Transcript for "jeff kuzmich - Migrate_FA_401k_Benchmarking_09112024_4669248":
Hello and welcome to the importance of four zero one ks benchmarking for financial advisors. Before we begin, just a few housekeeping notes. First, please note that the primary audio connection for today's session is streaming via your computer. Be sure to check your speaker volume is on and your listening device is turned on and your volume is at an audible level. To refresh or reload your screen, you can press the F5 key on a PC or on a Mac you can press command R. If you experience any technical issues during the webinar, click the help icon in the console dock. Our webinar console allows you to customize your view by enlarging or reducing the size of the slides and the media player using the tools at the top of each window. Let's take a closer look at some of those features. To download and print a copy of today's content for future reference and to access additional resources, refer to the files and resources window at the top right of your console available at any time during the event. If you do not see it on your console, can turn it on by selecting files in the dock. If you have any questions during the event, you can send them via the ask us a question window or the ask us widget located at the bottom of your webcast screen. To submit a question, simply write in your question and click Submit. Please note this presentation does not constitute legal advice and is for informational purposes only. I'd like to now introduce you to today's presenter, Scott Cavanaugh. Scott has been with Paychex since 2008 and has extensive experience and knowledge in the retirement industry, including prior roles in relationship management, sales, service, and various leadership positions. He holds his qualified four zero one administrator QKA credentials from the ASPPA along with his FINRA Series six and sixty three. Over his sixteen years with Paychex, Scott has helped financial advisors streamline their four zero one business and give participants access to these key benefits. Before we bring Scott on, let me talk about what you'll learn today. Scott will talk to you about four zero one plan benchmarking, what it is, why it's important, the benefits of a plan review, what will be additional resources. We will have time for question and answers at the end of the session, so please send in any questions you have, and if time allows, we'll have Scott answer those. With that, let me bring Scott. Well, you, Stephanie. Hi, everyone. Scott Cavanaugh here, and I appreciate your time here and your busy schedules to, learn a little bit more about four zero one ks benchmarking and what that process consists of. So what we're going to do today, you know, we'll start very high level at a 50,000 foot view, and then we'll get more and more granular as we go on what exactly is in a four zero one ks benchmarking, you know, good questions to ask and some really tactical questions for you and your clients. So at highest view here, a four zero one ks benchmarking question, it's a, you know, simply enough, it's a meeting between you and your client to review the four zero one ks plan and discuss any changes that will be needed to to that retirement platform. You know, why you should consider, use the financial professional offering these benchmarking services. It's really recommended by the Department of Labor and the IRS to really sit down and benchmark the plan. They say every few years is a good rule of thumb, you know, anywhere from three to five years to sit down and do a deep dive into the four zero one ks plan or into the retirement platform. And really what this is designed to do is understand the health and performance of the plan. So what plan elections are you offering? The investment performance, we'll dive more into that tactically as we go here. And then ensuring the plan operates in compliance with current laws and regulations. You know, 401ks, there's certain regulations and things going on in the K plan. So, they're not as complicated as you may seem, but it's really important for, you know, you to sit down with your client, and this is a great benefit to make sure that they are, they're operating the plan, if they have questions on the plan, they're getting the right resources and a good benchmarking will help uncover, you know, questions like that. And then this is more of a future current to future looking statement here, evaluate the current needs and make any updates. So, is it in the right shape that the business needs or the client needs? And we will dive into that more here as we go. But some potential benefits for your client, one is cost savings. So, as you go through a benchmarking exercise, cost is one of the things that we're going to look at today and how you evaluate the costs and the questions to look at the costs and the different buckets, you know, to consider there. So there are potential cost savings that you can uncover for a client because, if you're working with a client or maybe taking over advisor of record on a particular platform, you know, don't assume that that's been done in the past, that benchmarking exercise. They may be on some old outdated models or some service agreements and things like that. So it's really good to uncover that, that information for your client. And then peace of mind, you know, as you work with your client there, knowing that you understand the plan, you're asking the right questions, giving that client the peace