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 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.

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.

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.

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.

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 or 205.970.9088 to learn more.

Employee Benefit Plan Audits – Are You Getting a Quality Audit?

bsmsA great article from Jaime Sweeney, Senior Manager, Barfield, Murphy, Shank & Smith, LLC.




The Department of Labor and the Employee Benefits Security Administration recently completed an assessment of the quality of audit work performed by independent public accountants and the overall findings were disappointing.  In May 2015, the DOL released a report titled “Assessing the Quality of Employee Benefit Plan Audits” that found 30% of the audits (nearly 4 out of 10) contained major deficiencies in regards to GAAS requirements.  Those deficiencies could lead to rejection of a Form 5500 filing.

The report makes recommendations, including DOL outreach and enforcement related to audit standards.  As part of this outreach, in November of 2015, the DOL distributed letters and information to plan administrators of “funded” ERISA employee benefit plans providing tips for selecting and working with a qualified CPA firm auditor who has the expertise.  Plan administrators are held responsible as fiduciaries of the plan, and can be held personally liable if they are not making reasonable choices with regard to their plan.

The letter explains that a quality audit can help protect plan assets and make sure that the plan is compliant with applicable law.  The letter specifically emphasizes that plan administrators should be careful when they select and retain an auditor.

While many accounting firms are choosing not to continue offering employee benefit plan audits, we at Barfield, Murphy, Shank & Smith, LLC assure you that we are distinctly qualified for this work and will continue to offer this service.

According to the DOL, you should consider the following factors when selecting a CPA firm:

  • The number of employee benefit plans the CPA audits each year, including the types of plans
    • Having worked extensively with retirement plans for over two decades, BMSS is known for having one of the premier auditing practices in Alabama. BMSS audited in excess of 30 plans in 2015, including defined contribution and defined benefit plans.  Our staff has a great deal of experience understanding the nuances of these audits.
  • The extent of specific annual training the CPA received in auditing plans
    • Employee benefit plan audits have unique audit and reporting requirements and are different from other financial audits. At BMSS, all of our employee benefit plan professionals receive annual Continuing Professional Education specific to Employee Benefit Audits.
    • Barfield, Murphy, Shank & Smith, LLC is a member of the American Institute of Certified Public Accounts EBPAQC (Employee Benefit Plan Audit Quality Center), a group created to improve quality of benefit plan audits with news alerts, training, webinars, audit quality center and other resources.
  • The status of the CPA’s license with the applicable state board of accountancy
    • Our CPAs are actively licensed by the Alabama State Board of Accountancy.
  • Whether the CPA has been the subject of any prior DOL findings or referrals, or has been referred to a state board of accountancy or the American Institute of CPAs (AICPA) for investigation
    • We are proud to say that BMSS has not been subject to any DOL findings or referrals. We have not been referred to a state board nor the AICPA for investigation.
  • Whether or not your CPA’s employee benefit plan audit work has recently been reviewed by another CPA (this is called a “Peer Review”) and, if so, whether such review resulted in negative findings
    • BMSS participates in the AICPA Peer Review Program and has passed every peer review. Our last peer review was dated November 6, 2014

If you have any questions or concerns regarding your employee benefit plan audit or if you would simply like more information about receiving a quality audit, please contact one of the EBP Audit professionals Barfield, Murphy, Shank & Smith LLC at (205) 982-5500.

Written by Jaime Sweeney, Senior Manager, Barfield, Murphy, Shank & Smith, LLC

What the “F” ? – Part 3 – Fiduciary

What the “F” ?
A four part series that will address important themes of plan management  

Thus far we have looked at some complicated “F”s in funds and fees, in today’s blog we are going to address one of the most overused and misunderstood “F”s in our industry: fiduciary. The basic definition of fiduciary is any individual or entity that has, or exercises discretionary control over the management of the plan or the plan’s assets. A plan may have one than one fiduciary and/or one individual serving in more than one fiduciary capacity. From there, the functional definition of fiduciary goes in several different directions.

