2024 RPAY – Russell Warye, HUB Retirement & Private Wealth

Business at a Glance as of 12/31/23

• Location: Libertyville, Illinois
• How many plan assets do you have under advisement? $350M
• What is your median plan size (in assets)? $3M
• How many plans do you have under administration? 117
• How many participants in total do you serve? 3,000
• Parent firm: HUB Retirement & Private Wealth

PLANADVISER: Tell us about your practice and how you got into advising retirement plans.

Warye: I began my career as an employee benefits broker. I always considered the 401(k) plan part of the employee benefit package. Now, more than ever, that is a true statement. When evaluating a new employer, prospective employees expect there to be a 401(k) plan, and they expect it to have a matching component as well. It has become an expected benefit. It only made sense that we began adding 401(k) plans to our book of business. In 1998, I began writing plans with Principal Financial Group and eventually built a large book of business with them. Many were micro and startup plans that today have $10 million to $15 million in assets. Our business has grown with our clients. We now manage well over 100 plans and work with all the top recordkeepers. We continue to help anyone who is referred to our office. It’s important that we give back and help wherever we can. No client is too small. I remember where I came from. That being said, we do charge for our services, and it may not be a fit for everyone, but we are committed to helping clients find the right retirement plan.

PLANADVISER: Are you connected to a wealth management division? If so, please explain how you work for them and your goals for coordination. If not, please explain whether you plan to be in the future, or not, and why.

Warye: Yes, 100%. We have a wealth management arm to our business. It’s important to have this resource available for our clients. I believe it’s a differentiator. We provide one-on-one education for plan participants, as well as personal advice for our high-net-worth business owners. The synergies are there. Since we are advising on the plan assets, it makes sense we provide a path to personal financial wellness as well.

PLANADVISER: What challenges do you think the retirement plan industry faces, and what role do you have in addressing and confronting those challenges?

Warye: The biggest challenge in serving the micro and startup plan market is educating plan sponsors on the administrative responsibilities that come with their new 401(k) plan. Many clients in this space wear a number of hats at the company and typically don’t have a dedicated HR specialist to oversee the implementation of their new plan. Our goal is for this to be a positive experience for our client, and that means we need to stay actively involved throughout the entire onboarding process. The HUB service model begins with education and ends with education. Initially, we walk our clients through an informal RFP to secure best pricing from top recordkeepers. We explain the moving parts and costs to the company and participants so everyone clearly understands the nuances of their 401(k) plan. Cost is typically a hurdle that needs to be addressed when it comes to start up plans as well. Fortunately, the SECURE 2.0 Act provided some much-needed tax incentives to help with plan startup costs for those first few years. This immediately made it easier for us to work with micro and startup plan clients. We charge a flat fee for our work. The SECURE 2.0 Act provided employers the tax breaks needed to hire a qualified adviser to take them through the full process. These are just a couple of the challenges we face and how we’ve been able to address them. At the end of the day, we want to do good work for folks who appreciate what we do for them.

PLANADVISER: Why do you feel that retirement plan advisers should get involved in the expansion of the DC retirement plan system to cover more employers and, in doing so, more employees?

Warye: I think it’s inevitable. The government provided the incentive with the SECURE 2.0 Act. We now have tax incentives that small employers can leverage to hire an adviser to help them through the daunting process of establishing a new 401(k) plan. Many times have I reviewed a micro plan sold by a payroll provider and found unnecessary services and fees added to the agreement, and the plan sponsor was completely unaware. The retirement plan adviser community is absolutely needed in this space. We need to take advantage of PEP and MEP pricing where it makes sense. We need to provide thoughtful plan design guidance. We need to partner with recordkeeper platforms and administrators who have programs that can and will grow with the client as their plan grows, and we need to stay connected and take advantage of dynamic pricing whenever possible to proactively reduce expenses. The advisers who succeed in this space will be the advisers who have made these connections and are committed to the business.

PLANADVISER: What are the biggest stumbling blocks to adding more tax-advantaged retirement savings opportunities in the workforce? What are you doing to try and overcome them?

Warye: As I mentioned before, the biggest challenges in the micro and startup plan space are twofold. The first is bandwidth of the plan sponsor. Many are stretched too thin and need hand-holding to get the plan up and running and need support in those first few years when it comes to meeting compliance deadlines. The second, and perhaps biggest, hurdle is demystifying plan expenses for the owner. The cost is a concern. To overcome this, we are thorough in our explanations and our presentations. We make sure the client understands there are tax incentives to cover much of the plan startup and ongoing costs for the first few years. It’s a process. Transparency and consistency are the keys to success in our business. For this to work, you need to be able to confidently charge the appropriate fee for your services. There is heavy lifting involved in the startup plan market. Much teaching and patience is needed to serve this space. It is both rewarding and challenging at the same time.