of mind, You know, they may have questions on, you know, we talked about on the last slide, are they operating the plan in accordance to how they should, is the cost in line, are the benefits, you know, hitting the mark for these employees. So going through that benchmarking is really going to give your client that peace of mind. And then the competitive advantage. You know, in the labor market today, we see a lot in the news of what's going on. Retention, recruiting is still a top priority here with small business owners and mid to large sized business owners as well. So making sure that plan is designed, and really taking advantage for that small business owner. For you as the advisor, this is really a great chance to enhance your service model. As you look at the plan, setting your clients up with the benchmarking, you know, really allows you to review the enhanced services that you offer to your clients and then elevate your advisory role as well. So you spend a lot of time, you know, working with that client, building the trust for that client. This is only going to help you as that trusted advisor that you can cover all aspects of their other business, other personal wealth planning. A really great way to show that competitive advantage as well too. And I will say this is also a really good exercise too, if you're working with maybe junior advisors in the office and things like that, bring them into the process, you know, really help them and show them how this process is done with the different clients and things like that. Scott, I'm going to jump in here because I do think there's a great opportunity for us to do a quick poll. So a poll will pop up separately on your screen. Please mark your response and click the submit button. So the poll question is, of the three benefits we just highlighted, which is most important to you and your business? Is it a, allows you to offer enhanced services, b, elevates your advisory role, or c, gives you a competitive advantage? And the reason we're asking this question, it helps Scott as he used to present for you as we move through it to customize this presentation to your needs. So if you could just give us a quick answer for, of the three benefits we just highlighted, which is the most important to you and your business? We do have responses coming in. Appreciate that so much. I'm just going to give it one more minute for individuals to continue to click submit. And with that, let's see what our response rate is. So we actually have Scott elevate your advisory role was the number one response. And I'll pass this back over to you. Well, thank you, Stephanie. So yeah, some great poll results there. So we can get into some of that and we'll touch on a lot of that information as we go. So, you know, we mentioned here in the agenda, as we set that a moment ago, you know, what specifically is covered in a good four zero one ks benchmark review? And we're gonna dive into each one of these, you know, six bullet points from plan design to fees, you know, fiduciary checklists and resources there, investment performance, plan investment options, and then plan services and different providers and things like that. So we'll start high level on, you know, different fees that are going to be reviewed and things like that. What we do is we break that up into two different buckets. We call them transactional fees and we call them administration fees. So as you uncover a good benchmarking, you know, it's really important to dive into these and really work with your client to make sure it's hitting the mark. For example, administration fees, you know, those can be paid to plan assets, those can be paid to billable to the company, is, you know, tax benefits there. So not only uncovering what those costs are and working with that service provider, but making sure they fit the client's needs on how they're actually being paid for and how those services are being paid for too. So that goes into, you know, the service provider that you're working with, maybe the TPA, your advisory services, and then the transaction fees as well. And when we talk about transaction fees, we're talking about things like, you know, loans and distributions, the things that the participants are going to see, more on a, maybe not a day to day basis, but as needed as they're processing maybe a loan out of the plan or taking a distribution. So good to just uncover all that, you know, for your, for your clients. And these are some really good questions here, you know, high level when you're going over the plan design. You know, the one I like the most is what is the end goal of the plan? You know, when you're working with your client, each client's going to be different and they're going to sign that four zero one ks up for different reasons. For example, if you are in a state, you know, California, Illinois, you know, in the Northeast, like Massachusetts, there's different state mandate requirements out there. And that may be a goal of the client to, you know, have a plan on the books, be in compliance with the government regulations, the state regulations. So knowing that information with your client is really important before you, you know, kind of continue through the process. Or you may have clients that are looking for retention recruiting top employees. Maybe they're looking to take care of certain classes of employees. You know, that third bullet point down, you know, how the plan contribution is structured or which employees