structuring and executing future-proof fossil-free 401k plans for employees of all generations
TRANSCRIPT
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REINVENTING THE 401(K) TO MAXIMIZE EMPLOYEE ENGAGEMENT
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Alvin Rappwww.RPGconsultants.com
Burke Pembertonwww.stok.com@teamstok
Jennifer Andersonwww.sustrana.com@sustranaTalks
R. Paul Hermanwww.HIPinvestor.com@HIPinvestor
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AGENDA401(k) as lever for engagementWhy reinvent your 401(k)?How do you reinvent your 401(k)?What results are possible?Q&A
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• Retrieved from http://www.forbes.com/sites/samanthasharf/2014/07/30/the-recession-generation-how-millennials-are-changing-money-management-forever/
Fry, R. (2015, May 11). Millennials surpass Gen Xers as the largest generation in U.S. labor force.
Millennials in USA Workforce
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MILLENNIALS #1 PURPOSE OF BUSINESS IS BUILDING A BETTER WORLD
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• 80 million Millennials in USA• Inheriting $40 Trillion from Boomers
Source: Deloitte global survey of Millennials
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6https://ngam.natixis.com/us/resources/2016-survey-of-defined-contribution-plan-participants
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401(K)FIDUCIARYDUTY NOWINCLUDESNET IMPACT ON SOCIETY
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HIGHER IMPACT = HIGHER POTENTIAL RETURNS
CONFIDENTIAL © 2006-2017 HIP Investor Inc.
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MANY SRI FUNDS RATE HIGHER ON RETURN
http://my.morningstar.com/ods_images/161207_sustainability-02(en).png
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© 2006-2017 HIP Investor Inc. 10* Past 5 years, as of 7/31/2015 HIP Scores (2013/14)
ALL 401(K)FUNDSCAN BERATEDFORIMPACT
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Why reinvent your 401(k)?
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Kristen MagnusonLEED & WELL APMaterials Expert401k Crusader
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Walking the Talk
Stronger, more resilientorganizations.
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Why would a company create a 401(k) with mutual fund, insurance company or payroll platform that:• Doesn’t allow freedom in investment choices?• Doesn’t have fee transparency?• Doesn’t offer ESG investments that align with values?
Conflict & NeedEDITED: trying yellow color for readability,
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How do you reinvent your 401(k)?
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1 Impact of current plan?
ERISA FiduciaryChampions & InfluencersStakeholder EngagementESG Impact Assessment → HIP Investor
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Financial advisorRecord KeeperThird Party AdministratorAcquire Fidelity Bonding
2 Make Changes
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Cloud-based Advising & Record KeepingPush Button Fossil Free PortfoliosPayroll Integration & Automation
3 Make More Changes
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401(K) PORTAL, WITH PERSONAL IMPACT METRICS
20
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Re-assess Impact & Participation AnnuallyReport results to relevant stakeholdersRefine plan offering
4 Reassess, Report, & Refine
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1 Select the Provider
B Corps first Identify criteriaEvaluate options
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Started with all “sustainable choices”Internal dialogue Combined list of 23 funds
2 Select the Funds
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SUSTRANA’S 401(K)
Vanguard LT Gov’t
Vanguard Int. Term Gov’t
Vanguard Short Gov’t
Vanguard IT ETF
T. Rowe Price Health Sciences
Vanguard Total Stock Mkt Idx.
Vanguard Global Equity Inv.
Vanguard Federal Money Market
Calvert US Large Cap Core Index
Parnassus Endeavor
Shelton Green Alpha
Virtus Small
Pax Small
Portfolio 21
Calvert Green Bond
Calvert Global Water
Green Century Balanced
HIP FFF All Equity
HIP FFF Growth
HIP FFF Balanced
HIP FFF Balanced Income
HIP FFF Conservative
Vanguard Info Tech ETF
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Roll out planEducate employeesContinue to grow!
3 Implement and Grow
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1 A Superior 401(k) Provider
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2 More Value + More Competitive
SAMPLE:Plan Assets =
$5.5M
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3 ESG Integration ✓ SRI, ESG and FFF Fund Choices
✓ Conflict-Free Philosophy
✓ Partner with Sustainability
Experts
✓ Financial Wellness Education
✓ HIP Fund Ratings
✓ HIP Model Management
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4 The 4 “C”s of a Retirement Plan
✓ Confidence✓ Compliance✓ Cost-efficient✓ Comfort
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What results are possible from reinvented 401(k)s?
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OUR MILLENNIAL CONTRIBUTIONSIN TOP THIRD OF USA
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STOK
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“It's really important to me to use my 'spending power' appropriately and invest my money in funds that align with my core beliefs.”
“My last job didn't offer any sustainable 401(k) options so I'm really grateful to work for a company that "walks the walk" with regard to their values.”
LiliUnder 30, Customer Service + Product Content
2nd retirement plan 100% in sustainable funds
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“Investing is not just about getting a return –that’s certainly important – but what your money is doing is also really important.”
“When I have more time to review, I am very interested in moving to fossil fuel free funds.”
“What is great about this is the curation is done for us to find good sustainable funds, which is half the battle.”
JennySoftware Developer, over 55
Previous retirement plan had some ESGInitially 66% in sustainable funds
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Superior QualityInvestment FreedomConflict-Free PhilosophyLow Investment CostsFull Fee TransparencyPayroll Integration & AutomationSustainability RatingsFinancial Wellness & EducationIncreased ParticipationBest-In-Class Client Services
Inferior Consulting & ComplianceInvestment LimitationsSupports Fossil Fuel IndustryHigh Investment CostsRevenue Sharing & Hidden Fees
RPG
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How will you reinvent your 401(k) to engage your employees?