2013 PLANSPONSOR Retirement Plan Adviser of the Year

2013 PLANSPONSOR Retirement Plan Adviser of the Year

Jeb Graham
CapTrust Advisors LLC
Tampa, Florida

Jeb Graham, retirement plan consultant partner with CapTrust Advisors in Tampa, Florida, since 2005, is the 2013 PLANSPONSOR Retirement Plan Adviser of the Year. Graham’s mission statement is “to deliver exceptional services in a user-friendly manner, providing true value to help plan sponsors create the best possible retirement outcome for plan participants.” He adds: “The value I deliver to my clients, and ultimately to their plan participants, is meaningfully greater than that being delivered to most plan sponsors by other advisers.”

Graham, an independent registered investment adviser (RIA), has specialized in the retirement plan industry for more than 15 years—100% of his clients are retirement plans. He is active in the industry, writing, speaking at industry conferences and “promoting best practices that serve the interests of plan participants.”

Instead of limiting his counseling to plan sponsors, Graham has embraced both investments and retirement plans. “Many consultants have expertise and experience in either the investment side or the retirement plan side,” he says. “Those who do [both] are very valuable to their clients. I continually invest time in staying current on both the investment side and the plan side.”

While 60% of CapTrust’s clients offer 401(k) plans, 37% are nonprofit and higher education 403(b) plan sponsors. Graham says he gravitates to these types of 403(b) plans because they are “underserved.” These are great sponsors to work with, he says, because they “really want to do right by participants and are receptive when you make recommendations. They’re really good people, and that’s the kind of people I like to work with.” The Internal Revenue Service (IRS) regulations that brought more plans under the Employee Retirement Income Security Act (ERISA) umbrella have also made it “easy to have conversations with these people because they really need you,” Graham says.

When beginning to work with a new plan sponsor client, CapTrust sets goals and helps the sponsor decide on metrics for the plan’s success through a “participant services policy document,” similar to an investment policy statement (IPS) or an education policy statement. In developing a client service model, Graham says, CapTrust realizes that “each client is different. We start out with [its] objectives, design an overriding retirement benefits strategy and work closely with providers to tailor a service delivery model and a particular approach.”

 Another key way that Graham believes his firm distinguishes itself is by using metrics to assess retirement plan success—including the percentage of participants on target to meet their retirement goals—and aiming for the best retirement outcome. This is a change from years ago, Graham says. “Today, defined contribution [DC] plans are retirement vehicles,” which means that a participant’s income replacement ratio is vital.

CapTrust’s participant metrics report gives sponsors details about their plans’ participation rates, average deferral rates, diversification and the percentage of participants on track to achieve a 75% income replacement ratio. “I believe our firm is at the forefront of implementing participant service metrics to assess overall plan success,” Graham says.

“Our focus is on participants—not just fees and investments,” he says. CapTrust also offers one-on-one meetings with participants to help them understand how much to save—which should ideally be 10% or more. “When you talk about delivering participant advice, it’s not the advice in the same context we talked about 10 or 15 years ago,” Graham says. “Investments are not the focus in the one-on-one meetings. It’s more about the importance of savings and understanding why you need to save 10%—and, if you can’t get to 10% today, how you can get there in five years. Once you get that part communicated, how you should allocate your investments is almost like an afterthought.”

Asked how his firm differentiates itself from competitors, Graham says it is CapTrust’s “size and depth. We also have our own analytics team, a proprietary investment scoring methodology and three people assigned to each client—two lead consultants and an analyst.” CapTrust also has an established client base that can give references and that serve as examples of the services CapTrust offers.

As to new investment services in the past 12 months, Graham notes that CapTrust recently began offering an annual review of model asset-allocation portfolios—“benchmarking the overall portfolio strategy, structure and glide path, along with an in-depth analysis of the underlying investments comprising the model portfolios.” CapTrust has also begun assessing whether real assets should be added to clients’ model portfolios as a hedging strategy.