are eligible to join. All these are great questions, and it really goes into what is the goal of the plan? What is the client trying to accomplish with that retirement savings program? Auto enrollment, we get a lot of questions lately on auto enrollment as well. If you remember back to Secure Act two point zero, that was passed at the 2022, there's now, added tax benefits for adding auto enrollment onto the plan. That's a type of feature that can really boost participation, help boost participation, comes with those enhanced tax credits as well. Not only that, but starting next year in calendar year 2025, any companies that have over 10 employees are actually going to be required to have auto enrollments. So, you know, if you're talking to your clients now through the late summer fall season, they have over 10 employees that have been in business for a few years. Really good question to bring up on the auto enroll mandate and how they're going to handle that, making sure the service provider and the, you know, the, you know, different features that they're doing are going to be able to accommodate that And also, you know, make sure that you're not taking time out of the client's day to add that feature. So, and then you can dive into things like vesting schedule. Again, that all wraps around the plan design of the plan, and then the rules for distributions and any loans too. So that's more of the transactional part for employees. How do they have access to the plan? Do we want them to have access to these dollars, you know, right away or we holding them off more for what it's designed for, for retirement savings. And that's all around the plan design. And as you go through all this, you know, there's a lot of resources out there, right? So, you know, paycheck specifically, we have a four zero one ks plan checklist. We'll be happy to share that with you. It just goes over some of the, you know, key questions to ask and areas to focus on. It just kind of, you know, serves as your guidepost, maybe more behind the scenes as well. Certainly, you know, you can share it with the client as well. The IRS also publishes a plan checklist here. You're going to get the resources after this webinar, and there's a link right there where you can access that plan questionnaire and that checklist. And yeah, and if there's any other questions on it too, you know, our team, our retirement wholesaler team, we're happy to be that extension of your office, our retirement experts, you know, a lot of experience in the space. So if there's ever just a question or, you know, if plans not with us, we're still happy to help, you know, making sure you guys have all your resources. Investment performance review, another great area to cover here. And there's a lot of different ways that you can go down the channel with the investment performance review. You know, you're looking at things like, you know, cost of the funds, you're looking at, you know, performance review, benchmarking against their peers. Again, there's a lot of different resources out there that can help. You know, the Paychex team, we can certainly help point you guys in the right direction, and things like that. But as you go through your investment performance review, remember that it's, you know, you have a wide range of investors in there, right? You have, you know, your person looking to retire here maybe any day, you have new people coming into the job market in their early twenties and everyone in between. So, you know, it's making sure that you have that appropriate investment mix as well, really ties into that benchmark and review. We get a question, a couple of questions that we get, you know, what are the common metrics to review? And we'll go over a couple of slides on this right now, but the big one is plan participation rate. So we talked about it before with auto enrollment. That's one way we can increase plan participation rate. It's not the only reason or only way to do it. And then deferral rates as well. And not only what they're deferring, but how they're deferring, right? You have pre tax, you have Roth, you have company contributions, all that ties into a great participation mix. So reviewing that with your client is very critical. And then you can also look at the demographics of the business as well. So are they looking to target or support maybe more part time employees or more key employees? And what does the participation look like in these different groups? So all areas to uncover and a common question that we get when doing the plan benchmark here. And like I just said here, so that overall rate, you know, what is your participation rate? How does it stack up to the industry? How does it stack up to their sector? Employee by age. So are you getting, you know, are we looking to get the younger employees, the Gen Zs, the millennials into the plan and deferring at, higher rates? Or is the, you know, those pre retirees, you know, kind of backing down their participation rates? So these are all things to look at when you're doing that and breaking it down by age and by, you know, different categories is going to be great to look at. So a couple more questions that we get on the deferral standpoint is how much are participants putting into the plan each pay period? So, you know, that we have different resources and tools, when it comes home to take home calculators and take home pay calculators and things like that. And what's the average deferral rate for all the