When assessing whether or not you fall into a fiduciary role using the functional test you must consider the following: even with no expressed appointment or delegation of fiduciary authority if you are considered in control or procession of authority over the plan’s asset, management, or administration than you are considered a functional fiduciary. Many times this will include members of the Employer’s Board of Directors or Trustees, voting and non-voting, with power to exercise discretion and control. One important distinction to make is that the person who performs administrative ministerial functions, such as processing payroll, approving distributions or loans, or submitting data for testing, is not considered a fiduciary. In other words, the president of the company is usually a fiduciary because he or she has the discretion to implement plan decisions and to hire parties to assist in the administration of the plan; while a payroll clerk is not a fiduciary if he or she is processing the payroll in the 401(k) vendor’s website.

As a plan fiduciary, you may also be presented with opportunities to hire or appoint additional co-fiduciaries. There are different varieties of co-fiduciaries including 3(16), 3(21) , and 3(38) fiduciaries. A 3(16) co-fiduciary acts as the plan administrator and is responsible for managing the day-to-day operations of the plan. Some functions may include determining the eligibility of employees, maintaining all plan documents and records, providing annual notices, rendering decisions regarding participant claims, and fixing plan operational errors. This may be confusing since we have already determined that the individual within your company that provides many of these administrative functions like sending out notices and approving distributions is not a fiduciary; the difference is in that a named 3(16) fiduciary is an individual outside of your company that provides these administrative duties without consulting you, the plan sponsor. A 3(21) fiduciary is a paid professional who provides investment recommendations to the plan sponsor, but the plan sponsor retains ultimate decision-making authority and approves or rejects the advice of the 3(21) fiduciary. There is no discretion given to the 3(21) fiduciary. A 3(21) provides investment advice on a regular basis to the plan that the plan sponsor relies on to make a decisions pursuant to a mutual agreement or understanding (written or not) that is specialized to the plan for a fee. Finally, a 3(38) fiduciary is an investment manager in that the investment manager has discretion to make changes in the plan investment line-up or allocation without consent of the plan sponsor. A 3(38) must be appointed in writing by contract. The main difference between a 3(21) and a 3(38) is discretion. It is also important to note that even if you as a plan fiduciary hire a 3(16), a 3(21), and a 3(38), you still cannot absolve yourself of your personal fiduciary responsibility.

If you’ve made it this far in the blog, I’m sure it is clear to you why the definition of a fiduciary is anything but clear and you may be asking yourself why you should take the time to even bother with trying to understand your role and whether or not you are or are not a fiduciary. The reason understanding your role and acting properly as a fiduciary can be so important is that fiduciaries who do not follow the basic standards of conduct may be personally liable to restore any plan losses to the plan, or to restore any profits made through improper use of the plan’s assets resulting from their actions. While this is very true and taken directly from the Department of Labor’s commentary on fiduciary responsibility, it can be hard for many plan fiduciaries to conceptualize because chances are you have not, do not, and will not ever know anyone who loses their home or personal assets over a fiduciary breach. Nonetheless, there are very real examples of plan fiduciaries who have cost their companies a significant amount of many and/or lost their job due to improper fiduciary management. Look no further than Caterpillar, Fidelity, Lockheed Martin, Intel, Boeing and State Farm for companies that have faced or are currently facing case action lawsuits involving the management of their respective 401(k) plans (not all cases have been settled, nor have all companies been found guilty).

Moreover, as a plan fiduciary you have the unique and important role of providing the greatest opportunity for retirement savings that most of your employees will have. By properly managing the plan, you are playing a vital part in helping your valued employees get to their retirement goals. Check out my next installment when we will look closer at this role you play in the ultimate “F”.

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

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March 15th – A Scary Day to Open the Mailbox

March 15th – A Scary Day to Open the Mailbox

Highly Compensated Employees Receiving Taxable Refunds
and Why This Type of Refund is NOT a Good Thing for Employees or Employers

mailboxToday, some of you may go to your mailbox and find a check waiting for you. This check may be anywhere from a couple of hundred dollars to a couple of thousand dollars. And on any other day, but today, you would probably be thrilled to find such a surprise awaiting you in a mass of otherwise junk mail. However today, March 15th, is the deadline to make 401(k) compliance testing refunds to avoid a 10% excise tax (to your employer); therefore, if you receive a check today (or in the next few days) from the company that recordkeeps your company’s 401(k) plan , then you have just received a 401(k) refund.

