401(k) Specialist Issue 1 - 2018 - 29

JANUARY
BARBARA DELANEY, StoneStreet Renaissance
The Participation and
Deferral Rate 'Gold Standards'
FUNDS, FEES AND FIDUCIARY-the three " Fs " might be cliché, but they're also a key to
successful participant outcomes in any 401(k) plan. Yet Barbara Delaney points to one other
ingredient too often overlooked.
" What we look for, as far as the health of a plan, is not only good funds, but the right allocations, "
Delaney, the high-profile principal with New York-based StoneStreet Renaissance,
explains. " If people are not properly allocated over time, having good funds is not going to
rescue you. "
Employing blunt, no-nonsense language for which she is known, Delaney adds that, " It
almost becomes academic. The outcome over time is dependent upon the asset allocation you
stick with, and not what fund [product] you pick. "
For this reason, Delaney and her StoneStreet Renaissance team are " really tuned in " to en " What
we look
for, as far as the
health of a plan,
is not only good
funds, but the
right allocations. "
Barbara Delaney is principal with
Pearl River, New York-based StoneStreet
Renaissance.
suring participants are correctly allocated, and that they participate at a rate that will provide
replacement income of at least 80 percent.
" As a whole, we have participation rates near 100 percent, and that is our goal. "
Which, when one thinks about it, should be the goal of every 401(k) advisor, but the difficulty
of getting plan sponsors and participants to engage in behavior that meaningfully moves
the needle too often means many settle for far less.
But not Delaney.
" If we do it right with automatic enrollment, [participants] should not be opting out
unless it's for a specific reason, " she argues. " We have one client, in particular, who re-enrolls
every year, even if they opt out, which is interesting. "
While auto-enrollment has been a boon for getting American workers to save (and in
part responsible for Richard Thaler's recent Nobel win), the controversy surrounding the 3
percent deferral rate continues, something Delaney is dealing with directly.
" We're focused on increasing the plans we work with to a 6 percent automatic deferral,
rather than 3 percent. As 401(k)s mature, we see people taking a step back. Sometimes they've
increased their deferral rate above the default, only to then leave for another company where
it goes back to 3 percent. So, the more companies that we can get to 6 percent, the better. "
We can't help but wonder if it's met with resistance from participants.
" No, the resistance comes from sponsors who know that it's now a significant budgetary
item, " she counters.
So how, specifically, does she benchmark participant success to ensure positive outcomes?
Through constantly analyzing the data.
" I can take the plan demographic reports from the recordkeepers and look at participation,
asset levels and replacement income ratios by age band. "
The results pretty much speak for themselves, and are an indication of Delaney's (extremely)
high standards. She points to one plan with 95 percent participation and an average
contribution rate of 7.6 percent, before deadpanning, " Our goal is to get that up. "
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401(k) Specialist Issue 1 - 2018

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