401(k) Specialist Issue 3 - 2017 - 26

JUNE
LISA PETRONIO, Strategic Retirement Partners
How to Quantify the
Seemingly " Unquantifiable "
WE FEEL IT'S IMPORTANT for long-tenured employees to exit the workforce to a comfortable
retirement, achieving the successful retirement outcomes that they want and deserve.
To accomplish this goal, we look at quantitative, qualitative, and fiduciary aspects in order
to design a custom approach for employers.
Quantitative
Our process measures the success of these outcomes in several ways to give us a baseline
" One of the
best practices
of the committee
is the process
documentation
of all plan decisions
and these
outcomes. "
Lisa Petronio is managing director
for the Upstate New York region of
Strategic Retirement Partners.
for how the plan is performing.
The first is by participation. One of our plans had a perfect 100 percent participation in
both 2013 and 2014. In 2015, it had a 97.1 percent participation.
Secondly, we measure success by overall savings rates. For the same plan, average deferral
rates in 2013 were 10.5 percent, 2014 was 11.8 percent and 2015 was 12.2 percent (including
non-participants). The 2015 median deferral rate is 7 percent. This employer contributes a
very generous 7 percent on a non-elective basis. Amazingly, employees are on average saving a
total of 19.2 percent, between employee and employer contributions.
Our third measure of success involves the following: Using vendor analytics, a whopping 70
percent of the plan's participants have a predicted retirement income replacement ratio of 70
percent or greater. Fully 23 percent and 7 percent of the remaining participants are at replacement
ratios between 50 percent and 69 percent, as well as greater than 49 percent, respectively.
Qualitative
We offer our plans several financial education events throughout the year, which are
customized to the needs identified through the goal setting and analysis process with the employer's
retirement plan committee. As an example, with one plan we identified an opportunity
to divide the employee groups into three educational groups based on career stage:
1. Know Your Score: Those early in their career learned about the Retirement Wellness
Score and how to get started and stay on track.
2. Financial Fitness: Mid-career employees attended a session on financial goals and
spending plans.
3. Tax Strategies and getting the most out of Social Security: Those nearing retirement
learned about social security and tax implications.
Fiduciary
On the fiduciary level, we meet with the committee to assess the overall success of the
participant outcome initiatives regularly, and for most clients, this is semi-annually. One of
the best practices of the committee is the process documentation of all plan decisions and
these outcomes.
Additionally, we put an emphasis on committee fiduciary education, as well as on topics
such as in-plan retirement income and the DOL proposals. This piece of the process helps
fiduciaries focus on participant outcomes that drive plan decisions.
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401(k) Specialist Issue 3 - 2017

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