401(k) Specialist Issue 2 - 2019 - 27

MARCH
DANIEL PELUSE, Wintrust Wealth Management
How to Take a 401(k) Plan
From 'Good to Great'
BY NOW IT'S CLICHÉ to mention " Good to Great, " Jim Collins' 2001 business best-seller,
when discussing how a firm gets to the proverbial next level, but what about retirement
plans-and more specifically, sponsors and advisors?
It's something with which Dan Peluse recently wrestled. He had to find a way to move the
needle for a plan sponsor who, by all accounts, was already doing well but could nonetheless
do much better.
" They worked directly with the plan provider in the past, and historically were a very
generous plan sponsor, " Peluse, director of retirement plan services with Chicago-based
Wintrust Wealth Management, notes. " The first step was to find a plan advisor to help them
with communication and education, and then examine their plan design to see what other
improvements we could make. "
What he initially saw was almost 77 percent participation and an average savings rate
around 6 percent, which he attributes to a dollar-for-dollar match.
Without a doubt, they were indeed a generous plan sponsor, but they had a gap in retirement
readiness, with an income replacement rate of 75 percent.
" With many plans, it's about getting folks engaged and saving the proper amount. With
this group, it was trying to take it to the next level and say, 'How do we make sure our folks
are appropriately prepared to replace their income in retirement?' Part of our initiative with
them was to look for a plan provider that could help move those needles alongside with us, "
Peluse says.
Of course, that meant leveraging the plan design and the recordkeeping systems to drive results.
" They had never utilized re-enrollment-they just had a fairly high level of engagement.
We instituted a re-enrollment strategy for everyone in the plan, starting them at 6 percent
and then implementing an auto-escalation feature of 1 percent a year up to a cap of 50
percent. It seemed a little odd, but a participant would have to be there for 44 years to get to
that point. "
The results, as one might expect, have been " wildly successful. "
The company has a 98.5 percent participation rate right now, with a re-enrollment each
year at 6 percent to ensure they take advantage of the full match. Auto-escalation has taken
place for four years in a row, getting to 10 percent this year.
" So, the average savings rate now among the participants has gone from 6 percent to just
shy of 10 percent. The total contribution given the match means they're just short of 15.5
percent in terms of what they're yielding with the company contribution alongside their
contribution, " Peluse says.
But what Peluse finds most important is their readiness score, which increased from a 75
percent income replacement when he first engaged with them to 95 percent today.
" If we're doing all these wonderful things on the plan side, we don't necessarily need to
talk 401(k) or why they should save more, since we're utilizing auto features to help a lot
of folks do that, " Peluse says. " We're now spending time on helping them understand Social
Security, and this year we rolled out an HSA as part of the platform for them. It's now about
bringing in this other great stuff. "
" With many
plans, it's about
getting folks
engaged and
saving the
proper amount.
With this group,
it was trying to
take it to the
next level... "
Daniel J. Peluse, AIF, C(K)P, CBFA,
CRPS is director of retirement plan
services with Chicago-based Wintrust
Wealth Management.
ISSUE 2 2019 | 401kSpecialist.com
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