Expert Retirement Plan Design

Howard Insley, Senior Vice President, AscensusAscensus is well known as a leader in the world of full-service, open-architecture recordkeepers. But retirement plan advisers might not know that it also offers a wealth of knowledge that they can leverage in aiding retirement plan clients.

Ascensus Consulting, a division of Ascensus, is a national retirement consulting firm that services more than 4,000 retirement plans across all 50 states with plan design and actuarial services. The firm has four locations that allow its staff to connect with clients locally. Clients can access platform-neutral services through experts in defined contribution (DC), defined benefit (DB), cash balance, and specialty plan administration.

The staff at Ascensus Consulting includes over one hundred dedicated retirement specialists and an experienced Actuarial Team led by Jerry Filipski, a Fellow of the Society of Actuaries. Advisers who work with Ascensus Consulting often cite Filipski’s expertise, with one even going so far as to call him “the Yoda of plan design.” 

Ascensus Consulting’s area of expertise is plans that “may not fit on a full-service platform or need specialty plan design services,” says Howard Insley, senior vice president at Ascensus. The plan sponsor may have “a number of moving parts, and they’re looking for some help to pull it all together under one solution.”

CREATIVE PLAN DESIGN

One of the most popular solutions is the “combo plan,” which combines a DC plan with a DB or cash balance plan. This plan design is used mostly by smaller companies because it allows owners to allocate larger amounts of money on a tax-deferred basis to use for retirement savings—it can be up to $250,000 or more per person compared to the $50,000 to $55,000 allowed under a DC plan. It also helps business owners spread out the tax liability.

“When structured properly, it really can be startling to see the amount that an owner can save not only in the current year, but how much they can keep and maintain for retirement in future years,” says Insley.

ENHANCE YOUR VALUE AS AN ADVISOR

Knowledge of DB or cash balance plan design can be of significant worth for advisers who want to enhance their value, says Matthew Haywood, Accredited Investment Fiduciary (AIF®) at Krilogy Financial. “Cash balance plans have always been popular in the professional services market with doctors, lawyers, and CPAs,” he adds. “Over the past few years, we have had interest from other industries, such as marketing, logistics, and small construction firms.” He notes that changes in pension regulation have allowed small and mid-sized firms to take advantage of these changes to not only benefit the business owners, but also their employees.

Haywood also says that working with DB or cash balance plans can be a natural extension of the business for retirement plan advisers, as most of his clients started with safe harbor 401(k) plans with a profit sharing component. “Once the profit sharing plan is maximized, the normal progression is to add a cash balance plan. While it isn’t always necessary to pair the plans, it’s most common for companies to start with a DC plan and then build up to the cash balance plan. I compare it to driving a car: Most business owners need to start with a permit (defined contribution plan) before they can get their license (cash balance plan).”

These types of advanced plan designs should be of interest to many retirement plan advisers—who needn’t worry if they don’t have much expertise in the area. Insley points to the fact that there’s typically no participant direction, which allows a financial adviser to present their own investment strategies. The assets are professionally managed by the adviser, and they have full control by putting it on their own platform. This means that services usually reserved for wealth management clients can be offered to employers as well.

Another significant benefit when working with Ascensus Consulting on DB and cash balance plans is the fact that the firm is custody-platform agnostic. That means that advisers can maintain the assets on their own existing brokerage platforms.

“When advisers understand that they don’t have to take on a lot of the burden involved with educating employees—when they see that they can kind of control everything themselves—we end up having a good discussion about the benefits of adding a DB or cash balance plan to a DC plan,” Insley says. “The fact that clients can defer a lot more money for retirement and advisers can quickly grow AUM is very appealing.”

Haywood agrees, citing three benefits for an adviser who manages a cash balance plan: “1) The assets grow quickly; 2) The adviser usually manages the assets until the plan is terminated; 3) Managing the plan gives the adviser access to the other business owners and partners.”

GETTING EXPERT ASSISTANCE

Insley says that it’s important to consider the unfamiliarity that advisers have with plan designs like those associated with cash balance plans. However, he notes that Ascensus Consulting’s sales and actuarial teams can help increase their confidence by supporting advisers with informational sessions and illustrations. Illustrations can be developed to help clients understand the benefits of the plans and improve an adviser’s sales pitch.

“The team at Ascensus Consulting is very attentive and knowledgeable—I always receive a response within 24 hours,” Haywood says. “The representatives you speak with are the same people completing the calculations on your plans. From the top down, they not only give you the answer, but they help educate you. This is vital when dealing with such a complicated retirement plan.”

“We want to help make the entire process less daunting,” Insley says. “When it comes to DB and cash balance plans, you need to have someone who is knowledgeable about all of the variations in order to offer solutions. That’s where Ascensus Consulting can help.

To learn more about how Ascensus Consulting can help you with your retirement plan needs, visit www.ascensusconsulting.net.

You may also contact their sales desk at 866-929-2525 or email them at consultingservicessales@ascensus.com.