10 Attributes of a Retirement Plan Advisor

hand checking boxes.jpg

There are a number of advisors to choose from when it comes to providing advice for your company’s retirement plan. There are advisors that manage personal money, provide other benefit services, are best friends with the owner, specialize in qualified retirement plans, or if you are lucky some combination of those attributes. Our firm specializes in qualified retirement plans and is partnered with the Retirement Plan Advisory Group (RPAG) to offer investment analytics, plan design reviews, and enhance participant outcomes. RPAG also assists us with offering services that satisfy ERISA’s strict standards. Here are some guidelines from RPAG that can help you select a retirement plan advisor.

Attributes of a Good Advisor Why You Should Hire One
Independence Ability to help evaluate funds and providers objectively and without conflict of interest
Familiarity with ERISA Ability to keep the committee updated on litigation, legislation and regulations impacting plans and fiduciaries
Prudent Expert ERISA section 404(a) requires fiduciaries to act with the skill, knowledge and expertise of a prudent expert
Expertise with Plan Design Ability to help plans maintain qualified status while continuing to meet the goals and objectives of our organization
Knowledge of the Provider Marketplace Ability to ensure that our plan is being administered in the most efficient manner and for a reasonable price
Qualified Plan Investment Expertise Ability to evaluate, select and monitor fund performance
Documentation Skills Ability to demonstrate procedural prudence in a well-documented manner
Communication Skills Ability to educate employees regarding plan highlights and how to create an appropriate investment strategy
Acceptance of Role as a Co-Fiduciary Willingness to acknowledge in writing that they’re a co-fiduciary to our plan with respect to the investment advice being delivered
Full and Open Disclosure Fully and openly discloses all sources of fees being received on a direct and/or indirect basis

If you would like to learn more about how we fulfill these qualifications, please contact me at 205-970-9088 or jamie@grinkmeyerleonard.com.

 

Automatic Enrollment Myths

Business success with growing, rising charts and businessman in background

In Vanguard’s “How America Saves 2017” report, they cited a 300% increase in plans offering automatic enrollment since year-end 2007!  If your plan is considering adopting the automatic enrollment provision, here are some common myths you should address.

  1. 6% is too high to start the deferrals
    The fear that most plan sponsors have with starting automatic enrollment at an amount over the commonly accepted 3% is that the amendment will be met with ill will from the employees and/or the amount will be too much for the employees to afford. However, research has shown the opposite of that to be true. According to the 2014 PLANSPONSOR Defined Contribution survey, plans with a 5-6% default deferral rate have a 90% participation rate which is 13% higher than the national average.
  2. My participants will be ready to retire
    Even though 3% is better than nothing, it will not get your participants ready to retire if it is the only form of savings they take advantage of. It may be worthwhile to take a look at adding an auto-escalate provision which would increase deferral percentages up to a certain number. For instance, the provision could read “every January 1st, all automatically enrolled participants deferral percentages increase by 1% until a 10% deferral percentage is achieved.”
  3. It will immediately help annual compliance testing
    More than likely only automatically enrolling newly hired employees will not have a significant impact on your plan’s annual compliance testing since it does nothing to address the employees that are not currently participating. With that in mind, your plan may want to consider including all eligible employees in the automatic enrollment which may have a more immediate positive impact.
  4. It costs nothing
    While it is true there may only be a nominal document amendment fee to add the automatic enrollment provision, a company that offers a match needs to consider what an increase in participation will do to the company match commitment.

Automatic enrollment is here and gaining popularity and, in most cases, is a great addition to a company’s 401(k) plan as long as you completely understand what it is and isn’t before making the change. If you would like to discuss the potential impact that auto-enroll would have on your plan, please call me at 205-970-9088 or email me at jamie@grinkmeyerleonard.com.

 

Three Things You Need to Know When Hiring a 401(k) Adviser

401-k-advisor-image“Remember upon the conduct of each depends the fate of all.” – Alexander the Great

As a Human Resources Professional, C-level executive, or team leader, you depend on those around you to give their best, as you give your best to them. At the start of this new year, maybe it is time to ask yourself if you are demanding that same level of quality from the professionals you hire outside your company walls. That highest level of professionalism is especially important when hiring an adviser to manage your company’s 401(k) plan. With increased scrutiny on fiduciary responsibility and the roles that each professional plays in the management of the plan, here are three things to consider when hiring or evaluating your 401(k) adviser.