A 401(k) refund occurs when your company’s 401(k) plan fails its annual discrimination testing; the amount that is refunded is the amount that was needed to be taken out of the 401(k) account of each affected highly compensated employee in order to bring the test into a passing range. If you are an HCE that receives a refund, then you will also receive a 1099-R and you must report the amount as taxable income in the year in which the refund was received.

hce 1.pngThere are several annoying implications of receiving money out of your retirement plan. The first is that money that you intended to be set aside as tax deferred is now taxable at a time that is more than likely earlier than you would have liked. The second is the potential impact to your overall retirement plan in that any money that comes out of the plan early is lessening that which you had saved for retirement. Finally, we have found that there is a compounding negative impact on your desire to want to continue to participate in your company’s retirement plan when refunds are received in multiple years.

hce2.pngReady for the silver lining in this article? There are options that are available to retirement plans to correct the issue of refunds. Most of them involve examining the plan design to determine if there could be any modifications that would improve the likelihood of the plan passing testing. A Safe Harbor plan design would allow the plan to receive an automatic pass of the compliance tests that cause refunds. Adding an automatic enrollment option could give an immediate boost to participation numbers which could give added support to the testing calculations. Implementing a comprehensive education plan could bolster both participation and deferral percentages. These are just a few of the designs and your plan would have to be reviewed in detail to determine if one of these or potentially another solution would be right.

Need a better way to keep retirement contributions in your 401(k) plan? Want to improve your company’s plan for the HCE’s so you can attract and retain them? Contact me to discuss. or 205-970-9088.

jamie kertis headshot2

Jamie Kertis, AIF®, QKA / Retirement Plan Specialist
Grinkmeyer Leonard Financial
1950 Stonegate Drive / Suite 275 / Birmingham, AL 35242
Office: 205.970.9088 / Toll-Free: 866.695.5162 / Fax: 866.774.9029 / /  Find us on Facebook  / Follow my blog


The Highs and Lows of Auto-Enrolls

checkThere is a fascinating social science study that was conducted by Eric Johnson and Daniel Goldstein that studied the willingness of people across European countries to donate their organs after they pass away (stay with me since I know this seems to have nothing to do with your 401(k) plan). They compared Denmark and Sweden, Austria and Germany, the Netherlands and Belgium and France and the U.K.; the countries were paired based on their similarities in culture, religion, and norms. However, despite the likenesses there were significant discrepancies in their organ donation opt-in rates: Denmark’s opt-in rate was 4.25% while Sweden was at 85.9%, Germany was at 12% while Austria was at 99.98%, the Netherlands was at 27.5% while Belgium was at 98%, and finally the UK was at 17.17% while France was at 99.91%. So what could possibly explain the significant differences in these similar countries? As it turns out, it was a simple difference in the design of the organ donation opt-in process on the form at the D.M.V. In the countries where the form in set as “opt-in”, check a box if you would like to donate, people tended not to check the box and therefore do not become part of the program. The countries where the box on the form read “opt-out”, check if you do not want to participate, people do not check the box and are automatically enrolled in the program. The conclusion of the study was not that people do not care about whether or not their organs are donated postmortem, but rather how small changes in our environment, “opt-in” versus “opt-out” can shape our decisions.

Which brings us to the discussion of automatic enrollment in a 401(k) plan and the subsequent effects on your plan – the highs and the lows. While the concept of automatic enrollment, or negative election, has been in place since the mid-1990s, the Pension Protection Act of 2006 encouraged and therefore accelerated the use of automatic enrollment provisions within 401(k) plans by removing some of the regulatory requirements. Furthermore, the IRS eased some of the restrictiveness of correction methods for automatic enrollment in Rev. Proc. 2015 – 28 ( With the groundwork laid for the use of automatic enrollment, let’s examine the pros and cons to adding this plan design feature.

High – Increased Participation
The most obvious high of adding automatic enrollment to your 401(k) plan is an increase in participation. When making the decision to amend your plan to add the provision, there are two choices; make automatic enrollment effective for all eligible employees or just for those who become eligible after the provision is put in place. If you elect to enroll all eligible employees, there’s a better chance that you will see a dramatic impact in participation numbers. We work with a lumber company that opted to make the automatic enrollment provision effective for all eligible employees and their participation rate doubled virtually overnight. With greater participation, the plan may be more likely to pass annual compliance testing and will have an employee population that may be better prepared to retire.

