d be able to see something out there as to what retirement could look like and what it would take to for her to get there. We were able to show that to her, and it felt so gratifying to help someone who was obviously pretty distressed over that, and have that weight lifted from her shoulders in such a profound way.”
Brummel said a story of failure now serves as a valuable lesson to participants. He told of a meeting with a 61-year-old with only $12,000 saved for retirement despite making $160,000 in a bad year. Turns out the man and his wife prioritized paying for their kids’ college education in its entirety.
“I tried to encourage him that he had to rethink that,” Brummel said, noting that the man was not in great health and close to retirement with very little saved. The man did not change anything and couldn’t work anymore within a couple of years.
“I use that as a story for other participants. You don’t want to be in that situation. And that is extremely powerful in helping other people.”
Bonus tip
One final tip for advisors comes in the form of a resource available from TAPO program sponsor J.P. Morgan Asset Management.
“We have a lot of great resources when it comes to supporting those retirement conversations, said Marta Rodriguez of J.P. Morgan Asset Management, who offered a provider perspective during the session. “We have a little miniseries of retirement ‘Do’s & Don’ts’ for small plan markets on a range of different topics that a lot of advisors have found useful,” she said, for getting two- to four-minute “sound bytes” of useful information to participants.\
More from the Excel 401(k) 2020 Digital Series:
- Click here to watch a full replay of Thursday’s session
- Under-the-Radar 401k Performance Metric Takes Center Stage
- Convincing Plan Sponsors of the Value of Financial Wellness
- How to ‘Excel’ at Digital Client Meetings
- Scaramucci Speaks, Stout Named 2020 TAPO Honoree
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.