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Catching Up on Some Worthwhile Reading

Now that summer vacations are over, it’s a good time to start catching up on professional literature. Here are a few reports I’ve reviewed recently that I believe are worth reading.

“The Science of Satisfaction” From Wells Fargo Asset Management

Wells Fargo Asset Management teamed with consulting firm Ann Schleck & Co. LLC to ask plan sponsors what drives their satisfaction with their plans and consultants. The survey covered a range of topics, according to Ron Cohen, head of DCIO (Defined Contribution Investment Only) and RIA Sales for Wells Fargo Funds in Boston. “The purpose was to really get a sense of what drives sponsor satisfaction, not only in terms of things with the plan, but also with the advisor,” he explains. “What are the qualities that they look for in their advisor? What are the best practices that we could then take and bring out to the rest of the advisor community?”

The findings were informative, but many survey sponsors stop at this point and publish their results. Wells Fargo, however, used the data to build a library of practice management tools that they have named the “Science of Satisfaction.” The materials are available free with registration and can be found on

Advisors can drill down into particular practice management areas or follow the materials’ system, which includes:

  • Client feedback surveys to uncover sponsors’ objectives and preferences;
  • An education planning guide to develop and communicate a participant education plan;
  • A 'formulas for satisfaction' guide to help align your services with those that sponsors value most;
  • A 'calendar for satisfaction' guide to plan sponsor-level communication and service;
  • Checklist for satisfaction and annual summary for satisfaction guides to build your approach to plan service;
  • A 'testimonials for satisfaction' guide to promote your services and value to prospective clients.

The materials are informative, well written and include specific recommended action steps. Cohen says it’s not just new advisors using the material; experienced advisors also are finding ideas and using the checklists to expand and improve their existing processes.

“The Current State of 401(k)s: The Employer’s Perspective” From Transamerica Center for Retirement Studies

This study, which was released in June 2016, is the 16th annual retirement survey from the Transamerica Center for Retirement Studies (TCRS), is available online ( The organization teamed with Harris Poll in late 2015 and surveyed over 1,000 small and large employers. The survey covers a wide range of topics, and I asked Los Angeles–based TCRS President Catherine Collinson to elaborate on several recommendations of particular interest to plan advisors.

For employers who offer a plan, extend eligibility to part-time workers.

There is a dichotomy in retirement plan availability, Collinson explains. TCRS’ research shows that among employers with 10 or more employees, 74 percent offer a 401(k) or similar employee-funded plan. But, only 38 percent of sponsors extend plan eligibility to their part-time workers, and 91 percent do not plan to do so in the future. The most frequently cited reasons: It’s generally impractical (39 percent); cost concerns (37 percent); and high turnover among part-time employees (33 percent). There is also a policy aspect to increasing plans’ availability, she notes, including regulatory relief on nondiscrimination testing and an ability to exclude part-timers from matching contributions.

Consider structuring matching contribution formulas to promote higher salary deferrals.

Standard matching formulas match 100 percent of an initial contribution, such as the first 3 percent deferred. The report suggests that a better approach from a savings behavior perspective could be to use 50 percent of the first 6 percent of deferrals or 25 percent of the first 12 percent deferred, for example.

“Employees have gotten the message not to leave matching contributions on the table because it’s like leaving part of your compensation on the table,” Collinson says. “The idea of, for example, matching 50 percent of the first 6 percent rather than 3 percent of the first 100 [percent] could encourage more employees to contribute at a 6 percent level. The illustration that we’ve provided in our report is 25 percent up to 12 [percent]. So, 12 percent may be too high depending on the income demographics of the plan, but the idea of stretching the match is a great conversation for retirement plan advisors to have with their plan sponsors and determine what is right for them.”

Offer pre-retirees a greater level of assistance in planning their transition into retirement.

Potential services can include education about distribution options, retirement income strategies and the need for a backup plan if the employee is forced into retirement sooner than expected. The survey found that less than half of sponsors provide information about distribution options, systematic withdrawals or annuities, for example, and micro plans were even less likely to offer these services. “It’s really perplexing because plan sponsors invest a tremendous amount of resources and expertise to help their employees grow their nest eggs and, then, when the big time comes for the nest eggs to hatch, very few offer any sort of financial counseling or transition assistance,” says Collinson. 

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