bpas partner best practice - paul neveu

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


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


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


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.)


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


• 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)

2016 BPAS Partner Conference 11

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.)


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.)


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)


Ideas. Things that other Advisors and Trust Companies are doing. Ways to better serve clients and build your business.

Best Practices


• 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


• 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


• 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

http://www.bpas.com/r2r

http://www.bpas.com/r2r


• 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)


• 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


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


• 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


• 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


• 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


• 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


• 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


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


• 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


• 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


• 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


• 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



For instructions and our template, please email Melissa Varvarezis ([email protected])



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


• 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)


• 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)


• 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)


• 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


BPAS PARTNER CONFERENCE 2016

#BPASPC

bpas partner best practice - paul neveu

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