EmpPlans

Help for Employers

Common Objections

While some of these services may have been available from your plan provider(s), and there typically have been fees built into your plan to pay for them, actually receiving them in a meaningful way has not always been simple. The trend, in fact, has been a scaling back of these offerings from the providers – especially for small and mid-size plans.

It is also important to understand the conflicts of interest that are inherent in most plan provider structures and the sales-based nature of what they present as education.  The reality of their business models is that they have an economic interest in where plan assets are held.  This is especially true in plans where there is more than one provider.  Communications in these environments essentially have to be sales based, often geared toward proprietary products such as insurance and annuities that strive to keep control of a participant’s assets throughout their life.

As far as account management is concerned, it is essentially impossible for any plan provider that offers and promotes proprietary investments on its own platforms to be considered truly unbiased. This is why plan providers generally state in their contracts that they are NOT plan fiduciaries. They have a vested interest in the selection of some investment options over others.  StraightLine has none of the biases or potential conflicts of interest these connections create as we are independent of all fees and investment revenue generated within a plan.  All of StraightLine’s investment decisions are solely in the best interest of our clients and not for the benefit of ourselves, any plan provider or mutual fund.

Despite its critical importance, it is always somewhat difficult to get employees to pay attention to planning for retirement.  The concepts around it can be difficult to comprehend, the process can be intimidating, and the immediacy of other responsibilities often takes precedence.  In fact, common misunderstandings (often perpetuated by the financial services industry), have caused many people to give up on the idea of retirement – even before they truly understand what it could be.

StraightLine aims to demystify these concepts through simple, clear education that is targeted to address the wide variety of individual situations and needs.  Often, the biggest barrier to attendance is the inability or unwillingness of presenters to go directly to the people.  Big group meetings at 12:30 in one large lecture hall only work for a handful of people.  We understand the need to be flexible about presentation times, locations, customized topics, and even delivery methods (in-person seminars, webcasts, etc.).  We have presented everywhere from third shift meetings at 3:00 am to gatherings of executive leadership over catered lunches.

The most important factor needed to create participation and encourage positive action is consistency.  Education cannot be viewed as an afterthought or a one-time per year obligation.  Having an educational program that is properly designed and effectively delivered will build the credibility of the resource and yield increasing participation over time.  Improving the retirement readiness of all employees is the goal, making sure that no one is ignored.

The emergence of these features in modern retirement plans is a positive development; however it cannot be assumed that they meet everyone’s needs.  Online tools are rarely utilized by more than a handful of people and they are rarely kept up to date with an individual’s evolving situation.  Personal contact is the key to engaging the vast majority of employees and customized management is essential to address an individual’s unique needs.

While some rebalancing can be positive, it can result in problems.  Surprisingly, regular rebalancing can actually result in the portfolio being traded too often.  Sometimes market trends need to evolve over longer periods of time than many rebalancing programs allow, thus minimizing the positive impacts of a trend in an investor’s portfolio.  Markets have proven time and time again that trading cannot be ruled solely by a calendar.  We believe it must be based on a multitude of variables such as an individual’s time horizon, risk tolerance, expected return, asset class preference, tax status as well as the ever-changing market landscape.

This same belief also speaks to an inherent weakness of target-date funds.  They are essentially managed only by the calendar. Every quarter or every year, the funds are mechanically rebalanced based on a preset asset-allocation ratio, with little concern for market conditions or the needs of the individual investor.

 

The time you have to invest to initiate StraightLine’s services is minimal.  The information we need includes the basics of your plan, participant demographics and the setup and schedule of your organization.  We will then work with you to craft a program to meet your needs.

Unlike what you may be experiencing now, the costs for our educational services are simple and can be structured in several ways.  They are generally delivered on a per-advisor, per-day basis.  Project or contract-based pricing is also available.

You may not even realize that you are likely being charged for education services through your existing plan fees – whether you are receiving them effectively or not.  It may be possible to recapture some of these fees to cover the costs of our services.

Participant account management services are available at no cost to your company.  The employees typically pay the fee (often directly from their plan account), although some employers have chosen to pay the fee as part of the compensation package.

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Learn how StraightLine can be of service to you

Let us help you establish your organization as a leader in providing for the financial security of your employees. StraightLine also provides professional account management for individuals with 401(k), 403(b) and 457 retirement accounts. We manage the account for you – making changes to allocations as needed. We also offer an advice-only management option. Please let us know your needs and we’ll get right back to you and provide you with “straight” answers to your questions.

Corporate Headquarters: 165 Kirts Blvd., Suite 100 • Troy, MI 48084
Local / 248.269.8366 • Toll Free / 877.EDU.403b • Email: info@straightline.com

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