  1. Is your adviser focused on 401(k)s?

“Jack of all trades, master of none” comes to mind when thinking of a financial adviser who does not focus on one specific area of expertise. While there is nothing to say that an adviser cannot be good at multiple financial disciplines, when it comes to managing 401(k) plans it is imperative that your adviser know enough to stay on top of changing regulations and best practices. Aside from the fiduciary focus, there is also renewed attention on target dates and how they are selected and monitored. Your adviser should understand these rules and be able to document how your plan is addressing them. Additionally, review your adviser’s qualifications and designations looking for industry designations that specifically address their fiduciary knowledge.

  1. Is your adviser on a team or a sole practitioner?

There is not a right or wrong answer to this question, rather something to consider as a best fit for your plan. I work on a team and cannot imagine trying to go it alone and properly manage all of the responsibilities to the plan, the plan committee, and the participants. On my team, I focus on the analytical, detailed, “left-brain” tasks and my partner focuses on educating the plan participants and keeping the message relatable. Additionally, we have found that when working with committees there are times when my style and personality work well with some committee members and times where his is a better fit.

  1. How is your adviser compensated?

This is especially important to know ahead of the April 1, 2017, start date of the new fiduciary rules. It will be more difficult for your adviser to be compensated if he or she is receiving commissions from the investments in the plan. A commission is a fixed amount paid out to an adviser from an investment that is included in the cost of the investment and does not have to be paid separately or approved by the plan sponsor. The other way an adviser is compensated is to charge a fee to the plan. This fee can be in the form of an asset based charge, usually represented as a percentage, or as a flat fee. Typically, the fee is fully disclosed, is not paid by the investments, and can either be paid by the plan sponsor or passed on to participant accounts.

If you are unsure of the answers to any of the questions above, please reach out to me at jamie@grinkmeyerleonard.com or 205.970.9088 and I’ll be happy to get you some answers!

A Quick Guide to Understanding Fiduciary Definitions

fiduciary-duty-imageAs it stands today, the Department of  Labor’s (DOL) Fiduciary Conflicts of Interest Rule is set to take effect on April 10, 2017. As with most new rules or regulations, there are a lot rumors and speculation surrounding how the rule will be applied and who will be impacted. If you are a plan sponsor of a qualified retirement plan, like a 401(k), then now is the time to educate yourself as to who is working with the plan and how his or her role will be impacted by this rule. Here are the definitions of some commonly used terms that are associated with the rule.

Glossary of Terms: DOL Fiduciary Rule

Best Interest Contract Exemption
This provision of the DOL rule requires an advisor to enter into a written agreement with a client before advising him or her and receiving commission-based compensation. The agreement should confirm the advisor will act in the client’s best interest and disclose any conflicts of interest that may exist.

Commissions/Trails
This type of compensation pays a percentage of a product sold on each transaction. Trails are a form of recurring commission that pays a stated percentage annually for a sale made in the past.

Department of Labor (DOL)
The United States DOL oversees services and advice provided to retirement accounts, and it is one of the agencies responsible for enforcing ERISA. The DOL has proposed this revised fiduciary rule with the goal of expanding protection for clients’ retirement assets.

Employee Retirement Income Security Act of 1974 (ERISA)
ERISA regulates and protects retirement assets by establishing rules that plan fiduciaries must follow.

Fees
In fee-based accounts, advisors charge a management fee based on the amount of assets. The opposite form of compensation would be transaction based, such as commissions.

In qualified retirement plans, advisors charge a fee for services provided. The fee may be based on a percentage of plan assets or a flat fee.

Fiduciary
ERISA defines “fiduciary” as anyone who exercises discretionary authority or control over a retirement plan’s assets or provides investment advice to a plan. Fiduciaries are held to a higher standard of accountability than are brokers, and they are required by law to act in the best interest of their clients. The DOL rule seeks to expand the definition of fiduciary to anyone providing advice on retirement plans.

