bpas partner best practice - paul neveu
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B P A S P A R T N E R C O N F E R E N C E 2 0 1 6
BPAS Partner Best PracticesPaul NeveuPresident, BPAS Plan Administration & Recordkeeping Services
B P A S P A R T N E R C O N F E R E N C E 2 0 1 6
2016 BPAS Partner Conference
Welcome
• The goal of this session is to share insights and best practices which can help in your business
• We are honored to have partnerships with more than 400 firms across the financial intermediary space (RIAs and Trust Companies; Over 90% of our business)
• As we work with all of you, we see some very creative ideas and strategies
2016 BPAS Partner Conference
Bringing Back the CORRECT Focus in Client Relationships
A. 408(b)(2) and the tendencies of many plan sponsors
• It’s heavily about the fees• Whatever your fees are, they
need to be reduced• Maybe we should issue an RFP• Someone else will do it for less• Sometimes the “pure
commodity” philosophy (copier paper, driveway rock salt, bottled water)
B. Why you have a retirement plan in the first place
• Getting participants to a place of financial security
• The plan as a strategic attraction and retention tool
• Managing risks, reducing workload
• Combatting inertia to drive KSIs, including auto measures
• Engaging the RPC for each client• Creating a meaningful, lasting
relationship
2016 BPAS Partner Conference
Introduction
The things you do everyday in client relationships – including your passion, enthusiasm, resourcefulness and diligence – determine whether you can successfully shift clients from column A to B. (A custom solution built around their needs; not an “off the shelf” program provided to all clients.)
2016 BPAS Partner Conference
Helping clients look at their plan versus industry norms. Being able to put the situation in context for clients and prospects.
Perspective
— $6.7 trillion in DC — $7.3 trillion in IRAs— $9.9 trillion in other (private sector DBs; federal, state, local DBs; annuities, etc)
842,000 DC plans
$6.7 trillion in total assets
94 million participants
Total retirement assets in US: $24 trillion (end of 2014)
Source: ICI.org
DC Industry as a Whole
$4.6 Trillion in 401(k) Plans
$900 Billion in 403(b) Plans
$700 Billion in 457 and Federal Thrift
Savings Plan
$500 Billion in private-sector DC plans (PS, ESOP,
kSOP, etc)
Source: ICI.org
Of the $6.7 Trillion in DC Plans:
• Average participation rate:– 87.6% of all eligible EEs have a balance in their DC plan– 75.4% for plans with EE $ only (10 – 12% higher with match)– 79% for BPAS’ DC plans as a whole
• Average deferral rate: 5.8% for NHCEs, 6.9% for HCEs• Approx. 38% are now safe harbor (approx. 25% match, 13%
QNEC or AA), approximately 30% of plans fail the ADP / ACP test• Average ER contribution to 401(k)/403(b) is 3.2% of pay, but 4.7% of pay across all plans• 68.7% of plans now retain an Investment Advisor (or Corporate Trustee) to service their
plan• 89% plans have a written IPS, but only about half among plans < $5M
Sources: PSCA, 401(k) Help Center
High Level Figures to Keep in Mind
• 35% of plans are now offering Investment Advice (as opposed to education or guidance)• 62% of 401(k) plans now allow immediate eligibility for deferrals• Auto enrollment: 59% of all plans now,
most common is 3% of pay, 57.9% of theseplans auto-increase EE deferrals over time
• Maxing out: Approx. 54% of participants now “max out the match”; about 12% reach the full 402(g) limit (incl. catch up)
• 33% of plan sponsors have no investment committee• Loans: Permitted in 87.8% of plans. 14.6% of participants have a loan outstanding,
average loan amount is $6,216 (1.6% of plan assets) • SDBAs now offered in 28% of plans (avg. SDBA balance on BPAS platform = $201,731)• Roth: 51% of plans now. When offered, 19.5% of participants use it
Sources: PSCA, 401(k) Help Center
High Level Figures to Keep in Mind
2016 BPAS Partner Conference
• At BPAS on Omni:– 401(k) Plans: $52,723– 403(b) Plans: $32,960– 1081 Plans (PR): $17,731– 457(b) Plans: $52,232– 457(f) Plans: $233,678– All DC Plans: $38,916
• Plan Sponsor, 12/31/2015: $63,752• Fidelity annual survey (12/31/2015): $87,900• Vanguard: $102,682 (average), versus $29,603 (median)
Average Balances Across Plan Types(At BPAS on Omni, 12/31/2015)
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Agriculture, Forestry,
Fishing and Hunting
Mining, Quarrying, and Oil and Gas Extracts Utilities Construction Mnfg.