CapTrust equips each of its clients with a fiduciary calendar, offers both 3(21) and 3(38) fiduciary services, and is transparent about its fees, Graham says. “We have a formal service contract that explains what we’re going to do and states our fee, and we send [the client] a bill every quarter. We’re not a broker of record. There’s no commission. … Committees like that, and it’s one of the reasons independent firms [such as ours] have had success in the past 10 years.”

Lowering clients’ fees has been a priority at CapTrust, Graham says. In 2011, it contracted with Fiduciary Benchmarks Inc. (FBi) to provide annual fee and service benchmarking reports to each of the advisory firm’s defined contribution plan and project-based clients to which it offers fee analysis and benchmarking studies. “In the last 12 months, this benchmarking work has resulted in reduced service provider fees for three project clients—two of which became ongoing clients—and five ongoing clients. In addition, two clients realized a reduction in their advisory fee paid to CapTrust.”

Lee Barney,Managing Editor, PLANADVISER

Stace Hilbrant, 401k Advisors LLC, 2012 PLANSPONSOR Retirement Plan Adviser of the Year

Alison Cooke Mintzer, Editor-in-Chief, PLANSPONSOR and PLANADVISER

James Worrell, GPS Investment Advisors, 2011 PLANSPONSOR Retirement Plan Adviser of the Year

2013 PLANSPONSOR Retirement Plan Adviser Team of the Year

Capital Strategies Investment Group
Oakbrook Terrace, Illinois

Capital Strategies Investment Group of Oakbrook Terrace, Illinois, is the 2013 PLANSPONSOR Retirement Plan Adviser Team of the Year. With a mission “to help clients execute on their fiduciary duties and successfully manage their retirement plans and provider relationships, and to help participants save and invest successfully so that they retire with sufficient savings at the end of their career,” the team is dedicated to working with multiple plan types. This gives it a unique position to help a wide swath of plan sponsors.

This independent registered investment adviser (RIA) was established in 2003, with its principals, Nancy Rizzuto, Barbara Best and Will Woodall, leaving behind roles at broker/dealers (B/Ds) and national consulting firms. “We recognized there was a gap in mid-size plan companies with between $15 million and $700 million in assets that wanted broader expertise, true independence, fiduciary support and outstanding consulting—but didn’t want to pay the billable hours of a consulting firm such as Mercer or to be sold investment products,” Rizzuto says.

Capital Strategies emphasizes to its clients and prospects that it is a “truly independent advisory firm with no affiliation with any financial institution, be it a bank, a broker/dealer, insurer, investment manager, recordkeeper, trustee, custodian or other service provider,” Rizzuto says. As a result, all of Capital Strategies’ investment research and plan provider analysis is independent.

Adds Best: “It is a core belief that we should have our interests fully aligned with our clients. We believe it holds us to a higher standard.”

Capital Strategies’ aim is to offer multifaceted retirement plan services. Many of the firm’s clients have several retirement plans, not just defined contribution (DC) plans but also defined benefit (DB), non-qualified deferral plans and equity plans. Capital Strategies seeks to partner with plan sponsors that are “looking for a true business partner that can handle overall strategic and tactical aspects of their retirement plans and that can act [as] an extension of their retirement committee both on the HR [human resources] and treasury/finance side,” Rizzuto says.

In light of changing regulations and what the company sees as an evolution in plan sponsor responsibilities, Capital Strategies has broadened its offerings to cover five core services: governance consulting, investment consulting, retirement consulting, provider management, and participant services and support.

The company’s emphasis on governance is a strength, Best says, “not just in terms of managing the investments but really having a fully successful program, because all of these aspects help our clients be better fiduciaries.”

When helping plan sponsors with their investment governance, the team looks for the right investments for each company’s demographic and risk tolerance. Capital Strategies accomplishes this through a proprietary risk-posture assessment that allows it to score each plan sponsor’s goals for its retirement plan(s) and risk attributes as a fiduciary. At the start of a new client relationship, the firm also conducts one-on-one interviews with each member of the retirement committee to strengthen client relations.

Plan design is another emphasis for Capital Strategies. The firm promotes automatic enrollment, both for new hires and retroactively, auto-escalation and company matches of up to total deferral rates per participant of 10% or more.