Suitability
A suitability standard requires advisors to reasonably believe their recommendation will meet a client’s needs, given the client’s financial situation and risk tolerance. This standard is not as strict as a fiduciary standard.

If you are feeling a bit overwhelmed or confused by what is involved, you are not alone and we are here to help. Please contact me at jamie@grinkmeyerleonard.com or 205.970.9088 to learn more.

The Best Gift You Can Give to Your Company

money-christmas-tree

It’s official…the holiday shopping spree is in full swing. Hopefully, you made it through Black Friday with all of your limbs and hair and through Cyber Monday with enough money left in your account to pay this month’s bills! All the holiday shopping made me stop and think, “What is the best gift that you can give someone?” Respect, time, money all came to mind. With those things in mind, over the next three weeks I want to look at ways to use your benefit plan, specifically the 401(k) or Profit Sharing Plan, to help give those gifts to your company, your employees, and yourself.

Whether you are a C-suite level executive assessing where to best spend your company’s resources or a Human Resource Professional thinking about how to make the most of your resources to benefit the company, one thing is certain – ultimately the company you own, manage, or work for needs to thrive. I would argue that one of the best ways to ensure the growing or continued success of the company is to hire the most talented workers and to retain them by showing that you respect them and want to contribute to the success of their retirement futures.

The gift of time that offering a 401(k) plan can offer to your company comes by adding valuable time worked to the workforce. To explain, I believe there is a significant difference between an employee that has to work and one that wants to work. If, through your retirement benefit plan, you can add hours to the employees that want to work by reducing the hours of have-to-works by allowing those employees to retire on time, then I believe that you are giving a great gift to the company as a whole.

Offering a 401(k) plan can also help reduce corporate taxes, thus helping the company to save money. The most common way to reduce your company’s tax liability is through offering a match or profit sharing arrangement. With either a match or profit sharing agreement, the amount the company contributes is tax deductible. Another lesser known way to reduce your business taxes is to pay for the expenses related to the plan such as the cost of the third-party administrator, recordkeeper, and/or financial advisor. Most commonly these fees are automatically deducted from participant accounts, but recordkeepers are becoming more flexible with the ways fees are collected.

These gifts of respect, time, and money can be given to your company with a well designed 401(k) plan. If you do not think these goals are being achieved by your current plan, please call me at 205.970.9088 or email me at jamie@grinkmeyerleonard.com and I will get to work for you today on developing a plan that works for you and your company.

Just a different point of view; Left Brain, Right Brain


LeftBrainRightBrain-Jamie

Does the thought of reading your plan document make your skin crawl or excite you for all of the information it contains at your fingertips?  Would you rather look a diagram of how to build your daughter’s play kitchen or read the written instructions (in all 5 languages thank you)?  Questions like these are often used to help you identify if you are left brain dominant or right brain dominant.  Traditionally, is has been thought that if you identify with loving to read manuals, following the instructions, and diving into the details then you are left brain dominant; whereas if you respond strongly to art and images, want to be left alone to do your own thing, and value the big picture over the details then you are right brain.  Here are some questions that Caleb Bagwell and I answered that will further illustrate the differences in the dominate brains.  Can you guess what we are?

As a birthday present, your friend bought you one of the latest kitchen gadgets on the market – apparently, it can slice, dice, and make juice at the same time. The only problem is, you have no idea how the darn thing works. What do you do?

Jamie: This could go a couple of ways.  The first thing that I’d do is get online and look-up the instruction manual.  If the manual could not be located, it would promptly be returned or thrown out the window!

Caleb: This one is easy, just start pressing buttons! Seriously, the box told me all the stuff that it did and so trial and error will be all I need to figure out the correct combination of buttons or knobs to get things going!

If you could have 3 hours to yourself to go do whatever you liked, what would you do?

Jamie: Well, I have 2 young children, so I would like to think that I would lay out by the pool and read a good book, but since I have a hard time relaxing until the house is clean, I’d probably end up cleaning.