Wholesale Trade Retail Trade
Transport and
Warehousing InformationFinance and
InsurancePart. Rate
74.0% 83.5% 85.0% 67.5% 74.0% 75.0% 56.0% 70.0% 76.0% 81.0%HCE Def. Rate 6.8% 7.0% 7.4% 6.1% 6.8% 6.6% 5.3% 6.1% 6.7% 6.7%NHCE Def. Rate 5.2% 5.6% 6.2% 4.2% 4.5% 4.4% 2.9% 3.9% 5.0% 5.1%% who Max Match 48.0% 71.0% 77.0% 49.0% 55.0% 53.0% 47.0% 51.0% 54.0% 60.5%Avg. Ann. Comp
$34,159
$87,214
$87,578
$52,321 $57,374
$64,896 $31,195 $48,453 $77,231 $84,555
Avg EE Def ($) $1,776 $4,840 $5,429 $2,171 $2,581 $2,855 $904 $1,865 $3,861 $4,312
Key Data Points by Industry(Fiduciary Benchmarks, Inc.)
2016 BPAS Partner Conference
Real Estate and Rental
Leasing
Prof., Scientific
and Technical Services
Mgmt of Companies
and Enterprises
Admin and Support and
Waste Mgmt,
Remediation Services
Educational Services
Healthcare and Social Assistance
Arts, Entertnmnt
and Recreation
Accomm. and Food Services
Other Services (except Public Admn)
Public Admin.
Part. Rate 69.0% 78.0% 71.5% 68.0% 68.0% 68.0% 56.0% 25.0% 77.5% 49.0%
HCE Def. Rate 5.9% 6.7% 5.6% 5.9% 6.8% 6.3% 5.7% 3.2% 6.9% 6.3%NHCE Def. Rate 3.6% 5.3% 3.9% 3.9% 4.6% 3.8% 3.3% 1.6% 4.7% 1.1%% who Max Match 43.0% 57.0% 46.0% 54.0% 63.5% 50.5% 55.0% 26.0% 49.0% 35.0%Avg. Ann. Comp $47,290 $80,077 $96,586 $36,761 $40,785 $48,354
$43,219
$23,405
$34,885
$57,320
Avg EE Def ($) $1,678 $4,244 $3,718 $1,433 $1,876 $1,837 $1,426 $374 $1,639 $630
Key Data Points by Industry(Fiduciary Benchmarks, Inc.)
2016 BPAS Partner Conference
Finance and Insurance
The ABC Bank 401(k) Observation
Part. Rate 81.0% 86.1% Strong result; higher than average
HCE Def. Rate6.7% 6.8% Reasonable (SH plan, bumping up against 402(g) limits)
NHCE Def. Rate5.1% 4.9%
Can be boosted up more. Many employees sitting at 3% of pay
% who Maximize Match 60.5% 86% Strong result; much higher than averageAvg. Ann. Comp
$84,555 $48,510 Reflects many tellers; consistent with BanksAvg EE Def ($)
$4,312 $2,549 AverageAvg. Balance $63,752 (all DC
plans) $74,982 Above averageAvg ER contr. ($)
$3,105 $3,056 Generous ER formula across match and PSAvg ER contr. (% of pay) 4.7% of pay 6.3% of pay
Generous ER formula across match and PS
How Can You Present this to a Client(One Page Dashboard)
2016 BPAS Partner Conference
Ideas. Things that other Advisors and Trust Companies are doing. Ways to better serve clients and build your business.
