Handling Uncertain Times With Wellness Platform LEON

By Sarah Mooney, LEON

1. This is such a time of personal introspection for everyone, yet there’s still work to be done. How do you suggest balancing the support of employees’ emotional needs with the need to meet deadlines and goals?

Emotions are spiraling because of uncertainty. It’s important to keep everyone grounded, and let the team know that despite the craziness they’re a valuable asset to the company. This enables employees to transition their mindset and focus on deliverables.

It’s also important to let everyone know that what’s happening is temporary, and although things are shuffling, it’s imperative that they realize the work being done is to put growth on hyper speed for when things return to normal.

2. Remote work can be more challenging for some than for others. How do you set your employees up for success knowing they all handle distance differently?

As always clear communication is key. However, there are other aspects that play a key role in building a foundation for remote success.

There’s no doubt that collaboration is becoming a little difficult. While employees were able to speak face-to-face, that luxury no longer exists. Employers need to find a way to enable collaboration. This can be via video conferencing, or mixing up some fun collaboration to boost everyone’s morale. We’ve started offering online virtual fitness events to brighten everyone’s mood and keep positive mentalities flowing. The benefit here is that we’re getting everyone to move and ultimately start producing endorphins in order to help with productivity. With so many distractions around the house, it becomes difficult to be productive. And in order to keep targets on track, and tasks complete within deadlines, you need a productive set of employees.

3. Unfortunately, many companies are having to face layoffs. How do you keep employees motivated when there is so much uncertainty?

Everyone is shaken by what’s happening. It’s important to gain their trust, that way their anxiety hovering around being laid off can be a distant memory.

It’s important to show your employees that their work is meaningful – of value and importance to the company. That way they start to feel a sense of security.

Be calm. Although always needed, it’s even more important now. Regardless of how a boss may feel, employees need someone to look up to for reassurance. An encouraging employer will remain calm, communicating a clear plan for moving forward.

Collectively, these changes can go a long way to retain employees’ trust, and improve their mentality in the face of a crisis.

3 Ways Retirement Advisors Can Create Stability for Plan Sponsors Amid Instability

The past few months have been jarring, at best. Yet for retirement plan advisors, times of uncertainty emphasize the importance of helping plan sponsors with the administrative and fiduciary responsibilities of their company sponsored retirement plans. We asked retirement experts Katrina Bell, CIMA (ZUNA), Tony Fiore (PGIM Investments) and Chris Miller (Pensionmark) how best to respond. They highlighted three key ways advisors can showcase their value amidst these challenging times.

Provide Investment Fiduciary Relief

In times of market volatility, people can become particularly sensitive about the status of their finances. Participants are logging in more, evaluating the investments in their portfolios, and asking questions. Plan sponsors are not only expected to answer these questions, but they also have a fiduciary obligation to give a good one. Tony Fiore points out that this is where having an advisor as a 3(38) or 3(21) can help sponsors feel more secure knowing their investment selections were properly vetted by a professional. Fiore adds that this is a great way to approach a prospective client and say “You have a lot to deal with and a lot to think about…and you have to deal with those participants. You have a fiduciary responsibility. That’s not going to be number one on your list, but it’s going to be number one on your employee’s list.” If you’re approaching a new client, ask them about their investment charter and their investment policy statement. Chances are if they don’t have one, having a retirement advisor step in can make a lot of sense.

Evaluate Other Service Providers

Just as you add value to your clients, other vendors should be adding value as well. Now is the perfect time to take a second look at those supporting your client’s plans and ask how they can do better. Miller had some thoughts, saying, “If you can offload anything for your plans sponsor that you can’t get at with your current solution, look for solutions that do. Because if you’re not, someone else is going to call your client and say “I can do this for you.’” By way of example, Miller shares that several clients are laying off important staff such as HR employees who typically manage payroll. The manual entry process of payroll can take hours each month and choosing a 401(k) that integrates with your payroll provider can offer substantial administrative relief. It’s also worth exploring other value-add services such as purchase payback providers. At a time when many employers are cutting back on matching, this is a great way to direct additional funds to participants’ plans just by purchasing everyday items.

