PLANSPONSOR - October/November 2018 - 36

Alight Solutions looks first for participants not deferring up
to the full match level and has found that about 20% of its clients'
participants who make contributions fall into that category, Austin
says. " One reason is automatic enrollment: Many employers still
have an initial default deferral rate that's below their match rate, "
he says. A plan may auto-enroll at 3% but have a match of dollar for
dollar up to 6%, for example. " The other factor is that people have
a tough time saving, and they aren't really sure how to make their
paycheck stretch to cover everything it needs to cover. "
CAPTRUST's deferral-data analysis also looks for participants
not deferring up to the match level, and then the firm initiates
a dialogue with them, Kulick says. That dialogue needs to take
a very direct approach and make the complex simple; therefore,
the firm does a personalized illustration for those participants to
show the impact if they defer up to the match. " Quantify for them
in dollar terms what that would look like: the lessening of their
take-home pay as a result of the deferral increase,
but also the projected increase in savings that
person will ultimately have, " he says.
" It's a conversation with those participants
that 'You're leaving free money on the table,' but,
more importantly, we back that message up with
substance, " Cicalese says.
Do-It-Yourselfers Rebalancing
Fiduciary Plan Advisors at HighTower examines
data to uncover participants not in the default
investment who have neglected to rebalance their
portfolio-a group often including many long-time
employees. " Rebalancing is really important for
the do-it-yourselfers, " says Jania Stout, managing
director and co-founder of the advisory firm, in
Owings Mills, Maryland. " I think most people
don't even understand what rebalancing is, but, if
you explain it and show them an example, they get
it. " The firm tackles many of these conversations
in one-on-one meetings, when it also can help a
participant sign up for automatic rebalancing.
Atlanta Retirement Partners LLC (ARP) can
analyze investment-allocation data to identify
participants not in the default who are, from that
firm's perspective, invested too conservatively or
too aggressively for their age. Sponsors, on the
other hand, are often unaware of participants'
retirement savings outside the plan, which may
inform their current plan investment choices.
ARP has yet to see clients moving forward
with a re-enrollment into their default investment,
says David Griffin, founder and director-
institutional retirement plans. He attributes this
to their fiduciary concerns about reallocating
participants who previously made an active
choice on their investments.
" But after employers see that data, they want to take some
action, " continues Griffin, a 2018 PLANSPONSOR Retirement
Plan Adviser of the Year finalist. " So we're doing proactive education
about rebalancing. We'll say, for example, 'We've had a very
nice run in the stock market, and those runs can make people
complacent. If you allocated 60% to stocks and 40% to bonds when
you enrolled 10 years ago and you haven't rebalanced, did you know
that your allocation now is probably 80% equity and 20% bonds?' "
As the bull market potentially nears its end, that kind of allocation
could lead to major declines in those participants' accounts.
Loan Utilization
Taking out plan loans eats into how much money participants
ultimately have saved. CSI Advisory Services keeps an eye on loan
data such as the number of loans outstanding and the defaults
on loans from a plan. " If we could do anything on leakage, we'd
Gauging the Competition
Facing a tight labor market, employers have grown more interested in
data comparing their plan with plans of peer employers hiring from the
same talent pool.
What plan-data comparison matters most when competing for
employees? Without question, the employer match, says David Griffin
of Atlanta Retirement Partners. " Vesting and eligibility are way behind
the match in importance. " Among his firm's employer clients that are
in tightly competitive hiring environments is one that currently does a
200% match to 2%, and another that matches 100% up to the IRS
contribution limit.
Third-party benchmarking reports and a report prepared for a specific
sponsor can help to assess a plan's competitiveness.
When it creates plan-competitiveness reports for sponsor clients,
CAPTRUST first uses macro plan data from across its client base, says
Christopher Kulick, of the firm. Utilizing its database of over 1,700 plan
clients, CAPTRUST can tell an employer how its plan fares, compared
with peer plans, on features
such as automatic-enrollment default
deferral rate and automatic escalation rate, the employer contribution,
loan provisions and distribution options. " We [compare it with] peer
employers based on the number of employees, asset size and plan
type, and get a sense of how they stack up [against] companies with
plans like theirs, " he explains.
CAPTRUST has a second step in this process. " We also ask our clients,
'Who are your top 10 to 15 competitors for talent?' " Kulick says. " Then
we will pull the Form 5500 and audit reports for the competitors'
plans. " Those reports contain information such as whether the competitor
plans have automatic features, eligibility requirements, match
formulas, nonelective/discretionary employer contributions and vesting
requirements. " You can get a good sense of what's going on with your
competitors' plans, " he says. -JW
36 PLANSPONSOR.com October-November 2018
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