Plan Resolutions

shutterstock_350434298I have to admit that I do not believe in New Year’s resolutions. I prefer to let the glitter settle, the pressure diminish and the stress of getting the kids back into their school schedule wane before making any life altering promises or commitments. However, that is not to say that I do not think there are some very important lessons that can be learned from taking a moment to look back at the past year and assessing what we’ve learned and what we can do better. With this in mind and focusing on the results of the Rocaton/Pensions & Investments 2015 Survey of Defined Contribution Viewpoints (, let’s take a look at what is on the mind of plan sponsors like you and examine ways to take these worries and turn them into advantages.

Resolution 1: Increase Participation and Savings Rates

By a landside margin, 49% of plan sponsors said that participant’s participation and savings rates were the number one item keeping them up at night. With good reason when you consider America’s aging workforce and lack of retirement savings. We believe that the only tried and true way to really move the needle in both participation and savings rates is to implement a meaningful education plan. Case in point, we work with a bridge building company that over the last three years has increased participation from 61% to 80% by conducting a combination of one-on-one meetings with employees, group education events and education events geared at the management team who is in the field with the laborers. It should also be noted that we implemented an automatic enrollment provision which also gave the plan a much needed boost in enrollments. In a later blog we will look at the pros and cons of adding auto-enrollment and how it is imperative to include education with auto-enroll.

Resolution 2: Improving Participant Communications

While improving communications did not register highly with what is keeping plan sponsors up at night, it was at the top of the list for the three top priorities over the next 12 months with a whopping 71% response rate. It is understandable that for a plan sponsor to address their main concern of increasing participation and savings there needs to be a solid communication strategy in place. This can be tricky considering that there is not necessarily one method that is guaranteed to reach and impact all plan participants. The first step can be to make sure the recordkeeper you are working with that provides the participant website and statements offers Gap Analysis. Gap Analysis is a tool that illustrates to the participant what monthly amount of income they will need to generate in retirement in order to replace 75% – 80% of their pre-retirement monthly income. Good Gap Analysis tools will also let the participant enter outside sources of savings and income along with debts to get a clearer picture of their retirement outlook. Along with offering tools, we also believe that what you are putting in front of your participants must be delivered in a way that they will actually comprehend. For our clients, we offer a monthly video and short written excerpt delivered through email that is about a pertinent topic; January’s installment dealt with naming and updating beneficiary information. Also, check out what your 401(k) providers have in ways of participant communication and make sure that before it is sent out that you read it or watch it to ensure that it will have a positive impact on your participants.

 Resolution 3: Addressing Fees

Addressing fees was middle of the pack in what keeps plan sponsors up at night, but second in priorities for the next twelve months. My theory on why it may not be keeping many plan sponsors up is because it is hard to stress about something that you don’t truly understand. To clarify, if as a plan sponsor you do not have a complete understanding of how much the fees are or how they are being collected, then it is hard to agonize about how to make them better. Therefore, my first step in addressing fees would be to complete a thorough benchmarking assessment of your 401(k) plan provider against other providers in your market space. Not only does the Department of Labor require that your plan complete a benchmarking every 3 years, but also asking your provider to clearly spreadsheet their fees can go a long way in understanding and possibly reducing what the plan is paying. It has been my experience that your plan provider is not going to come right out and offer you a discount, but when pressed you may be pleasantly surprised on what they are willing to do. For example, in the summer of 2014 we conducted a Request for Proposal (RFP) Benchmarking report for a software company that was currently be billed $20,000 annually plus what the provider was receiving in revenue from the investments in the plan. After running the RFP, the provider cut their billable fee in half to $10,000 annually just by asking! The second step is to investigate what your provider is receiving from the investments in your plan. This can be tricky and rather frustrating because this information is not always made readily available, but it is so vitally important because it can have the greatest impact on the most highly compensated individuals participating in the plan. To simplify, if the provider is receiving 25 basis points or 0.25% from the investments, then the more money you have invested the more money you are paying in fees. To be clear, that is a very simplistic explanation and much more research is needed to really get to the bottom of what your provider is receiving from the investments, but at least it’s a start.

According to Statistic Brain Research Institute (, only 8% of people are successful in keeping their resolutions each year, but by making resolutions for your 401(k) plan that are definable and actionable and by partnering with the right resources to help you succeed, I feel confident that you can be in that 8%! Please contact me at 205-970-9088 or if you would like a better way to get to your plan resolutions.

Jamie Kertis, AIF®, QKAjamie kertis headshot
Retirement Plan Specialist
Grinkmeyer Leonard Financial
1950 Stonegate Drive / Suite 275 /Birmingham, AL 35242
Office: 205.970.9088 / Toll-Free: 866.695.5162

Contact Jamie

Follow Jamie on LinkedIn

Follow Jamie’s Blog

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s