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The Next Big Thing in Retirement Advice

Guidance for plan sponsors on how to motivate employees to get beyond their 401(k) inertia.

As Seen in Investment News

The farther an adviser gets away from client-related activity, the greater the potential drag on efficiency

As implementation of features like auto-enrollment and auto-escalation become common, advisers that have dedicated their practice to serving retirement plans are redefining their role.

Experts I talked to are leading a movement that is gaining momentum with plan sponsors, one that focuses on financial well-being beyond retirement.

They are introducing big-picture goals, such as income replacement in retirement, finding ways to break through employee inertia and creating escalation strategies that move employees closer to optimal savings for retirement. Here are some of the advanced strategies three retirement plan experts are using to better serve plan sponsors.


Brady Dall, a retirement plan adviser at 401k Advisors Intermountain (401k AIM), manages more than $2 billion in dedicated retirement plan assets. He and his team are committed to the overarching goal of helping employees retire comfortably, and their counsel to plan sponsors reflects that goal.

While 401k AIM exhibits a number of best practices, a few of their forward-thinking tactics stand out:

They have a proprietary plan-design optimization process that brings key decision-makers together and helps them focus on employee outcomes.

To begin, they collect a lot of data and create a baseline measure for retirement readiness. “This measure,” Mr. Dall claimed, “really focuses the plan sponsor on employee preparedness versus savings rates and dollars that may not translate to employee success.”

Then they provide projections of auto-enrollment, increase and match scenarios.

Finally, they demonstrate ex-pected outcomes, provide costs and help guide the committee toward the development of goals.

They refuse to allow plan sponsors to use the moniker of “investment committee.” Instead, they frame the role of the “retirement plan committee” as being much broader than mere investment selection and monitoring. They point out that employees are not going to “invest their way to retirement” and advise the committee that they will not add a lot of value to the company or employees with a pure focus on investments.

They typically auto-enroll at a 6% deferral rate. If employees drop out, they re-enroll at 1% deferral and are put on a list to receive individual consultation, with the goal of getting them to commit to future action in writing.


Make it easy for employees to do the right thing by providing education that inspires action and enables easy changes. “Employees will never be more motivated to act than they are while they are sitting in your educational session,” said Mark Tonelli of Compass Benefit Partners. He provides post cards so that employees can ink changes on the spot.

Mr. Dall takes a similar approach and uses a public form of Socratic questioning to make a point and help motivate employees to take action. He asks employees to raise their hands if they know they need to save more for retirement. He follows that by asking them who has been meaning to increase their savings rates and review their investment selections.

“When employees confess publicly to not doing what they know they should, it helps to motivate action,” said Mr. Dall.


Like many advisers, Ann-Marie Sepuka, who heads the retirement plan consulting division for The Noble Group in Texas, began auto-enrolling, with 1%, 2% and 3% deferral. But while it drove participation, it still left overall savings rates in a less-than-optimal state.

She and her team, who oversee more than $1 billion in retirement assets under management, have been counseling companies to stretch their match and to mirror the auto-escalation schedule to maximize employees' benefits. She has found that employees respond to the incentive of the match, and if a change in the approach to a match is communicated properly, the results are positive.

Research from Transamerica's Center for Retirement Studies recently demonstrated that many retirees regret their pre-retirement savings behavior: 76% wish they had saved more, and 68% wish they had been more knowledgeable. If you are an adviser on retirement plans, how can you help employers help their employees do the things they need to, but often won't until it is too late?

Christine Gaze, CIMA, is president of Purpose Consulting Group, a practice management consulting and training firm in New York.

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