Serve as a Subject Matter Expert

When markets become volatile and sweeping regulation throws traditional rules about plan distributions and loans out the window, sponsors and participants want answers around what they can and should do. Show clients how your expertise in understanding financial markets, investment strategy, and new regulation is of particular value in times of market volatility. You can approach clients with heightened sensitivity to their problems by showing them ways to save money on their plans, alternatives to plan terminations, and what the new provisions mean for them. Katrina Bell noted this was the first thing her team at ZUNA did when the CARES Act rolled out saying, “We were really able to get in there, reviewing contracts for clients, reviewing plans documents, and then consulting with them on how to implement all these provisions and the CARES Act, if they’re appropriate for their business.”

Looking Ahead

Given the financial and emotional strains of the time, additional administrative work and fiduciary obligations are the last thing any HR department wants to worry about, especially in the SMB space. While these three tips are ways retirement advisors add value throughout the entire year, they become increasingly important during uncertain times. As an advisor, you can offer immense support by simply giving clients a call to remind them of the stability you offer amid a time of instability.

U.S. News: Q&A With Vestwell

By Coryanne Hicks, U.S. News & World Report

U.S. RETIREMENT AND pension plans are nearly a $670 billion market with an average annual growth rate in the last five years of 6%, according to IBISWorld. It’s an enticing market, but one registered investment advisors, RIAs, have often shied away from out of fear of the archaic technology traditionally used to run it.

In addition to being one of the largest finance and insurance industries in the U.S., the retirement plan industry is also one of the oldest. This means a lot of the industry’s operations were put in place well before the dawn of the internet. In some respects, the industry has been slow to adapt.

It’s time to change that, according to digital retirement plan provider Vestwell. The company says it’s time the 21st century comes to the retirement plan industry, starting with a modernized, digital platform that allows advisors to more efficiently sell, manage and scale their retirement business.

Read interview excerpts from the conversation with Vestwell’s founder and CEO, Aaron Schumm, on how his company is digitizing the retirement planning industry.

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Four years into startup, Vestwell makes its big move — nixing FIS’s recordkeeping for the 401(k) super-bot it built with Goldman Sachs’ VC money

By Lisa Shidler, RIABiz

After four years in business, Vestwell is gearing up to become a turnkey 401(k) program on behalf of RIAs — a software change that could be like swapping a Model T for a Tesla — with some heated industry debate about whether that really makes a competitive difference.

The New York-based startup that Aaron Schumm founded in 2016 plans to deliver more “digital” data that helps RIAs — most of whom currently specialize in 401(k) or non-401(k) assets — create an investor experience that unifies those spheres.

The goal of Vestwell’s data harmonization is to get more retail RIAs to tackle plan sponsors and plan participants.

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Practical 401(k) Advice to Clients Amid the Market Dip

By Kate Stalter, U.S. News & World Report, via Yahoo News

The COVID-19 crisis is shining a spotlight on employer-sponsored retirement accounts such as 401(k)s. Long-standing rules have been relaxed, and investors have new options for making withdrawals.

These changes were put into law last month as part of the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act.

Financial advisors are also being more proactive in helping clients with these employer-sponsored vehicles, which are usually held outside the investment accounts an advisor manages.

For starters, 401(k) account owners can now access up to $100,000 penalty free if they, a spouse or dependent suffer adverse consequences — either health or economic — due to the virus.

Also, 401(k) loan limits have been raised. “Before this crisis, loans were limited to the lesser of $50,000 or half of the vested balance in the participant’s account,” says Allison Brecher, general counsel at Vestwell, a New York-based retirement plan administrator.

“The CARES Act increased that to the lesser of $100,000 or the full present value of the participant’s vested account balance. Loans, even from a participant’s own retirement plan account, do need to be repaid, but the repayments (on outstanding loans) can be delayed by up to one year,” she says.

