cover story | PLANADVISER May/June 2015

A Leg Up

Case studies of advisers improving plan outcomes

By PLANADVISER Staff | May/June 2015
Page 1 of 10
Art by Gerard DuBois

Retirement plan advisers are often spearheading plan design and participant initiatives. However, it takes a responsive plan sponsor and investment committee to be able to act on such recommendations. The winners and finalists in the 2015 PLANSPONSOR Plan Sponsor of the Year award program—representing many types of plans and sizes—were generally selected for their innovative plan design and impressive plan metrics, and many of those achievements were made possible by the support and advice of a retirement plan adviser. What follow are case studies showing how advisers worked successfully with these Plan Sponsors of the Year to drive better outcomes.

JE Dunn Construction Co.

Grant Arends, president of Alliance Benefit Group of Kansas City Inc., in Kansas City, Missouri, helped JE Dunn Construction Co. bolster its 401(k) profit-sharing plan and employee stock ownership plan (ESOP) so that employees can attain a sustainable retirement. The goal is to replace 50% of employees’ income, with the expectation that Social Security will provide another 25%, for a total replacement ratio of 75%.

Arends introduced the company, headquartered in Kansas City, to economist Shlomo Benartzi’s 90-10-90 target of a 90% participation rate, savings rates of 10% or higher and at least 90% of participants enrolled in a lineup of professionally managed funds. While the company was already automatically enrolling new hires at 6%, it had never performed a re-enrollment, so Arends guided JE Dunn in that process and introduced the company to custom portfolios, created by Alliance Benefit Group, and a suite of target-date funds (TDFs).

Because many of JE Dunn’s 2,000 workers, who are spread over 20 locations, speak and write Spanish, Alliance created a dedicated Web portal for participants, so they could find education on the plan in both English and Spanish. The firm also used a multichannel communication strategy to explain the changes to the plan; this included delivering information through the workplace and sending it to employees’ homes. Before JE Dunn began working with Alliance Benefit Group, the participation rate in its plan was 77%. The initiatives have increased that rate to 92% today, with an average deferral rate of 6.8%; additionally, 92% of the participants are invested in either the custom portfolios or the target-date funds.

Arends recalls that when planning for changes, William Dunn Sr., son of founder John Ernest Dunn, said that the last thing he wanted to see was employees on a street corner or having an unsustainable retirement because the company failed to do its part.