However, it does not rely on plan design to achieve participant success. “We help participants in many ways,” Best says. “One of the real strengths of our organization is our research. All of our clients have access to all of our resources. We have our own CFAs [chartered financial analysts]. We do our own economic research. We do a lot of participant-based research based on tremendous amounts of data from vendors.” Besides participant communication and education as well as one-on-one advice, Best says, it is equally important to help a plan sponsor select the right target-date fund (TDF) or improve plan designs to strengthen its participants’ retirement readiness and outcomes. “We’ll either help customize the communication in partnership with a vendor or we’re on the ground delivering custom content, depending on what level of engagement certain clients are looking for,” Best says.

As to what metrics Capital Strategies uses to measure plan success, Rizzuto says, funded status and the quality of investments apply well with pension clients. For defined contribution clients, though, the metrics are based on a client’s priorities—be they related to participation or savings, she says. “We frame the metrics relative to the plan design, whether it is voluntary or automatic enrollment. We look at peers and calibrate those metrics, and we have also started to roll out our [income] replacement ratios by different demographic groups. When they see that data, it really helps them understand the better plan design and investment menu decisions—higher deferral rates, automatic increase—why we need to sweep everyone into the plan and not just new hires, or why we might need to re-enroll people into the target-date funds.”

As to its fees, Capital Strategies charges an annual flat retainer based on the plan services it provides. “We try and learn as much as we can about [clients’] goals, objectives and needs upfront,” Rizzuto says. “We feel very comfortable in the proposals we give. Companies hate surprises, so our annual retainer is all-inclusive.” However, she says, there are some times they do charge extra for things outside the normal scope of the contract. For example, she notes, if a company acquires another organization that maintains a separate retirement plan, for which some research or reporting would be needed, or if a plan sponsor has not evaluated or benchmarked its providers in some time and Capital Strategies believes a request for proposals (RFP) should be conducted, the firm will, in some cases, charge for that service.

Lee Barney,Managing Editor, PLANADVISER

Steff Chalk, Fiduciary Consulting and Governance Group Inc.

Phil Fiore,FDG Institutional Consulting Group of UBS, 2011 PLANSPONSOR Retirement Plan Adviser Team of the Year

Matt McLaughlin, Graystone Group Consulting–Danvers, 2012 PLANSPONSOR Retirement Plan Adviser Team of the Year

Alison Cooke Mintzer,Editor-in-Chief, PLANSPONSOR and PLANADVISER

2013 PLANSPONSOR Retirement Plan Adviser Multioffice Team of the Year

Pensionmark Retirement Group
Headquartered in Santa Barbara, California

Pensionmark Retirement Group, headquartered in Santa Barbara, California, is the 2013 PLANSPONSOR Retirement Plan Multioffice Team of the Year—the inaugural winner of this award.

Founded in 1988 as a single-office team, the firm has experienced dramatic growth in the past few years—expanding to a national presence with 23 offices and a total of 75 employees, 30 of whom are advisers. The vast majority, 80%, of Pensionmark’s revenue comes from corporate retirement plans, whether defined contribution (DC), defined benefit (DB) plan termination support or deferred compensation plans. The company also offers adviser and practice management support, as well as some wealth management services.

“It has been an amazing process, the way we and our offices have grown,” says Troy Hammond, president and CEO. “Seven years ago, we started getting industry recognition, particularly [for] the technology and infrastructure systems we were building. Advisers started calling us to ask how we can manage so many plans—750 plans and 150,000 participants—and deliver educational services. It’s because of our great infrastructure. After 10 or 15 of those calls, we realized we had an opportunity. We have a unique, service-intensive scalable model for plan sponsors and plan participants, with a unique proprietary tool set that assists plan sponsors in meeting their fiduciary responsibilities and delivering plan success.” That was when Pensionmark decided to partner with other advisers, offering them access to its tools and services.

Each affiliate that becomes a Pensionmark adviser continues to have its own focus and unique specialty in retirement plan consulting. “People still maintain ownership of their book, but they do become part of the Pensionmark structure,” Hammond says.

