PLANSPONSOR - April/May 2019 - 33

2019
value of the retirement benefit.
" When you have a diverse workforce with many blue-collar
employees, there's always some small amount of hesitation and
uncertainty when you see an adviser come in, " Brown says.
" Finance is not something everyone naturally wants to talk about.
But what we have seen at Phillips is that, with just a little push,
the vast majority of people respond positively and jump on board.
The Phillips employees are all in, which is so refreshing to see. "
Working with Anderson, the Phillips Companies plan has
moved to a direct fee model, such that any revenue sharing that
might still be created from, say, a small transfer agent fee, is
rebated directly to participants.
" This approach makes the plan cleaner and more transparent, "
Phillips says. " Everyone is paying the same thing, and they appreciate
that the fees are called out and are easier to understand. "
Phillips points to another way the retirement plan has
evolved in recent years to promote true retirement readiness. " Up
until a couple of years ago, we were not a matching plan. We were
giving everybody 15% each year we declared a profit, " Phillips
says. " Half of this would be offered as a company contribution to
the retirement plan and the other half as a bonus, which could
either be taken as cash or directed to the plan. "
Although employees liked this flexibility, Phillips says,
too many-especially the younger employees-were taking the
cash bonus rather than seeing the windfall as an opportunity to
up retirement savings.
" So what we did was change our plan design pretty fundamentally,
starting with a 4% pay raise across the board, " he says.
Now, Phillips' contributions to its plan include a 3% safe
harbor contribution, a 100% match on the first 4% of salary
deferred, and a possible profit share up to 4% of salary. When
all of that was added to the 4% raise, participants in year one
received the same 15% potential contribution value as with the
old plan design-which gave them further incentive to keep
putting money into the plan.
The Value of Generosity
Phillips encourages other small businesses to embrace generous
retirement benefits. He says any expense is more than compensated
for by employee satisfaction, loyalty and productivity.
" The benefit we get as an employer is that this plan is a
wonderful recruitment and retention tool, " Phillips says. " Once
someone has been with us for even just five or six years, he'll
see a significant balance build up. He then goes on to advocate
for our company to friends and colleagues in the industry. His
friends in the industry will say they're jealous that their employer
doesn't offer anything like the Phillips' retirement benefit. "
Another advantage, for a small business, of offering a
retirement plan, Phillips says, is that the company can hold
itself up as a premier employer in its market or region. This is
especially important in a tight labor market.
" Our plan demonstrates that we don't just look at employees
as random people who show up, do a job and go home, " Phillips
says. " We do care about them as people, and we care about their
futures and their well-being. We are paternalistic about the retirement
benefit, and our employees appreciate that. They know
we're making it possible for them to achieve retirement security. "
Brown echoes this point and says Phillips further stands out
because the sponsor pays all of the administration fees, meaning
participants pay only the expense ratios of the mutual funds.
In addition, Phillips Companies has pushed fees down to a rate
uncommon in the small-plan marketplace, he says.
" The benefit we get as an
employer is that this plan
is a wonderful recruitment
and retention tool. "
" With the plan using the lowest-cost share classes of each
fund, and with the rebating of revenue sharing to participants'
accounts, that creates a very affordable investment environment, "
Brown says. " The cost of the plan is incredibly low for a small
plan. When you look at someone who stays in this plan for 40
years, the amount of increased growth he will enjoy because the
fees are so low and because he isn't paying for recordkeeping,
this is very significant. "
In his 30 years of working as an adviser, Brown says, Phillips
Companies stands out among employers in the construction
business. Simply put, small-business retirement plans in this
industry tend to lag behind those of professional service practices
such as doctors' offices or law firms.
" When you look at what Phillips Companies does for its
clients, which has nothing to do with finance, this commitment
to the retirement plan and to employee benefits is that much
more impressive, " Brown says. " Frankly, they are not normal for
a small-plan sponsor. This is reflected clearly when we talk to
the employees. So many of them, especially as they gain some
tenure, talk so positively about the plan and how generous it is.
They tell us Phillips Companies is a great place to work. "
-John Manganaro
Corporate 401(k) <$25mm Finalists
Northwoods Dublin, Ohio
Reliance Savings Bank Altoona, Pennsylvania
Riddle's Group, Inc. Rapid City, South Dakota
Read the full finalist profiles on plansponsor.com/PSOY2019.
PLANSPONSOR.com April - May 2019 33
http://www.plansponsordigital.com/plansponsor/april-may_2019/TrackLink.action?pageName=33&exitLink=http%3A%2F%2Fplansponsor.com%2FPSOY2019 http://www.plansponsordigital.com/plansponsor/april-may_2019/TrackLink.action?pageName=33&exitLink=http%3A%2F%2FPLANSPONSOR.com
PLANSPONSOR - April/May 2019

Table of Contents for the Digital Edition of PLANSPONSOR - April/May 2019
