What do plan sponsors want? What products and services do they feel are right for their participants? Importantly, what do they expect from the advisors with whom they engage?
These questions and more were answered at an afternoon general session at the recently completed NAPA 401(k) Summit in Nashville, Tenn.
Appropriately titled “What Do They Want? Ask a Plan Sponsor,” it featured a cross-section of large and small plan sponsors in the public and private sectors, all of whom were members of the National Association of Plan Advisors’ (NAPA) sister organization, the Plan Sponsor Council of America (PSCA).
Moderated by Will Hansen, PSCA’s Executive Director, the human resource professionals on the panel were:
- Brandon Diersch, Global Financial Benefits Manager, Microsoft
- Diane Garwood, CPSP, SHRM-SCP. Vice President, Human Resources, Horizon Bank
- Yvette George, PHR, SHRM-CP, CPS, Human Resources Director, Henrico County, Va.
- Michelle McGovern, CPSP, LSSG, Director, Strategic Operations, People & Culture, American College of Surgeons
Largest Priorities
Referencing PSCA’s Annual Survey of Profit Sharing and 401(k) Plans, which is now fielding responses for its 67th edition, Hansen asked panelists about their current priority regarding the retirement plan and retirement savings for their employees.
“With Microsoft, this year, our main focus is really doing a detailed investment lineup review,” Diersch said. “Historically, we’ve had many investment options spread across the various Morningstar-style boxes. We really want to use the most advanced research in behavioral science to ensure we’ve got investment options that actually get strong utilization and direct the participant to the types of investments that are appropriate for them.”
Garwood said her main priority is executive compensation and instituting a revamped deferred compensation plan.
“We’ve done a lot of work with 401(k) in the last few years, so we decided to focus and move to helping those who can’t save as much for retirement because of the caps to have the ability to defer more compensation,” she said. “[We’re] just really giving a lot more people the opportunity to save additional funds. It’s definitely a retention strategy. We just had our 25-plus year CEO retire, so we’ve had a lot of changes at the top recently, and we’re just looking at things differently.”
George mentioned participant education as Henrico County’s biggest employee focus.
“Being a local government, we have a lot of volunteer employees,” she said. “We have some that have been there 35 years. We do that with our service awards. We’re finding out that a lot of them are non-participating, and they’re depending on just their pension, or that they are not building on their retirement. And we’re coming to find out that they’re really not educated in what’s out there.”
McGovern said the American College of Surgeons continually looks at education but is fortunate enough to have a fully funded active pension plan.
“We are looking at benchmarking our overall retention benefits through our retirement plan,” she added. What does that look like holistically when you look at the pension in conjunction with our 403(b) plan—how competitive is it? It’s really meaningful for many of our employees who’ve been there …then we have a whole other spectrum of those that we’re hiring who have been there for less than five years. Do they even understand and appreciate what a pension is?”
Automatic Enrollment
Hansen moved to auto features, noting that PSCA’s 66th annual survey found 63.9% of all plans now have automatic enrollment, yet the falls sharply for smaller plans at only 28.9%. Hansen asked if the panelists and the organizations they represent are “auto believers.”
“Yes, I absolutely am a believer,” McGovern said. “It’s phenomenal. I think it’s an absolute. It really makes a huge difference in your plan.”
George agreed, noting that Henrico County only recently implemented it, as did Garwood, noting Horizon is a “recent convert” to auto-enrollment.
“We added it at 3% in probably 20222 and then bumped it to 6 % in 2023,” she said. It was because we didn’t get the pushback we expected. Everybody was fine with it, so we could increase it. It’s helped a little with our ADP testing, but not as much as we’d like to see. We’re getting there.”
Noting he was an outlier panelist, Diersch surprised the audience by stating that Microsoft does not use auto-enrollment and pointed to the tech behemoth’s 94% participation rate without it.
“The main reason why we don’t want to implement it is that it would really reduce our deferral rates,” he explained. “The average deferral rate is about 12%, but if you auto-enroll, what rate do you enroll them at? The approach that we’ve taken is more of an ‘easy enroll,’ which our record keeper allows us to do. At new employee orientation, they can sign up on the spot. It accomplishes something similar to auto-enrollment, but then it allows them to select the rate they want to participate. It comes down to knowing your employees, your participants, and making the right decision for your population.”
Data (Dah-ta)
Hansen, having some fun with its pronunciation, asked about participant data and what the panelists were doing with it.
“Honestly, the data has been very, very, very important in making some decisions thus far,” George said. We look at our data to help boost our participation. Where are our pain points? What do we need to do? Where do we need to grow? What do our employees know? What don’t they know? We have surveys that are done through our advisors, and they have just given us so much information regarding our next step.”
“It’s one of the things I’m continually asking for,” McGovern added. “We have meetings with some of our administrators and advisors every other week for 30 minutes. We can look at the dashboard, but are we having a problem with beneficiaries? Can we look at who that is? I want to make sure that everyone is covered. If you don’t have a beneficiary, I’m volunteering.”
Advisor Pluses
Hansen asked the panel to “show some love” to the advisors in the audience. What is their advisor doing for them that they just could not do without?
“I think a little extra effort is needed when someone’s retiring,” McGovern said. “We’re not referring them to the call center. We’ll have some of those folks willing to set up separate phone calls to make sure we’re handholding them through that process and nothing goes wrong because, again, it’s going to be a reflection on our team and our brand to our employees, and that’s our number one customer.”
“Picking up on that communication point, it’s really helpful when the advisors and everyone who works on our plan make sure that the advice or recommendations they’re making are really relevant and they’re not stock, off-the-shelf presentations—they’re really tailored to the client,” Garwood said. “And then also being able to work with fiduciary committees effectively. And each fiduciary community is very different. It is really important to know who the personalities are, how they like to have their information presented and consumed, and when to stop talking.”
Garwood’s organization has had some “weird things happen in the last couple of years,” and, without the advisor, it would have been much harder to manage. So just any time they’re available, I think it’s great.”
Advisor Minuses
Hansen concluded by asking about some advisor negatives, or the “the bad and the ugly” experiences they’ve had with prospective advisors.
“It’s a phrase you’ve all heard—know your audience,” McGovern concluded. “That’s nothing new. But the types of things that happen in this day and age, I’m always surprised [about]. I’m from the College of Surgeons. Before we do an RFP, we do a lot of work to make sure that we have a very robust list of expectations and timelines. We have folks come in and refer to us as a school or a college, and as I told you, we’re a large association. It shows there’s a complete disconnect from someone at the table.”