participants? And the plan provider, so as you benchmark this as well, back to the original question, right? What's the goal of the plan? What's the goal of the small business owner? What are they looking to do with the plan? And making sure that plan provider is, providing those resources directly with that business owner, making sure they have all the information, they have the expertise, they have the technology based solution to provide them with the resources. So all these questions are really critical to review. These are in the plan checklist that you see here, and that we can provide to you. So really making sure your clients have the right tools and materials for not only themselves, but for their employees too, right? Because we know they're focused on, you know, running the business and recruiting and retaining employees and things like that. So, you know, making sure that they have everything they need and not slowing them down. And this is a real critical step to after you've done the work. So, you've put in a lot of time and effort, you know, you've gathered all the documents, know, you put the analysis together, you've pulled the checklist, you know the right questions you're going to ask. You know, what happens after the meeting is a very critical step here. So consider the plan features, you know, as far as fiduciary responsibility, maybe you're looking to increase participation. So, some things and solutions that you could think of post meeting are things like adding a three thirty eight investment solution, or maybe they need a three sixteen. If you're not familiar with that, you know, a three sixteen is, it helps alleviate some of that admin fiduciary liability and that responsibility, you know, things like delivering notices and, you know, signing, filing the 5,500 on behalf of the client. So it takes a little bit of that work off of their plate. Auto enrollment feature, you know, we touched on that a couple of times today, auto enrollment, auto escalation, re enrollment, how do we drive higher participation rate? Is it the right fit for the Are they, you know, are they ready for the changes in 2025, with the new Secure Act changes? And then things like pooled employer plan, you know, making a really turnkey solution, maybe less administration the client's looking for. You know, I'd say you guys all know your client really well there, so, you know, you know the ones that are going to, you know, have to lean on a solution like a three sixty or allow them to free up their day, and then there's the clients that, you know, are more comfortable, you know, with the day to day responsibilities in operating the plan. And then last here, we'll leave you with this. A couple of questions, poll questions here to come. You know, with Paychex here, we have the tools, we have the resources to support you and your client's futures, book of business there. So, you know, whether you're looking to, you know, help with some benchmarking, get into the space, make it a serious part of your practice, our regional wholesalers are really here to help you and support you. I mentioned it earlier in presentation. We want to be that extension of your office and that resource. So, you know, give us a call. We'll be happy to help. You know, we'll provide that collaboration, that plan expertise, or maybe have little design questions you want to bounce some ideas off of us, we will be more than happy to hop on the phone, spend the time with you, show you the tools, show you the resources to really help you to grow your business here. And then a quick note. So, what we've done in the past with, you know, complimentary benchmarking services, we offer this at no cost. So if you have a plan out there that's looking to, you know, go through this exercise, whether they're serious about moving the plan, or you're looking to, you know, kind of go through this exercise with your client, we can help with that. Our regional wholesalers are here. We do side by side cost comparisons. We can dive into the, you know, investment review and produce different reports there as well. You know, on average, we save clients about, you know, 25% on the fees for you and your clients. And again, the plan doesn't need to be with paychecks. We are, we're definitely happy to do this with any plan out there. So, with that, I'll turn it back to Stephanie for our poll question. Scott, thanks so much. You've done a wonderful job and we will go into question and answers because we've had a lot coming in. But our poll question is perfect because some of the questions coming in is how do we contact Paychex to set up benchmarking and to have Paychex do some benchmarking for them? So if you'd like to speak with a member of our regional wholesale team about scheduling a free plan benchmarking session, please click Yes, and we will get that set up for you. So with that, Scott, let me start with a huge thank you. We have a team behind the scenes answering questions, and they were getting to them so quickly that I was able to save a couple for us to answer live. So our first question was, my client's four zero one plan's participation rate is low. What are some things that they can do to increase the participation rate? You know, I love this question, right, because, you know, participation rate is a critical factor of the plan, right? We wish we had 100% of enrollment and, you know, every participant out there, you know, really saving dollars for retirement and using the plan to secure their