2018 RPAY – UBS Retirement Plan Consulting

PA: Tell us about your practice and how you and your team members got into advising retirement plans.

Our team relies on three core strengths: We are experienced, disciplined and innovative. I began my financial career in 1983, before 401(k) plans were prevalent. I built a broad knowledge of not only 401(k) resources, but a wide range of retirement plans and options. I help provide plan sponsors and their employees with retirement options that reflect their rapidly changing needs. In this industry, you need to work hard to keep your knowledge sharp while remaining flexible and able to adapt to new ideas.

PA: How is your team/process/structure unique? How has it evolved? Where will you be in five years?

Currently, our team consists of two financial advisers and a client service assistant. What I believe makes us different is that we are husband and wife, Bruce and Bernadette Lanser, with a combined 60 years of retirement planning experience. As a couple working in the financial industry we are able to collaborate and share our perspectives, provide insights based on our combined knowledge and experience. However, as spouses we understand how families plan for their financial futures. Our team also believes in building the future– for the last several years we have employed a college intern to begin teaching the next generation.

In five years, we see our team devoting more time and resources to helping clients manage their fiduciary responsibilities that go along with offering lifetime retirement options to participants, and helping employees better understand their own retirement planning.

PA: What have you done in the past year to improve participants’ retirement readiness?

Our clients are early adopters of automatic enrollment programs that get people saving and the results are incredible. As a result, one client now has a participation rate of 99.9% with only one person out of approximately 800 employees not saving in the 401(k) plan. We have increased the default retirement contribution rate to 6%, up from 3%, and the auto escalation rate is now at 2% annually for most clients. In addition, participants who contribute less than 6% of their income to retirement savings were moved up to 6%. We also periodically reenroll people who have opted out of the auto escalation programs. In addition to helping people invest effectively over their careers, we help them convert those assets into an income stream once they approach retirement.

Studies from the University of Pennsylvania Pension Research Council show that participants who are invested in a managed approach, such as a target date fund do 2% per year better than those that invest on their own. Here’s why that 2% truly matters–the compounded impact over many years could double employee retirement savings. To help plan sponsors meet their fiduciary responsibilities and better serve employees’ savings needs, all defaulted participants are moved to QDIA (Qualified Default Investment Accounts). The result has been that typically around 90% of participants are properly invested.

To ensure plans remain on track we monitor the expense ratios of the funds in our plans to determine if we can take advantage of lower cost share classes. If we can offer the same funds at a lower cost, our clients’ employees enjoy more value from their retirement investments.

PA: Describe any particularly initiatives you have led with your customer base in the past 12 months (investment or education or plan design or communication) or any plans for the next 12 months.

We have helped clients meet their 408(b)(2) obligations by benchmarking plan fees and services to ensure they are reasonable. We also have conducted fiduciary training sessions to help clients better understand prudent fiduciary practices.

PA: As a retirement plan adviser, what do you take the most pride in?

Our team is most proud of the positive impact we strive to make on the retirement and lives of our clients’ employees. In addition to helping employees, we seek to improve the lives of their families for generations to come.

We are also proud of the recognition our clients received for strengthening their 401(k) plans and improving their employees’ retirement outcomes. For example, our clients at Dawn Food Products were recognized as the 2016 Plan Sponsor of the Year, and JX Enterprises won that same award in 2017. As Rich Yezzi, Jr., vice president of Human Resources at JX Enterprises says, “This award means more to us than any of the various industry awards we received because it represents the impact we have on the thousands of people who rely on us each and every day.”

PA: What benchmarks do you use to measure plan and client success? How do you react to clients or prospects who don’t share your goals for their retirement plan?

We measure plan success using a number of metrics including employee participation rate, contribution rates, if participants are properly invested, and what the income replacement ratio is.  Our targets for client plans are ambitious, but important. We strive for 90% employee participation with a savings rate of 10% of income. We also want 90% of participants to be in qualified default investment alternative (QDIA) options to effectively protect plan and employee resources.

By actively listening to clients’ goals as well as challenges, we collaborate to identify potential issues and then enhance the plan to meet revised goals that align with company values and meet their business needs while delivering better retirement plans for employees.

PA: What are the most important issues that your plan sponsors face with their company retirement plan, and what specific actions do you take to assist them in overcoming those issues?

Right now, the most important issue facing plan sponsors is how to improve the fiduciary governance process. Plan sponsors need to learn the lessons from employee retirement income security act (ERISA) litigation to ensure that fees are reasonable; that they are not using expensive share classes and that they are consistently following their investment policy statement (IPS). Our team helps clients meet all these challenges by working closely with plan sponsors to keep in step with their needs right now, but also help them see future issues on the horizon.

In the long term, we feel that plan sponsors need to better understand the cost they incur when employees cannot afford to retire. When this issue occurs, there are significant monetary and non-monetary costs absorbed by the business. These costs include higher wages, higher healthcare costs, lower productivity and a drop in morale. We help our clients proactively address these issues through solutions tailored to meet their individual company and plan needs.

We also conduct fiduciary education training sessions annually so clients are aware of the legal environment and their responsibilities. Our training provides a clear understanding of who has fiduciary responsibility, what are fiduciary objectives and finally – how to meet those fiduciary objectives.

To help our clients keep their plans strong, we regularly benchmark the fees they pay in relation to the services they receive to evaluate and document the reasonableness of plan costs. Each year we review all of the fund positions to determine if we are utilizing the lowest cost share class. We also document the actions taken and decisions made by the client to ensure that the policy statement is followed. We also prepare an annual fiduciary checklist to document these important measures.

We study actual employee data and plan health to determine the marginal cost of delayed retirement. This way the client is able to make intelligent and informed decisions about resource allocation. Often employees are reluctant to retire because of the uncertainty surrounding market volatility and the impact that it may have on retirement income. The lifetime income options that we have implemented in plans can remove that uncertainty so employees are able to retire with confidence knowing what their lifetime income will be.

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

The biggest threat facing the retirement plan industry, specifically defined contribution plans, is the potential of government intervention. This threat manifests itself in the form of a possible reduction in the allowed amount that can be contributed to a retirement plan. Without this powerful incentive, it will be more difficult for us to guide people to begin or continue retirement savings. The second potential government intervention involves an option where funds from company plans that are deemed weak could be moved into Social Security, under the rational of protecting employees’ future retirement. This is one of the reasons why our team works so closely with client plan sponsors to ensure fiduciary responsibilities are effectively met and their plans remain robust, which is better for everyone.