Philip Sherman,
Deschutes Investment Consulting

Business at a Glance as of 12/31/23

• Location: Portland, Oregon
• How many plan assets do you have under advisement? $1.7B
• What is your median plan size (in assets)? $5.4M
• How many plans do you have under administration? 79 plans
• How many participants in total do you serve? 38,000
• Parent firm: Not applicable

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

Sherman: Our firm was started in 1997, and our founder, MacGregor Hall, has been involved with retirement plans his entire career. He likes to remind our team that he helped set up one of the first 401(k) plans in the state of Oregon. I personally joined the firm in 2019 and specifically was drawn to Deschutes due to their work with retirement plans and focus on education. When I first entered the financial services industry, I started as a wealth adviser working solely with families and individuals. Less than a decade into my career, I started losing my zest for the industry and was becoming burned out after a series of client meetings in which I saw individuals unprepared for retirement who were forced to leave the workforce due to age or health reasons. This was incredibly frustrating for me, as these families needed time more than anything else, but I couldn’t provide it. Instead, I knew I needed to find a way to pivot my frustration into action, and that is when I found Deschutes. As a firm, Deschutes is and always will be deeply dedicated to providing participant education and resources. This provided the opportunity I was seeking, allowing me to connect with participants whom I could assist not only in the present, but also for years to come, providing the financial education and support they deeply require.

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.

Sherman: Yes, Deschutes has a wealth management division. I started in this industry as a CFP professional, so I am deeply rooted on both [retirement and wealth] sides based on experience and the fact that I have legacy financial planning clients I still work with. From a firm perspective, the two sides are integrated and work together to support each other for overall success. We are fortunate to have a team of CFP professionals that we can use to assist our education efforts, whether in the form of creating content or attending participant meetings that we know are covering more advanced topics. In our experience, once most participants understand how to log in to their account and what the company match/contribution amount is, their questions tend to focus on specific topics related to their personal financial situation that often have nothing to do with the retirement plan. Having a wealth management division allows us to have a direct line into what financial issues are keeping our clients up at night. We are completely independent, and that allows us to run our firm in an ethical-conflict-free manner. We do not have account minimums on the wealth management side, so the idea that we only work with the ultra-wealthy is not indicative of our firm’s practice. We also have built in guardrails, like requiring participants to go through our free Retirement Assistance Program and required fee disclosures that clearly lay out costs before working with the wealth management team.

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

Sherman: In my opinion, the biggest challenges our industry faces are financial literacy and income replacement. For years, you could have argued it was plan design or entry to retirement plans, but recent legislation on national and state levels has alleviated this hurdle for many Americans. The old mantra, ‘Fees, Fiduciary and Funds’ has been relegated to advice of the past. Today, as advisers, much more of the work we do should be directed on how we help participants. Participants want help and are looking for guidance that relates to their situation. That’s why we created a series of educational webinars designed to meet participants where they are in their career/financial stage. This helped us tackle financial education and literacy, but what about income replacement? To address this, we focus on Social Security and the idea of working backward to fill the gap. We work directly with our HR contacts to get average company salaries and build custom education presentations that illustrate what participants need to have saved in retirement. We can then back out what Social Security will cover and provide examples of how they can ‘fill the gap’ through their retirement plan and personal savings. Taking it one step further, we then encourage those who are 50 or older to go through our ‘Retirement Assistance Program,’ which partners them with a CFP professional to go through our proprietary financial gap analysis and provide direct feedback on their family’s retirement readiness and other considerations.

PLANADVISER: Why do you feel it is important to work individually with plan participants?

Sherman: I feel it is important to work individually with plan participants because of how the financial services industry is structured and rewards advisers. The system is inherently built to drive and reward advisers who serve those with the most wealth accumulated, often leaving those who need help the most left to fend for themselves. For prior generations, they had the comfort and confidence to know that if they stayed with a company for long enough, they would walk away into retirement with a pension intended to support them and their families until they passed away. When pensions went away, individuals were left to fend for themselves, and now the only ‘pension’ left for Americans is Social Security, which is under much scrutiny and pressure in its own regard. If companies historically provided a safety net via pensions in the past and are now moving forward with defined contribution plans, one of the few ways we can work to provide that same sense of comfort is through education and the opportunity for consultations. I don’t blame companies for disbanding pensions. A manufacturing plant is generally pretty darn good at prefab or logistics, but asking them to also be experts in financial markets is an impossible task; just take a look at certain governmental pensions with some of the brightest financial minds working on their team that are under duress. When we put that same financial management pressure on individuals and their families, how can we expect them to succeed without help?

PLANADVISER: What are three of the biggest challenges that plan participants face today? How are you helping to address them?

Sherman: Income replacement, access to quality education and industry jargon and paperwork.

Remember when annuity was a bad word? Now, in-plan retirement income and creating your own ‘pension’ are presented at every industry conference. But we cannot ignore the very real fear participants have of Social Security’s solvency. ‘Will Social Security be there for me?’ was our No. 1 question asked last year (besides ‘Can you reset my password?‘). We work hard to remind participants to control what they can and focus on finding ways to set aside even the smallest amount to get started on building savings.

For quality education, it boils down to meeting participants where they are. That means media format and the topics that matter to them. We take participant feedback seriously, and our best education presentations aren’t some wildly creative ideas we had, but come directly from consistent participant questions on the topics that matter most to them. We are so ingrained in this industry to talk about retirement that we sometimes forget to listen to those we serve.

Lastly, it is our jargon and the frustrating process participants have of completing our industry’s paperwork. When’s the last time you sat on hold to help someone with a rollover? Banking has so many advances that participants are now accustomed to that it makes the retirement industry standards seem antiquated and unnecessarily difficult, even if they are in place for sensible security reasons. Cut through the jargon and create helpful ‘How to‘ flyers; trust me, it will go a long way!