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COVID-19 may quickly expose that McKinsey’s 2030 vision report ill-advisedly reprises Mark Hurley’s 1999 logic about classic RIAs as easy marks for ‘enterprises’

By Oisin Breen, RIABiz

But pushing a narrative is a lot easier than proving it, especially when it comes to the long-tail influences of technology, says Aaron Schumm, CEO of NYC retirement-robo, Vestwell, in an email.

“Wirehouses can sell a great story, and they may have a lot of offerings on the shelf. But the back-end architecture is glued together with fragility at best,” he explains. “Slapping a front end user experience onto an old mainframe doesn’t make it modern.”

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Dollar Cost Averaging: Managing Risk During a Downturn

As we navigate this period of market turmoil, there is a great deal of advice around how to manage (or leave alone) your retirement plan. It’s particularly common to hear finance analysts and pundits talk about the benefits of dollar cost averaging (DCA) since it’s a popular way to manage investment risk during periods where the market may be declining or volatile.

According to Investopedia, “dollar cost averaging is an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of a target asset in an effort to reduce the impact of volatility on the overall purchase.” So rather than investing a lump sum, you can invest that amount over a period of time, such as 25% in each of the next four months.

The idea is that diversification doesn’t just apply to investments; it applies to timing. Market timing is impossibly hard, so rather than investing all at once where you can lose a large amount if markets fall, you can invest that sum over a period of time. There’s been a wide body of research on the topic, showing that in periods of market volatility, dollar cost averaging can be very effective.

There are two ways you can use dollar cost averaging with your 401(k):
  1. If you’re putting away a percentage of your paycheck, congratulations! You’re already dollar cost averaging. Keep saving for retirement and follow your retirement strategy.
  2. If you’re thinking about reallocating your portfolio, you can shift your allocation towards stocks incrementally over a period of time rather than immediately.

Outside of your 401(k), if you have money to invest outside of your “emergency savings” and other investment goals, you can practice dollar cost averaging by investing it over a period of time rather than immediately. Let’s say you intend to move $4,000 to an account. Rather than moving it all at once, you can move $1,000 for each of the next four months. In effect, you’re reducing your risk in the event the market continues to fall.

If you’re trying to implement a dollar cost averaging strategy, be sure to ask an investment advisor. Or, if you’re a self-help learner, there are plenty of resources online.

Vestwell is not a law firm or tax advisor. Participants may wish to consider hiring their own professional before making any changes to their retirement plan, as there could be tax consequences and other adverse impacts on their retirement plan.

Understanding Recordkeeping Technology

While recordkeeping is arguably the backbone of the 401(k) and 403(b) industry, most providers are trying to service modern day needs with mainframe systems. However, because the technology is so complex, many don’t understand how it truly works and why it has such a significant impact on the cost, function, and service of a retirement plan offering. Join our Founder & CEO, Aaron Schumm, and 401K Specialist Magazine’s Editor-In-Chief, John Sullivan, as they discuss the ins and outs of recordkeeping technology.

This session covers:

  • The How. Inner workings of recordkeeping technology.
  • The Who. Industry players and how they’ve evolved over time.
  • The Why. Why should advisors, plan sponsors, and even participants care?
  • The What Now. What could the future of recordkeeping look like and how can that help you and your practice?

Effective Ways to Manage Your Retirement Plan During Uncertain Times

COVID-19 might be causing a meltdown on Wall Street, but it doesn’t have to create a meltdown in your office. You’re likely facing pressure to answer questions (and maybe even make decisions) regarding your company sponsored retirement plan, so it’s imperative to stay informed. This webinar covers common participant challenges during times of uncertainty and how to address them. We also discuss some of the actions plan sponsors can take should they find themselves required to cut plan costs. Read the full debrief here.

Plan advisers may lose business as 401(k) sponsors struggle

By Emile Hallez, InvestmentNews

Some advisers have indeed been busy, said Aaron Schumm, CEO of Vestwell, which provides digital record-keeping services to about 5,000 plans.

Because of remote work and a standstill in new plan sales, “advisers are probably more accessible than ever right now,” Schumm said. “We’re seeing a high volume of advisers wanting to create proposals for existing clients.”

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