retirement future. But, you know, how to realistically, we know that doesn't happen, but it's our jobs to help, you know, really boost that participation rate. So, you know, things that we've helped with in the past, auto enrollment is a really good one, is getting participants auto enrolled into the plan. We found that that does stick, that does increase participation rate. Auto increase is a key feature as well. Having that on the plan where employees every, you know, once a year on their anniversary date, they can be auto enrolled or re enrolled at a 1% higher rate, to help continue drive up that participation rate. And then reviewing the plan, when it comes to, you know, eligibility, who's in the plan, who has access to the plan, different plan designs, is there, you know, company match is always good to consider the plan. I get every client may not want to offer that for various reasons, but, you know, having that incentive, that savings incentive for employees does go a long way. And we do see that demographic across our plan or that staff where, you know, those plans with matching dollars that have access, where employees have access to this, you know, from almost a day one, right? It drives higher participation rates. So these are things that we can talk about in, you know, different one on one meetings, but yeah, it's a great question. Awesome. Thanks so much. So the next question I'm seeing is you mentioned the end goals of a four zero one ks. What are common goals you see with your clients? Some common goals that we see with clients. And again, every client's different. Like I mentioned before, you know, some of it's state mandate driven where they need a plan on the books and they're looking to, you know, be a little bit more of the compliance aspect of why they have a plan on the books. And once they see the benefit of that, okay, then we can start, you know, discussing strategies to driving participation and making that higher. Some other goals, you know, think of the business owner as well, right? Probably your wealth client, or maybe you're looking to pick up that wealth business as well. So, that individual needs additional tax savings and may want additional tax benefits of the plan, whether it's from the business perspective or from the personal perspective. So, I would say, you know, personal tax planning for the business owner is critical. And then, and then all those other employees in the plan as well. So, you know, retention, recruiting, we know based on survey data and what we've heard in our in our demographic of clients that they are still looking for retaining and recruiting top talent. So having a plan designed around finding those employees, bringing those employees into their business, keeping those employees is a great goal to have. And we definitely hear that a lot as well. Great. Scott, this one came in when you were talking about the three twenty one and three thirty eight third party fiduciary. If they're using that, is it a real concern benchmarking performance? Is it a real concern? I'm sorry, you broke up there. Yep, so it says, if we use a 321 or a three thirty eight third party fiduciary, is it a real concern benchmarking performance? You know, I always think it's something you want to look at in the investment review, right? So, you know, whether you have a turnkey three thirty eight, whether you have a, you know, three twenty one still gives you that, that look and feel of open architecture, so you do get a little bit more of that fiduciary protection, but there's, there's lots of three thirty eight's out there. But yeah, it's certainly a category you want to cover in the plan benchmarking service too. Okay, awesome. I have time, I believe for one more question. So what happens at the end of the plan review if I discover my client's plan is not optimized to suit their business needs? Critical takeaway, right? It's all about amending the plan. It's making the changes. It's earning out that action plan with the client. So, you know, the first step is getting there, you know, uncovering the need that it's not hitting the mark, you know, getting their buy in that, yes, we need to make changes, and then ironing out that action plan of how are we going to execute the changes and make the changes. Sometimes it's a simple plan amendment to, hey, let's update the eligibility or let's add a match or, you know, January 1 is coming around the corner. Let's, let's tee that up for a great transition at the, new plan year. So these are all different things to talk to the client about, but I think it really comes down to getting their buy in on the game plan to change, you know, whatever it is they're looking to change, plan design, investments, etcetera. Great, Scott. Thank you so much. Just to make sure we get everybody out of here on time like we promised, we do have additional resources. At the end of this presentation, you will receive an email, I'll say most likely by tomorrow at the latest, that you can click on any of these links either now or tomorrow when you receive the copy of the presentation. And these are resources that you can open at any time and utilize to support your clients. With that, we want to thank you for joining us today. As a reminder, which I just said this, you can download and print a copy of today's presentation in the event resources area on the left hand side of the screen. Click on the drop down arrow and select the file to save and print. We hope you have a great day.