Caleb: Totally depends on the weather.  If it is sunny that I would be outside on a jog or grilling something tasty.  If it is rainy that it is definitely a movie/nap opportunity, with PIZZA.

How would you describe the neatness of your desk?

Jamie: Everything has its place and even though it may not be as neat as I would like, I know my system and how to find things.

Caleb: Perfect Chaos, but really it’s more like LIFO.  Things go in stacks and depending on when I was working on what project tells me how far down the stack to look for it.  Once a coworker cleaned me desk for me and I had anxiety attack! How was I supposed to find anything!

Would you rather draw someone a map or tell them how to get where they are going?

Jamie: Draw a map or rather give them the address so they can plug it into their GSP.

Caleb: Actually I’m pretty bad with direction and worse at drawing.  I would say use your GPS your holding one in your hand!

Before you take a stand on an issue, do you gather all of the facts or go with your gut right away?

Jamie: Definitely gather all of the facts; it is important to me to know why I am making the decision that I am making.

Caleb: Depends on the outcome resulting in my conviction.  If we are taking a stand on whether the crunch wrap supreme or beefy crunch burrito is better I am ready now, but if we are taking a stand that will affect others I would probably want someone who is an expert on the subject to help me with the details.

How quickly can you tell if you like someone?

Jamie: Not very.  I am usually pretty cautious when it comes to forging new relationships.

 Caleb: Seconds.  Seriously but that’s kind of an unfair questions because I tend to like everyone until they prove me wrong.

You may be asking yourself “why this is important in the context of 401(k) plans?”  What it comes down to is that traditionally retirement plan education has appealed to predominately the analytical, left brain by doling out a bunch of numbers and figures that tend to overwhelm, confuse, and, frankly, bore the people who you are trying to appeal to.  We are aiming to change the norm by not ignoring the details and the numbers, but rather by incorporating the emotional, creative right brain to help the left brain process the information.  In fact, recent research has shown that the brain performs better when both sides are involved, especially when completing tasks associated with mathematics (American Psychological Association, April 11, 2014) like determining how much to defer into a 401(k) plan.

That’s right Jamie, I have to remind myself sometimes that many people enjoy the details but the fact is people need to know “Why” they are making decision.  Helping them find the “Why” behind their retirement savings make the processing of the details possible.  They need to understand they are not saving for a number they are saving for trip to Disney with the grandkids!  Spouting out number at a group of your employees is not connecting with them, helping them channel their creativity and  use it to paint their retirement picture bridges that gap.

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
www.grinkmeyerleonard.com

Contact Jamie

Follow Jamie on LinkedIn

Follow Jamie’s Blog

Busy women fall short in retirement readiness

busywomenI have the great pleasure of working with investment and retirement committees day in and day out that tackle the tough task of managing a retirement plan that will, more than likely, be a main source of retirement income for their valued employees in the future. In most every case, these committees have at least one female who is at the table helping shape the future for her people at work. As a woman, I know that it is second nature to want to take care of other people first; sometimes out of necessity and other times because taking care of other people’s problems allows us the ability to push our own problems further down the line. However, when it comes to preparing for our own retirement futures, putting our own needs at the bottom of the pile can be a big mistake. The fact of the matter is that in households today women make the financial decisions. Need proof? Women make 85 percent of all brand purchases (Stephanie Holland, shecomony) and according to Nielson Consumer 04-02-2013, women’s purchasing power ranges anywhere from $5 trillion to $15 trillion annually. So why are we still delaying putting a plan together for how we are going to live and spend in retirement?   If you would like to discuss how becoming more financially prepared for the future can help you today, please let me know.

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
www.grinkmeyerleonard.com

Contact Jamie

Follow Jamie on LinkedIn

Follow Jamie’s Blog

What is keeping your employees awake at night?

shutterstock_171835172A recent survey finds that 62% of Americans are losing sleep over at least one financial problem, and the most common worry? Retirement savings.

According to a 2015 CreditCards.com report, people are up counting sheep at night concerned about some serious money issues.