“Everybody wins,” Hammond says, of his company’s decision to grow nationally and expand its technology beyond the Santa Barbara office. “The advisers are able to deliver better services to their clients. The clients get better services at a lower cost. The participants get better services.”

Pensionmark’s guiding principles are: “We are a team of committed and experienced professionals with one guiding purpose in mind: to help plan sponsors and individual investors meet and exceed their retirement plan needs and obligations. Our mission is to provide the best retirement plan consulting services in the nation with the utmost professionalism and uncompromising integrity.”

Asked about the future of his business, Hammond says, “We want to continue to add advisers, to grow, to develop better tools and services, and to create more efficiencies.

“We recognize we have 23 locations now. There’s a maximum number for us where we feel we would lose touch with our advisers, and we don’t want to do that,” he notes. “We don’t have plans to grow to 200 offices. We expect to cap out at 40 to 50 offices, and have good enough market penetration at that level but not oversaturation.”

Fully supporting its affiliated advisers is central to the Pensionmark model, since the advisers are connections, not acquisitions. “We have to continue to push quality tools, quality service,” Hammond says. “We’ve got to be cutting edge and continue to roll out new ideas. That’s inherent in the business model we’ve built. If our advisers don’t feel they are getting value for what we are charging them, they have the ability to leave us at any time—and they don’t. Our advisers stay with us.”

To ensure that Pensionmark clients receive consistent customer service and that the corporate office listens to the needs and ideas of its advisers—as well as get ideas for new products and technologies—the firm holds two companywide conferences each year. In addition, throughout the year, the branch operation service team keys into advisers’ ideas about how to grow their practices.

“We spend a lot of time at our conferences sharing ideas, asking our advisers in roundtables what their clients are asking for, [also,] ‘Where are you spending your time?’ and where do we think the industry is going?” Hammond says. For instance, Pensionmark is building its own custom target-date funds (TDFs) and recently introduced the Retirement Plan Exchange, a fully-outsourced master trust product for plans of $5 million or less in plan assets, for which Pensionmark acts as a 3(38) fiduciary. “Because of our size, we have a lot of resources to develop these things, and we really let our advisers dictate where the energy will be spent; that has been a really positive thing for us.”

Besides its infrastructure, Hammond says, Pensionmark is competitive with other retirement plan advisers because of its “focus on working with the participants directly to address the issue of retirement readiness.” To increase participation and deferral rates, the company emphasizes automatic enrollment and automated deferral increases but sees plan design as not sufficient to achieve participant success.

The company also promotes its Financial Wellness Program—complete with technological innovations frequently only available through recordkeepers—to engage employees. This, Hammond believes, remains a differentiator for Pensionmark against other advisory firms and teams. “The hub of the wellness program is the personal financial portal,” he says. “This is a data aggregation tool that allows people to link all of their accounts—checking, savings, 401(k), IRAs [individual retirement accounts], spouse’s IRAs. The accounts are updated on a daily basis. I don’t think it’s a recordkeeper’s job to do gap analysis. I think they do it because they’ve been forced to. Really, I believe it’s the adviser’s job to do gap analysis, and if we are going to do a really good job, we can’t just look at the 401(k) data. We’ve got to look at everything.” Therefore, the Pensionmark software allows participants to view their whole financial picture, track spending habits and build budgets.

Pensionmark also offers the Retirement Connect Program, which collects census data from each plan and then communicates that information to employees via newsletters. The firm has a “Call to Action” campaign that asks employees whether they are saving enough, runs an online information center, offers monthly webinars and communicates through social media.

Lee Barney, Managing Editor, PLANADVISER

Alison Cooke Mintzer,Editor-in-Chief, PLANSPONSOR and PLANADVISER

Doug Prince, ProCourse Fiduciary Advisors LLC, formerly The Prince Group of Stifel Nicolaus, 2010 PLANSPONSOR Retirement Plan Adviser Team of the Year

Rick Wedge, Pensionmark Retirement Group, 2010 PLANSPONSOR Retirement Plan Adviser of the Year