While participation and deferral rates typically garner the lion’s share of attention when talking about key 401(k) plan performance metrics, it was another, less tangible metric that top advisors couldn’t stop talking about on Tuesday.
In an Excel 401(k) 2020 Digital Series panel discussion featuring 401(k) Specialist Magazine Top Advisor by Participant Outcomes (TAPO) nominees, the value of the one-on-one meeting with participants kept coming up, with those meetings being seen as a key to setting the advisors up to help plan participants achieve positive outcomes.
The session, which can be viewed here on-demand, featured advisors Austin Gwilliam of Global Retirement Partners, Douglas Parker of Sage Rutty & Co. and Jake Rushton of TrueNorth Wealth, along with the 401(k) plan provider perspective from Kilie Donahue of TAPO sponsor J.P. Morgan Asset Management.
Moderator John Sullivan, Editor-in-Chief of 401(k) Specialist, kicked things off by asking about which 401(k) plan performance metrics matter most.
“Obviously participation and deferral rates are the key thing everybody is focused in on,” Parker began the discussion, before soon pivoting to the importance of one-on-one communication with participants.
“Every enrollee gets a one-on-one custom enrollment,” Parker said. “What we really track is how often we can sit down with an employee for 15 minutes prior to enrollment to get them ‘coached up.’ Our success rate there is the first domino, and if that domino hits, our success rates are much better.”
His company keeps a close tab on when employees become eligible to participate in their company’s 401(k) plan, and said they are able to meet with about 80% of them. “If we’re sitting down with them one-on-one and doing 15 minutes, we’re going to get a 98-99% participation rate. That really drives our participation,” Parker said.
Rushton said he couldn’t agree more about the value of face time with participants.
“The one-on-ones are really critical for us,” Rushton said, adding that the main thing he tries to measure—admitting it is a challenge—is confidence in their ability to retire. “The employees that we’re helping—do they really know the math behind actually stopping working one day? To me, that focus and that real one-on-one attention is where we can actually do the math, figure it out and give them the confidence to know that they are going to be O.K.”
One of the biggest challenges in that first and often even the second one-on-one meeting with a participant, Rushton said, is getting rid of the stigma around sharing their real financial picture with an advisor who needs that information to better help them.
“A lot of employees I meet with, it takes a couple meetings before they really open up and share what’s going on,” he said. “If we can get past that we can figure things out. We need the full picture and then we can actually start to move forward.”
Gwilliam, also noting the importance of face-to-face interaction with participants, said explaining how the income replacement ratio works can be a good way to get participants to open up during those meetings.
“That income replacement ratio is a good starter and especially if you are meeting one-on-one with participants, you are able to better fine-tune those numbers and really walk them through,” he said, adding that by showing them how to pull in and include outside assets, he “can really give them a true picture of how prepared they are for retirement.”
A side benefit of putting a strong emphasis on one-on-one meetings is the added visibility they inherently bring.
“Because we’re doing enrollments on a regular basis, most employers will have us in their facility six to 10 times per year,” Parker said. “When we’re walking through the shop or through the offices, people start to recognize you. If you’re around once or twice, you’re a salesperson. If you see someone in your office five or six times over the course of a year, you start to recognize they’re part of the fabric.
“We want to be engaged that way,” Parker continued, adding that it tends to lead to a lot more personal conversations and “A lot more confidence that you’re not here to sell them something—you’re here to give them advice.”
Gwilliam pointed out another benefit in seeing participants regularly: “In the long run, what that provides is retention for the advisor,” Gwilliam said. “It’s a lot harder to get fired as the advisor of the plan when you have those ingrained relationships at the participant level.”
Click here to watch the full 30-minute session on-demand.
More from the Excel 401(k) 2020 Digital Series:
- 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.