  • The most common money fret is saving enough for retirement; two in five Americans say this keeps them up at night at least occasionally. People between the ages of 50 and 64 are the most concerned (50% said they fret about their retirement savings – or lack thereof – in the wee hours).
  • The second-biggest concern is educational expenses. This time, it’s younger adults who are the most troubled. 50% of 18-29 year-olds are losing sleep worrying about how they’re going to pay for educational expenses (much higher than the 31% of the overall population who have this fear). Student loan repayment is a sincere, honest concern for young Americans. Trent Grinkmeyer had a great article recently for parents of young children with ways to save for their college education. It seems as if more parents had saved and prepared 20-25 years ago, there would be a lot more people sleeping well tonight.
  • 29% of Americans are losing sleep because of healthcare/insurance bills, 27% because of their ability to pay the monthly mortgage/rent and 21% because of credit card debt.One thing that all of these concerns have in common is that they can be solved, or at least lessened, with proper planning. Working with a qualified financial advisor to assist your people with financial topics such as budgeting, debt reduction, and retirement readiness, can make the difference between a well-rested, alert workforce and groggy, stressed-out employee population.

 

Source: http://401kspecialistmag.com/401ks-as-a-sleep-aid-retirement-savings-keeping-clients-up-at-night/

 

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
www.grinkmeyerleonard.com

Contact Jamie

Follow Jamie on LinkedIn

Follow Jamie’s Blog

 

 

 

Friday Funny {May 5, 2016}

Bk0X2xhCIAAlT8AThis week’s Friday Funny isn’t as funny as it is true.

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
www.grinkmeyerleonard.com

Contact Jamie

Follow Jamie on LinkedIn

Follow Jamie’s Blog

You cannot spell HERO without HR

hr2.jpgIt is not often when I am really caught off guard by a remark, but recently while attending a panel style discussion lead by three Human Resource Managers that also serve as 401(k) Plan Sponsors, one of them made a comment that threw me for a loop. She said, “People don’t realize what a lonely job being a Human Resource Manager can be.” She went on to elaborate on the fact that few, if any, members of a company can really appreciate all that the HR professional has to do throughout the day. The rest of the panel members agreed and listed off a myriad of tasks from personnel manager to staffing firm to marriage counselor that most members of human resources serve as besides their official written job description. In an effort to bring others into your personal world or to at least garner a better appreciation for what you do, here are a few much easier said than done ideas for HR professionals.

  1. Find a sidekick– The HR workforce is full of superheroes; and superheroes never need for help, right? Wrong! We all know that Batman had Robin and Wonder Woman had Wonder Girl. Therefore, it is so important that you finds an individual either within the organization or outside to assist with the tasks that you are too busy to tackle to help you free up some time to continue saving the world (or at least your company). Look to your advisers and product providers for resources that they can provide to help you do your best work.
  2. Ask for help – One of the hallmarks of an awesome HR professional is the level of care and selfness that they often exhibit; often to the point that they do not want to appear overwhelmed for the fear that they might burden another employee. However, by not asking anyone for help, you may be creating unnecessary work and/or stress for yourself down the line. Asking for help can also be a great way to involve those valued individuals who report to you by allowing them some extra responsibility.
  3. Delegate more – Delegating is the hardest task for me personally, since I like many hard-working professionals, think my way is often the best way. Recently though I have come to the realization that done beats perfect every time and my way isn’t necessarily the only way. While it is extremely important that tasks get done to your standards, it is also important that items that you do not love to do or are too busy to complete get done as well. Figure out the items that you can let go to free up time to do what you do best.
  4. Say “No” – While you may not be able to say no to the employee standing at your door or your boss demanding an immediate response to an email, there are ways to say little no’s throughout the day. Thinking of saying no to things like checking Facebook every 15 minutes or sitting in on a weekly meeting that does not impact the way you do business as a way to free up time. Also, consider turning your email off for an hour a day as a way to focus on completing outstanding projects. If you are one of those HR superheroes who feels like they could use a sidekick, I would love to talk to you about ways to find advocates and to ask for assistance. As a HR professional, you do so much for your company; isn’t it time for someone to help you?

 

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
www.grinkmeyerleonard.com

Contact Jamie

Follow Jamie on LinkedIn

Follow Jamie’s Blog