401(k) Specialist Issue 1 - 2021 - 32

FEBRUARY
STEVEN GLASGOW, Tower Circle Partners
Defined Contribution
Contrarian
STEVEN GLASGOW ISN'T AFRAID to contradict conventional wisdom in the service of successful
outcomes. His " it is what it is " attitude might ruffle industry feathers, but it's appreciated
by his clients and the results they achieve, which is all that really matters.
" It's hard for me to trust retirement readiness metrics, " Glasgow, Executive Vice President
" Everybody's
tired of hearing
auto-enrollment
and escalation,
but the reality is
that it has moved
the needle. "
Steven W. Glasgow is Executive Vice
President/Wealth Management with
Tower Circle Partners of Janney Montgomery
Scott in Franklin, Tennessee.
with Tower Circle Partners of Janney Montgomery Scott, admits. " If the average participant
has been with five employers, most haven't gone through the rigmarole of moving accounts
or consolidating assets, so we don't really know what they have. "
But he pushes back when described as a disbeliever and notes that the problem (as always)
is scale when determining how to effectively engage participants to influence behavior and
truly make an impact.
" As a practitioner, I wrestle with offering one-on-one meetings in a way that doesn't dig
deeply into profitability, " he says. " I have several plans that are fairly large, one of which has
75,000 employees scattered around the country. If somebody sits across the table from you
and says, 'Here's my situation,' and you say, 'I think this is what you need to do,' most of the
time, they will do it. It's just tough for me to promise one-on-one meetings to a very large
employer. "
What can be done, Glasgow emphasizes, is to get the plan design right.
" Everybody's tired of hearing auto-enrollment and escalation, but the reality is that it has
moved the needle. "
A longtime client initially engaged Glasgow and his team because they were concerned
about their fund lineup. While it only needed a " nip and tuck, " the company's participation
rate lagged, as did its average deferral rate. It was creating testing issues for senior executives.
" We were able to sit down with them, and for a little increase in cost, we found them a
new recordkeeper, we did a complete refresh of the target date funds with an automatic 6%
enrollment and an auto-escalation, " he says.
The biggest hurdle was convincing committee members, something with which presentation
material from behavioral economist Shlomo Benartzi was able to assist.
" As we went through the behavioral finance statistics, we saw the light bulb go off. We finally
told them we had other clients that did this, and we could show not only anecdotal but
actual evidence from plan sponsors in other industries that were a whole heck of a lot lower
than theirs in terms of average earnings. At that point, there was zero pushback, and frankly,
they were thrilled with the outcome. "
That outcome was 90% participation, a doubling of the deferral rates, and a significant cut
in recordkeeping and investment costs.
" That's not all that heroic, " Glasgow modestly concludes. " We didn't drag every single participant
through snow and ice to achieve a huge increase in participation, but it reinforces the
power of what we've been saying for a while. You can do things from an auto perspective that
absolutely work, but you must be cognizant of the CFO sitting on the other side of the table.
They have their pressures, so you have to be therefore creative about the way you implement
these initiatives and not always default to the simple answer. "
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401(k) Specialist Issue 1 - 2021

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