Editor’s Note: This is the second of three in-depth interviews with the finalists for the 2013 401(k) Advisor Leadership Award. Sponsored by NAPA and ASPPA, the award reflects the multi-faceted efforts of advisors to serve their clients (both plan sponsors and participants), act as a mentor, maintain high ethical standards, and consistently improve their practices and services in the retirement industry. One of the three finalists will receive this year’s award at the 2013 NAPA/ASPPA 401(k) Summit, March 4 in Las Vegas.
Jania Stout, CBFA®, AIF®, is retirement plans practice leader for the Fiduciary Consulting Group, part of PSA Insurance and Financial Services, Maryland’s largest independent multi-disciplined financial services firm. Stout has more than 18 years of experience working with middle-market companies and their corporate-sponsored retirement plans.
Stout has an extensive background in providing advice and counsel to plan sponsors regarding qualified, non-qualified and defined benefit plans. Her focus is to help plan sponsors and their participants get the most out of their vendor relationships.
Stout holds Series 7, 6, 65 and 63 licenses, and recently attained her Certified Behavioral Finance Analyst designation. This designation aligns well with her passion for understanding participant behavior and helping them get across the finish line. She currently serves as president of the Chesapeake Human Resources Association and is also director of membership for the Maryland State Council for SHRM.
Stout’s Fiduciary Consulting Group at PSA (FCG) generates 100% of its revenue from consulting on both qualified and non-qualified plans. The FCG’s entire service model is built around the four pillars of fiduciary duty. What sets the FCG team apart is the level of focus around the exclusive benefit rule, the plan document rule and the prudent expert rule.
The FCG’s goal is to empower participants to make informed decisions relating not only to their plan elections and retirement goals but to living a fiscally responsible life. Sharing knowledge with all parties leads to greater levels of engagement, higher participation rates and an overall positive company-wide outlook regarding this important employee benefit.
NAPA Net spoke with Stout about her career, her business philosophy and the practices that have made her a finalist for the NAPA and ASPPA 401(k) Advisor Leadership Award.
Q: In terms of skills, insight, and services performed, how would you describe the arc of your career in the retirement planning business, from your first job to your current one?
Stout: My first job was with ADP 18 years ago. I had no previous experience; I was a philosophy major in college. 401(k)s were still fairly new but the momentum was building. For 10 years my job was primarily to sell plans; in one year I sold 100 of them. This was the part of my career in which I learned the basics of plan design and compliance, but I began get impatient with just selling a product. It was, however, the perfect basis on which to build my next phase with Fidelity.
Fidelity Investments was a great experience because it represented a whole different philosophy. It was like working for a non-profit organization that was there to help participants. I started to realize that what we do can make a difference in the world. The way we structure these plans — the benefits and tools we give the participants — can have an effect on how they retire. I decided I wanted to sit on the client’s side of the table, not just sell product, no matter how good the product was. I also realized I knew enough about this business to be an advisor. I came to PSA so that we could have more of an impact in controlling the outcomes for our clients.
Q: Recipients of the 401(k) Advisor Leadership Award are judged on how they use their expertise to help Americans prepare for their retirement future. What are the three top things an advisor should do to help clients’ employees retire with dignity?
Stout: Our clients are the plan sponsors who hired us, but also, because of our focus on fiduciary responsibility, our clients are also the participants. Many consultants see only the sponsor as the client, but I think a shift is happening, because the participants are what this is really all about.
For years providers have focused on the accumulation phase, blindly picking a number and going for it. Ten or 15 percent seemed a good number because chances are it would result in enough to enable them to retire. But most people don’t even know the basics of investing. When you ask if that number will get them to where they need to go, they’ll admit they don’t even know where they’re going. You need to sit across the table from participants and talk to them about more than just numbers.
Automatic enrollment is great and I’m not against it. But I don’t want us to think it’s enough. If you enroll employees at 3%, they’ll be very happy but 3% isn’t going to cut it. You can add an auto escalation feature, which is better than where we’ve been, but advisors need to invest in their participants by offering one-on-one meetings with them. You don’t make money off it, and it’s really time consuming.
Second, don’t just talk about the retirement plan. Look at everything. People are so in debt that talking about a 401(k) is secondary. They have to figure this out first. We have to do a better job on debt elimination and budgeting, talking with them about how you shouldn’t spend more than you make.
Maybe they’re $50,000 in debt and buying a car every five years. If you show people what would happen if they just drove their car a little longer and put that car payment into their retirement plan, it can open their eyes. If you talk to participants about making wise choices in their daily life, it can have an impact on the savings rate.
One participant had $30,000 in liquid savings and $25,000 in credit card debt. She was actually in pretty good shape except for this one little piece, and she was trying to pay off the debt without touching her savings. Nobody had ever sat down and talked with her about how much those credit card interest rates were killing her. So I walked her through how she could use the savings to pay off the debt, take the payments she was making on the credit card, and put them into savings.
Most participants don’t have a budget. Using a three-module program of goal setting, budgeting and debt elimination, we’ve helped participants at one of our client companies pay off a total of more than half a million dollars in debt. And when we started adding debt elimination topics to our monthly webinars, the numbers tripled immediately.
I did this wrong for most of my career. I was right there with everybody else; it’s all about saving 10% to 15%. I’d sit across the table and tell them to keep pushing until they get to 10%. I’d ask them all the questions about risk and debt, but it wasn’t really the main part of the conversation. Now we focus on goal setting, budgeting and debt reduction. If we can help every participant in a plan get a budget, we’ll have healthier plans in the long run because we’ll have financially healthier participants.
Q: What do you consider the most innovative idea that you’ve implemented in your own business?
Stout: We hired a financial wellness coach on our team when we hit $1 billion in assets as our way to reinvest in our clients. His role is to sit with clients and map out strategies with them. We don’t have the resources to hire 30 people to do just that, so we all do participant education — no one is exempt. So the financial wellness coach helps us improve our counseling of participants. It keeps us in tune with the real reason we’re doing this. It’s kind of that non-profit spirit I picked up at Fidelity.
Q: Speaking as a mentor, what practical steps can other advisors take if they aspire to compete for the 401(k) Advisor Leadership award themselves?
Stout: Just because it was done one way in the past doesn’t mean that’s the way is has to be done in the future. I think we need to break all the rules right now. We haven’t done a great job of education, not just our industry but plan sponsors, too. We as a firm do better with clients who care about their employees. We’re not a good fit for everybody because we need the sponsor to step up and allow us to talk to their employees.
An AARP speaker I heard recently said that in the next 10 years we’re actually going to have a worker shortage, there won’t be enough people for the jobs we’ll have. Which blew my mind because of the current rate of unemployment. But based on the Baby Boomers retiring and exiting the job market, there won’t be enough qualified people to fill that gap. Employers are going to have to get creative about attracting employees. But rising health care costs are strapping them, so they have to find ways that aren’t too costly. I believe if you invest in employees by helping them make better financial decisions, they’re going to be loyal — more connected to the employer.
So don’t follow the traditional ways of education because they didn’t really work before. Our presentations use props and involve the crowd. We don’t bore them with PowerPoints and charts and such. Our presenters are passionate and come up with creative ways to engage the participants. And then we measure the results. We don’t just walk away and think we’ve done some good. We quantify it through surveys and follow-up calls, measuring how we’ve affected the participation rates.
We’re making a difference but it’s going to be a slow difference. I’d like to educate providers and other advisors about this issue and maybe we as an industry can join together and help people get out of debt. This is the issue. People can’t get to 15% if they’re in debt.