Low – Stagnant Deferral Rates
The fear with adding automatic enrollment without auto-escalation, increasing deferral percentages on a set schedule until a certain level is reached, is that participants will get enrolled in the plan at the designated deferred percentage, typically 3%, and then never give another thought to increasing their deferral percentage. While 3% is certainly better than 0%, 3% will more than likely not get your participants to their retirement goals. In order to combat stagnant deferrals, a regular and meaningful education program should be put into place along with utilizing GAP analysis tools that can illustrate what your participant’s current deferral amount will equate to in retirement income.

High- Flexibility within the Automatic Enrollment Provisions
The number one reason that we hear as to why a company is hesitant to add an automatic enrollment provision is that they are afraid their employees will be frustrated that their money was contributed without their consent and now it is locked into a plan they don’t want to participate in. The easiest way to avoid this situation is by selecting the correct automatic enrollment arrangement. There are three types: basic automatic enrollment 401(k) plan, eligible automatic contributions arrangement (EACA) and qualified automatic contribution arrangement (QACA). The basic feature is what most employers understand automatic enrollment to be, a stated percentage of eligible employee’s wages will be automatically deducted from each paycheck unless the employee elects to not participate. The EACA allows automatically enrolled participants to withdraw their contributions with 30 to 90 days of the first contribution without penalty (standard tax rates apply); thereby solving the concern that participants may be unable to access their money.   Finally, the QACA plan design allows the plan to automatically pass certain annual compliance tests and must include features such as a fixed schedule of automatic employee contributions, employer contributions, a special vesting schedule, and specific notice requirements.

Low – Increased Plan Costs
There is a pretty good chance that as your plan adds participants and assets, the costs will rise in potentially a few ways. First, if your company offers a match, then the more participants there are contributing to the plan, the more the company will owe in company match. Second, depending on your contract with your 401(k) plan providers, more participants could mean higher cost if there is a per head fee and/or greater assets could lead to a higher dollar amount if the fees are based on plan assets. When your plan opts to add automatic enrollment, the plan should also consider renegotiating provider fees in order to make sure that the change in participation and assets will not negatively impact the appropriateness of the fees.

As with any plan provision, it is important that the plan committee closely examine all of the highs and lows of amending the 401(k) plan. Please let me know if I can be of any assistance in assessing whether adding automatic enrollment would be appropriate for you plan.

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

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On Shaky Ground

shutterstock_305483711The stock market of 2016 seems to have picked up right where it left off in 2015 on shaky ground with dramatic downswings and nagging uncertainty. Admittedly, we all had become a little spoiled by the last bull market which started in March of 2009 and persisted until the third quarter of 2015 and we have been thrown back into the harsh reality that even though the S & P 500 has had an overall upward movement since it was introduced in 1923 there has been and more than likely always will be an element of volatility. As a matter of fact, when you take a look at the history of the stock market from 1928 to 2013 you will find that a decline of at least 10% occurs on average every 11 months and a decline of 20% happens about every 4 years.  So the question is what can you as a plan sponsor do to help ease some of queasiness caused by these ups and downs.

Process, Procedures and Prudence

As I have discussed in previous blogs, I believe the number one thing that plan sponsors can and should do to protect themselves and the plan against market volatility and investment performance is to have a documented process with written procedures that demonstrate prudence in selection and monitoring in place. You can argue until your blue in the face about the best investment in each asset class, but when it comes down to it performance takes a backseat to process. Now more than ever, it can be important to review the plan’s Investment Policy Statement (IPS) and to review the committee that is place to execute that IPS.   There are also notices such as the 404(c) notice and the 404(a)(5) notice that you can send out to your participants that describe the participant’s right to direct their own investments and to gather information regarding those investments.


While sometimes the best investment strategy within a 401(k) plan for a participant can be “set it and forget it”, the same is not true for the investment committee and the monitoring of the investments within the 401(k) plan. Once the committee has decided on an appropriate investment menu for the plan, the committee must also monitor those investments for continued appropriateness. A word of caution here, many recordkeepers and investment providers have tools that can help the committee monitor performance, but they may or may not consider other factors such as the demographic make-up of the participants, the overall risk tolerance of the plan, the cost of the investments and/or the availability of alternative investments.

