Financial Advisors

Being Thoughtful about Retirement Plans

Retirement plans, like everything else in financial services, are becoming less of a pre-packaged, paint-by-numbers sales process and evolving into a more bespoke and consultative experience thanks to a growing fiduciary mindset and empowering FinTech tools and solutions.

To better explore how advisors are evolving their approach and engagement with business clients, we decided to talk to Gary LoDuca, Founder & Owner of Thoughtful Advisors – an independent Tampa-based advisory firm that differentiates by offering clients a “fiduciary-focused ethical alternative to corporate financial service providers”.  He shares with us his thinking about his business model that focuses on fiduciary mindset and FinTech partners to provide a competitive value proposition of successfully rehabilitating 401(k) plans for small-to-midsize business owners.

Hortz: Why do you claim that most business owners are not getting specific and strategic retirement plan advice that can improve their bottom-line results for themselves and their business?

LoDuca: Most businesses are sold solutions that are basically cookie cutter prototypes from the usual Wall Street, insurance company or payroll provider suspects. The growing number of lawsuits against plan sponsors and the personal feedback I get from business owners I talk to, make it clear that they are not happy with the results and advice they have been receiving. 

Hortz: You mention numerous times that thinking differently is where value is created. Can you give us an example of thinking differently and how that benefits your clients?

LoDuca: Being a fiduciary advisor forces you to think differently and work strictly from client needs and goals.  Being focused on what the business needs and expects to accomplish, helps us explore what options are available, which ones provide the best benefits, and shop for the lowest costs with the highest probable measurable outcomes. 

That ongoing search for the right solutions brought us to FinTech companies where we have found superior retirement plan services and tools with lower costs for our clients. We are constantly looking for, and finding, financial innovation that benefits our business owners.  Once we identify an innovative solution that provides higher quality, lower cost and hassle-free outcome, we introduce the innovation and quantify the benefit to the business.

Hortz: What is your recommended 4 steps to developing the best possible retirement plan?

LoDuca: The first step is Understanding.  Whether it’s a start up plan or current plan, as fiduciaries, we need to understand all there is to know about what and why a company wants to add or redesign a retirement plan.  With a current plan we review the most recent annual disclosure [Form 408(b)2] and prepare a benchmark report from AdvisorLab™ called a Retirement Plan Diagnostic [RPD].  The RPD report creates an objective 3rd party baseline for the most valuable measurables of the plan like participation rates, plan admin fees, investment cost etc, and sets the starting point for plan redesign improvements.  We quantify all the subjective reasons for the plan as well to identify business and retirement plan goals and past experience with retirement plans?

The second step is Opportunities.  This is where our fiduciary mindset and FinTech experience pays off.  Through our research, analysis and collaboration partners, we identify the best combinations of technology and services available for our business clients.  We compare the new opportunities to the current plan in an analysis called a Retirement Plan Efficiency [RPE] report.  This side-by-side analysis quantifies the benefits and metrics of the proposed opportunities.

Step three revolves around Decisions.  Steve Jobs had a quote I love, “people don’t know what they want until they know what they can have.”  Presenting our recommendations and showing the decision makers the differences in the Retirement Plan Efficiency reports allows us to more effectively collaborate with them and help them understand what they can have and the benefits of the recommendations.

The fourth step is Execution.  Nothing happens until someone in charge signs paperwork.  Once our decision maker agrees to implement, we step in to manage the process with as little interruption or disruption to their business.  Our FinTech integration and automation leads to seamless workflows that puts all the plan partners in the best possible situations to manage the plan successfully.  We measure everything on a recurring schedule and document everything needed as fiduciaries for our plan sponsor.

Hortz: How do you create value through thoughtful collaboration? What does that process look like?

LoDuca: At each step of our process I just outlined, there is a considerable amount of valuable discussion and feedback with the client and our FinTech partners.  It is that continuous, iterative dialogue that assures we are all on the same page and customizing a solution that truly meets their needs and goals. We operate between the business owner and the service providers on service integration and on-going process management.   This allows the business to continue to operate without having to divert time, attention or energy to that on-boarding project.

Hortz: What is technology bringing to the table?

LoDuca: We see the biggest benefits coming from better payroll integration with our 410(k) plans.  The impact to our business clients is higher quality, lower cost programs that are truly hassle-free.  Our FinTech integration solution automates 401(k) plan employee enrollment and separation, offers risk evaluation and asset allocation recommendation and provides high quality and very low-cost managed portfolios that match an employee’s risk tolerance.  All of this leads to better employee engagement, enhanced financial wellness and better outcomes for the business and the participants.  FinTech thoughtfully deployed makes our retirement plan client experiences significantly better than other traditional or packaged options.

Hortz: What best advice do you give to your business owner prospects on being more thoughtful on retirement plans?

LoDuca: Seek out fiduciary retirement plan providers first.  Have a set of expectations or outcomes in mind when discussing your plan.  This provides a great starting point to understand what is available and possible for your business. Be cautious of payroll provider plans packaged and sold as upgrades to your payroll relationship.  Avoid retirement plans and services that combined do not include full 3(16) and 3(38) fiduciary services.  Make sure your retirement plan includes modern technology solutions. Last, but not least, benchmark your plan annually to make sure your current 401(k) plan provider is performing as expected and they are continually doing all they can to keep your plan as well managed and cost effective as possible.   

True fiduciary advisors will continue to advocate for financial service cost transparency and ethical practices.  We believe capitalism works best when decision-makers are fully informed consumers.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Bill Hortz

Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.

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