Last June, for the first time in its history, leadership from all five of the American Retirement Association sister organizations was together on a single stage – but that wasn’t the most extraordinary aspect.
The event was the Women in Retirement Conference (WiRC) – the combination of two unique events: the ASPPA Women’s Leadership Business Conference and NAPA Connect. And there, for the first time in its history, not only were leaders of all five member associations on stage – those leaders were all women.
Those leaders – Kris Coffey, President of the National Tax-deferred Savings Association (NTSA); Marjorie Mann, President-Elect of the Plan Sponsor Council of America; Miriam (Missy) Matrangola, President-Elect of the American Society of Pension Professionals & Actuaries (ASPPA); Lauren Okum, President-Elect of the ASPPA College of Pension Actuaries (ACOPA); and Jania Stout, President of the National Association of Plan Advisors (NAPA) - each long-time volunteer members of their respective associations – brought decades of experience and a unique perspective to the attendees, who alternated between rapt attention and enthusiastic applause throughout the discussion.
‘Up’ Beat
Moderator of the panel – and Co-chair of WiRC Janine Moore, Retirement Practice Leader – HUB Texas, asked the panel what kept them up at night, and while one generally assumes that sentiment with fears, this group had a positive perspective.
For Coffey it’s that “tsunami” of retirement money rolling out of plans – one that to her presents an enormous opportunity, one that she thinks will produce new careers for advisors. Acknowledging that the flow to individual accounts might present a challenge for recordkeepers, she pointed to the emerging popularity of health savings accounts (HSAs) – and a potential future combination (visually, if not legally) with traditional retirement balances as yet another opportunity.
She also envisions the opportunity to develop a specialization aligned with specific professions: serving as an advisor to attorneys, or to accountants, or perhaps nurses, perhaps in the way that NTSA focuses on teachers as a way to signal a more personalized connection to those professions and their focus. This would allow you to partner with them before and during their distribution cycle, she explains, as well as new hires just entering the profession(s).
NAPA’s Stout said those movements are why advisors should “look really hard” at how they partner with recordkeepers, and consider what additional services – and how much more efficiently – they might be able to offer those services if the money stays in the plan, such as managed accounts, or “virtual” advice. Thinking outside the traditional box could allow advisors to create value with terminated participants in the plans today. To be truly successful, she counsels that advisors should partner with recordkeepers. “It can’t be us versus them,” she stressed.
Listen and Earn
Working together was a theme echoed by Matrangola, who emphasized the need to work together to show value with regard to emerging products like HSAs. “As a TPA you have to understand what your value proposition is, and what you can do for your plan sponsor clients and advisors,” she noted. “Nobody likes doing notices, and cash-out distributions – the HR staff is stretched thin. It’s important to look at your book of business, and find things your clients will let you do for them,” she explained. “The key is listening.” Practice tip: She notes that could include putting a “Do you know we do ____?” notice on invoices.
As a plan sponsor herself, Mann said it was important to anticipate what the needs are – that “sometimes the job description doesn’t include everything you might worry about.” This can actually help plan sponsors better understand their responsibilities.
“You have to talk about things holistically,” Stout explained. “HSAs are a savings vehicle,” she said, reminding the audience that it was an attributed that some plan sponsors hadn’t yet focused on. Particularly at a time like today when fees are being squeezed. She points out that at her firm they used to bundle everything in under a flat fee arrangement – education oversight, investment advisory, etc.
That’s now changing, going to an a la carte approach, she said, noting that the emphasis tends to be cyclical, from bundling to unbundled, and back again. Today that a la carte approach helps Stout not only differentiate her firm’s services, but to add value by being consultative. The process forces her to place – and justify – a value for those services. She also told the group that she was a “big believer” in what she referred to as stewardship reports, rather than a cost of living adjustment. The stewardship report recounts what’s been done over the two years of their service contract: key components, participation, deferrals. “It’s risky,” she acknowledged. “You’re asking for a raise.”
The bottom line, she recommended; “Tell them what you’re going to do, do it, tell them what you’ve done.”
Coverage Concerns
For Okum, the concern is the increasing gap between the “haves” and “have nots” in retirement savings. “The way I look at DB plans, including cash balance plans,” she explains, “is that the goal of large and small plans are very different.” For the larger plans, the traditional goal of benefits designed to “attract and retain,” hoping to encourage valued workers to stay until retirement, holds true. However, Okum notes that even though many small plans maximize the benefits for owners, they also minimize the cost for employees, who are much better off than those without such plans.
Mann noted that retirement finances are the “basis of our economic system in this country.” She noted that plan sponsors are concerned about the financial wellness of their workforce, and as a result there are plans that are starting to auto enroll at rates as high as 7% and even 10%. “They don’t want folks to think that 3% is enough,” she emphasized. The reasons are as much here and now as retirement’s “then and there.” Employers “want to help workers,” Mann said, citing increasing stress levels among current employees, as well as debt management issues, and that means that these programs “have to be more than retirement focused.”
What else keeps these leaders up at night? Legislation – and the impact, both good and potentially not so good, it might have on those benefit programs. “The thing to remember with any law is that there are always opportunities,” Matrangola explained. “Not as bad as we think, and maybe good.” What’s important, she noted, is to read the laws and talk to your representatives – look at how it might impact your business – and what, if necessary, you can do to pivot.
As an example, Okum reminded the group about concerns that recent tax cuts would reduce incentives to contribute to retirement plans. “Turns out,” she explained, “especially with S Corps, there are new ways to maximize benefits.”
Cyber ‘Space’?
Also keeping these leaders awake – cybersecurity. Stout acknowledged that it’s a big deal – one that concerns her more than fiduciary issues, in fact – and one that is beginning to effect advisors. “We rely on recordkeepers to provide data and there’s a lot of data,” she acknowledged. Her firm has not only required every recordkeeper they work with to do a “cyber audit,” but documented that they went through that process.
Mann confirmed that, certainly from a plan sponsor perspective, this was a top risk concern. She noted that the increased emphasis on privacy protection – citing specifically recent developments in California – presents challenges for employers overall. She explained that while there may not be a current, or at least not explicit, fiduciary requirement on this, since all fiduciary actions must be in the best interests of participants, there is an argument to be made that that duty extends to being careful about their data – and in the hiring of firms to which that data is entrusted.
While this extraordinary group came from different places, with different backgrounds, and got involved with this industry at different points in time, the inevitable question for this remarkable group was, “How did you get to this position of leadership?”
Ironically, certainly in view of their divergent starting points, a thread of commonality emerged. Nearly all found themselves at an event sponsored by one of the ARA associations, where they connected with someone who (eventually) connected them with the planning for that event, that (eventually) produced an invitation to participate in leadership.
As Mann explained it, the goal wasn’t to be in leadership, it evolved from their involvement – and, for most, it began with a connection at an event – such as the Women in Retirement Conference. Closing out the panel, Coffey challenged the attendees – but it holds true for everyone, but especially to those who have been part of one of the ARA associations – find just one new person at that next event you attend to whom you can “pay it forward.”
You may have a hand in creating tomorrow’s leaders!
This article first appeared in the the Fall issue of NAPA Net the Magazine.