Best Practices
2016 BPAS Partner Conference
• Define your practice to the world at large
• Create a product name, and/or easy to find URL
• Section for Plan Sponsors, Participants
• Link to the Participant Education Center
• Model fact sheets• Economic information• Market charts• Calculators• Log in to BPAS• Testimonials• Request a proposal
Retirement Services Landing Page
2016 BPAS Partner Conference
• Many prospects will keep you at “arm’s length” due to the sheer number of firms knocking on their door
• However, decision makers may be willing to click a short link in an email to view a multimedia show – put a toe in the water without a sales pitch
• Showcase your philosophy, approach, fiduciary status, technology, solution for education and guidance, etc.
• Use this link in multiple locations – website, business cards, brochures, email signatures, etc.
• It’s all part of building your brand • Dovetails with new Roadways proposals
A Multimedia Clip for Your Retirement Solutions
2016 BPAS Partner Conference
• Can usually be produced for a few thousand dollars (see www.bpas.com/r2r for examples), specialty MM firms
• BPAS can guide you in getting this done
A Multimedia Clip for Your Retirement Solutions
2016 BPAS Partner Conference
• Many advisors use CRM to manage interaction with individual wealth management clients; can also be used for plan participants
• “Know your client” compliance• Categorize and tag results (ABC Company 401k Plan)• Reporting engine• Automated alerts – call to review asset allocation, follow up on rollover• Broadcast emails • Importing/exporting• FINRA/SEC compliance• Produce report for plan sponsor of annual interactions with participants
Implement CRM (e.g., Red Tail CRM)
2016 BPAS Partner Conference
• Smaller plans versus larger plans. Client perceptions and reality.• We know what the mix should generally be. But how do CLIENTS want you spending
your time, between PS-level and Participant-level activities? It’s worth knowing. • Identify key services and their level of importance to client, as well as time
commitment from your firm.
• Document the services you (and we) will deliver Thornburg example (K3). BPAS example (K2).
• Revisit with client every 2 years and whenever there is pressure to update/reduce fees. They go hand in hand.
• Fee considerations (minimum annual fee, benchmarking).
Meet with Plan Sponsors to Define Your Service Model
2016 BPAS Partner Conference
Which functions do you consider our highest priorities as your Advisor/Trustee?– Managing your investment menu, offloading fiduciary risk– Managing the compliance risk of your plan (DOL, IRS, fiduciary concerns)– Boosting Key Success Indicators of your plan– Educating and engaging participants so they can make sound decisions in the plan– Training participants on procedures, processes and technology– Problem resolution– Managing costs against benchmarks and maintaining a proper documentation trail– Managing / overseeing the recordkeeper– Meeting with our committee to review high level issues– Other services (please provide)
Online Survey / Report Card for Retirement Plan Committee Members
2016 BPAS Partner Conference
• If 1 was the lowest cost, lowest service provider and 10 was a very high service provider (with correspondingly higher costs), where would you put your priority for your Plan?
• How satisfied are you with our firm in servicing your plan? With BPAS?
• Any suggestions for things we can improve in the future?
Online Survey / Report Card for Retirement Plan Committee Members
2016 BPAS Partner Conference
• Many of our partners use F/I 360• BPAS Fiduciary Services can support your business if needed• Plan Investments Plus ™ (see M9 in toolbox for sample)• Plan Tools ™ • “Regardless how you handle and deliver fiduciary services, getting the process
down so it is evergreen and monitored, with automated client reporting, is essential”.– We have seen some partners spend 10 – 15 hours preparing investment review reports
for client meetings; you can automate this.
Simplifying Your Fiduciary Deliverables and Process
2016 BPAS Partner Conference
• Annual Plan Review Report– Now includes 12 month “income statement” at level of
funds, then sources.• Investment Monitoring Report /
Fund Performance Grid
• Quarterly Economic & Market Report (Resource Center, Education section)
Suggested Handouts for Plan Review Meeting
2016 BPAS Partner Conference
• Other demographic reports from PS site:– Retirement Gap Report– YTD Rate of Return Report– Range of asset and utilization reports
• By the way, sign your clients up for one of the BPAS Plan Sponsor site training sessions (2x/month)!
• And the good news is…..
Suggested Handouts for Plan Review Meeting
2016 BPAS Partner Conference
• Enhanced entire format, selection of reports and look• Renewed focus on the KSIs of each plan• First report around July 20th (6/30/2016), quarterly
thereafter• Annual update of
benchmark data• Additional enhancements
over next 3 quarters
The APRR The QPRR!