Dollar Cost Averaging

Google “time in the market versus timing the market” and you will find countless articles that preach the value of a buy and hold strategy and that bemoan the fact that most average investors buy high and sell low. This concept of buy and hold, while not appropriate for every investor, is of particular interest in 401(k) plans because of the power of dollar cost averaging. Dollar cost averaging is the practice of investing a regular amount of money regardless of the performance of the market and therefore, the average cost of investments has the chance to decrease while your chance of greater returns increases.

The beauty of consistent contributions into a 401(k) plan is that a participant can participate in dollar cost averaging without even realizing it! A note about dollar cost averaging, dollar-cost averaging is not a foolproof investment technique. It does not assure a profit or protect against loss in declining markets. It involves continuous investment in variably priced units, regardless of price fluctuations. Investors contemplating the use of dollar-cost averaging should consider their ability to continue purchases over a period of time even when prices are low.


Knowledge is power which leads to confidence and calm; this is very evident in 401(k) plans when it comes to the comfort of the average participant in investing his or her hard earned money in an investment that they have little to no control over. When we conduct employee education meetings the first tenant that we attempt to convey is that of risk tolerance. We believe that if a participant understands and is comfortable and confident in the amount of risk that he or she is taking, then that participant is less likely to stop investing in times of market volatility. Additionally, we find too often participants do not have a realistic expectation of investment performance due to a lack of education about the investments in their plan which leads to confusion and frustration and ultimately a decline in participation. We take the time to educate our participants about the level of risk and the potential return that they may receive for taking on that risk.

While the recent markets have caused even the most seasoned investor to reach for aspirin, there are steps that you can take as a plan sponsor to insulate yourself, your plan and its participants from the headaches of volatility. If you need further guidance or have questions about the current market condition, I would love to hear from you. Please contact me at 205-970-9088 or

Disclosure:  Certain sections of this commentary contact forward-looking statements that are based on our own reasonable expectations, estimates, projections and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges or expenses. Past performance is not indicative of future results.

401(k) Year-End Tips

2016 sq

As the end of the year  is quickly approaching, here are some ideas that you can share with your plan sponsors of items that they should be aware of.

  • Annual notices are due at least 30 days before the plan year end.  These include Safe Harbor, QDIA, 404(c), and automatic enrollment notices
  • Add a Safe Harbor provision.  If the plan annually fails compliance testing, then a Safe Harbor plan design could be a good option.
  • Research alternative plan designs for possible tax deferral including non-qualified deferred compensation plans and cash balance plans.
  • Review the plan design for possible changes including adding a Roth option or amending your plan’s cash out provisions.
  • Make sure all Required Minimum Distributions have been processed.

– Jamie Kertis, AIF®, QKA / Retirement Plan Specialist

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

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Three Ways to Make Employees More Productive With Your Retirement Plan – {Anatomy of a Happy Office}

shutterstock_249108538 copyA quality retirement plan is a carrot that encourages loyalty and productivity. We talk about plans that “recruit, reward and retain” employees, but you should also consider the importance of helping an employee “retire.” The trend of baby boomers planning to stay employed to a latter age is well-documented. Although this can be beneficial, it can also mean increased costs for your company:

  •  Wages are likely on the high side of the scale for comparable positions
  •  New talent is not being developed, or is leaving for greener pastures

If you can offer an effective exit plan for the baby boomer, you help your employee and your company.  The seasoned employee is motivated to be productive, but also sees a light at the end of the employment tunnel.

A competitive retirement plan motivates younger employees as well. They see an opportunity to grow wealth within the company rather than seeking their fortune elsewhere. The golden handcuff of a long-term savings plan may give them a reason to avoid the salary chase.

An effective approach

This is an excellent environment to review and update your business’s retirement plan. While many business planning considerations may be on hold due to capital restrictions, productivity of the current workforce is paramount.  And retirement is on workers’ minds … young and old.

Cost should not be the controlling factor in reviewing the company’s plan. Effectiveness should be the target.   Keep these keys to effectiveness in mind and you’ll have a happier, more productive workforce:

1. Make it about them:  I’ve seen some retirement plan communications that read more like playbooks than explanations. While it is important that employees understand the “how” of the plan, you first have to sell the “why.”  Think of it this way: you invest dollars to set up a retirement plan, but a few cents spent in effectively communicating the plan can significantly enhance the return on your investment.

2. Offer options:   Automatic enrollment, pre-tax and post-tax features, expanded investment options – all of these give the employee an enhanced feeling of control. In an environment where so much of their retirement capital is associated with your company plan, peace of mind comes with giving the employees an enhanced say in how their money is handled.

3. Promote the hidden paycheck:  Now that you have the employee’s attention, use the company retirement plan to promote the other benefits of employment with your company.  With communication about the retirement plan, you can also change the conversation from “wages” to “pay plus.”  You can promote the company’s contribution to Social Security, the medical plan, flex time and other benefits that enhance the employee’s life.

In decades past, workers built retirement savings by paying down the mortgage balance on their home, putting money in savings bonds and building up cash values in their life insurance policies. Although it can be argued that these approaches are admirable, the reality is that not as many Americans are doing this. Instead, a sizeable chunk of a family’s retirement savings sits in their qualified plan at work. 401(k) features, such as automatic enrollment and employer match, make it increasingly easier to build up a retirement nest egg. For higher paid employees, nonqualified plans have become a key savings source, especially in a rising tax environment. The bottom line is employees are far more attentive to what retirement plans are offered through their employers.  When an employee feels like their employer has his or her best interest at heart, they are far more likely to work harder and perform better.   Add in the value of the employee not feeling as stressed about whether they will or will not be able to ever retire, the employees’ morale boost again increases work productivity which helps you the employer while benefitting your employees.

-Jamie Kertis, AIF®, QKA / Retirement Plan Specialist

*excerpts of article from article by Steve Parrish – “Why You Should Care About Your Employees’ Retirement Plans”

anatomy-smallAll through November, all of the advisors at our office are doing a series of articles, tips and tools and geared toward the “Anatomy of a Happy Office”.  Follow all of our blogs to read it all.
Northside of Average by Valerie Leonard
Motivated Monday by Caleb Bagwell
TAG-Living Loud by Trent Grinkmeyer


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

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Who Does What? – 401k Administration Roles

firstSometimes it can feel like you are trapped in that famous Abbott and Costello “Who’s on First” act (check out this link for the full transcript and a little comedic break: when trying to figure out who in your organization is responsible for the plan and what are the roles of the vendors that you have hired to service the plan.   Even though it can be challenging and at times a bit maddening to determine all of the players, it is a must in order to hold all parties accountable for the proper administration of the plan.

My advice is to start within your organization. First and foremost identify the individuals who are fiduciaries to the plan. A fiduciary is any individual or entity that has, or exercises discretionary control over the management of the plan or the plan’s assets. It is important to note that a plan can have more than one fiduciary and an individual can serve in more than one fiduciary capacity. An owner or Board of Directors/Trustees member is almost always a fiduciary. We will further explore the definition and role of a fiduciary in a later blog. Next, determine who within the organization is responsible for the ministerial, day-to-day operation of the plan. This person more than likely processes payroll, approves distributions, and assists with plan enrollment. While ministerial functions like these do not make this person a fiduciary, the importance of this role cannot be underestimated since the timely contribution of employee deferrals after they are withheld from the employee’s pay is one of the most audited items in plan administration.

Once you have established the basic roles and responsibilities, I would strongly urge your company to go a step further and officially name a retirement plan or benefit committee. This should be done by having your Board of Directors/Trustee select and appoint members of your organization that have some working knowledge of your benefit plans and of the general principles behind investing. In order to help guide your committee’s investment related decisions, I would also advise that you put an Investment Policy Statement (IPS) in place. If your organization has already taken these steps, bravo, if not, we certainly can help.

The final component of determining who does what is to clearly define and understand the roles of all of the providers that you have hired to help with the administration of the plan. This may include your third party administrator (TPA), recordkeeper, financial advisor, and auditor and ERISA attorney, if applicable. It should also be noted that your TPA and recordkeeper may be the same company. While you may be able to easily identify each of these providers, it may be less clear what role they each play when it comes to the operation of the plan. If it safest to never assume that someone is “doing that for me” or “is handling that”, but rather to get in writing what to expect from each.

If you need some direction in determining who is on the 401(k) playing field for your team, please give me a call at 205-970-9088 or email

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

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