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• Runs monthly across all plans• Posts to Resource Center,
Demographic Reports section• Compares data to M* averages• Makes for an easy handout
during plan review meetings
New: Fund Performance Grid
2016 BPAS Partner Conference
DOL has hired 650 additional field agents in last two years. What happens when the PS receives the dreaded “letter?”
• Vendor search process• Plan docs and amendments• Gov’t filings and communications• Vendor documents and agreements• 404(c) compliance activities and file• ERISA fidelity bond• List of who has access to plan sponsor website
(kept up to date with BPAS)• Participant communication archive• Plan procedures, minutes, resolutions• 408b2, 404a5 disclosures• Other
Rockland Trust Solution
Old School But Effective: The Fiduciary Compliance Binder
2016 BPAS Partner Conference
• We have an array of presentations for your use in the Toolbox (Education tab)
• However, nothing is more stale than just giving the same presentations over and over
• Make these sessions something participants will want to attend
• Use content from PEC, Financial Resource Center, articles from the web and other sources
Turning Education Meetings into Holistic Financial Planning
2016 BPAS Partner Conference
• 20 minutes on the plan and investment menu• 30 minutes on rotating topics (retirement
healthcare planning and HSAs, IRAs, life insurance, mortgages, getting out of debt, basic tax considerations, how Social Security works, personal finance topics, etc.)
• Walk participants through the website and using the financial calculators
Turning Education Meetings into Holistic Financial Planning
2016 BPAS Partner Conference
• Plan sponsor site includes participant email addresses, but see if PS will provide you with a full list
• Send Survey Monkey (online survey at surveymonkey.com) to participants one month before education meetings
• Ask HR rep to email link to all employees, ask them to respond• Sample survey is provided, change to suit situation
– Understanding of plan provisions– Retirement readiness– Comfort level with investments– Using the website– Other areas where more training is needed
Online Survey to Drive Participant Education Meetings
2016 BPAS Partner Conference
• Produce colorful reports for client, use to shape education/communication efforts
• A big hit with clients. – Clients always want to know that your approach is tailored
to their needs, not “off the shelf”• See toolbox for many targeted communication pieces and full
array of PPT presentations
Online Survey to Drive Participant Education Meetings
2016 BPAS Partner Conference
For instructions and our template, please email Melissa Varvarezis ([email protected])
Online Survey to Drive Participant Education Meetings
2016 BPAS Partner Conference
Basics of RetirementUnderstanding Our Plan
How Much to ContributeInvestment BasicsInvestment Menu
Investment SelectionTour of Website
Planning Calculators
0 1 2 3 4 5 6 7 8 9 10
On a scale of 1 to 10 (where 1 is a topic you are not interested in and 10 is a topic you are very interested in), please indicate your level of interest in learning about the following topics at your retirement plan education meeting.
Sample of Results
2016 BPAS Partner Conference
• Produce colorful reports for client, use to shape education/communication efforts
• A big hit with clients. Clients always want to know that your approach is tailored to their needs, not “off the shelf”
• See toolbox for many targeted communication pieces and full array of PPT presentations
Targeted Communications(toolbox.bpas.com)
2016 BPAS Partner Conference
• Will “live” at top of participant home page • 5-part wizard:
– Basic info, Retirement needs, additional needs, retirement income, completion• Will encompass full range of assets • Future costs: healthcare, college, housing, etc.
Participant Gap Thermometer (coming)
2016 BPAS Partner Conference
• Projects shortfall, updates daily based on current balance• User-set parameters (inflation rate, earnings, retirement date, etc.)• Plan Sponsor and advisor will be able to see macro results for each participant,
but not specific assets or costs that would cross the line with data security• A much better assessment to help you better serve participants
Participant Gap Thermometer (coming)
2016 BPAS Partner Conference
• Our world is about to change dramatically with new fiduciary regulations• Tremendous new opportunities for fiduciaries and those who embrace
full transparency, level compensation– Some in our industry have engaged in practices that drove these new
regulations. We can use this time to remind clients that we have been operating with these concepts for years; capitalize on the process with new business
• Cement relationships, reaffirm your value proposition, get value out of the change
• BPAS stands ready to help as your partner
Conclusion