401(k) Specialist Issue 4 - 2021 - 24

DECEMBER
JOHN GLOMSKI, MFP
Big Things in Small
401(k) Plans
MUCH IS WRITTEN about the incredible opportunity in the micro and small plan market.
Advisors recognize the possibilities, but few dive in, preferring quality over quantity and the
large plan " score. "
John Glomski isn't one. He's making this underserved market work.
" Most advisors get paid on a percentage of assets, " Glomski, an IAR with Minnesota-based
Midwest Financial Partners (MFP), noted. " It doesn't matter what you charge; 50 basis points
or 1% or 5% of nothing is still nothing, so most advisors don't spend time starting plans from
scratch. However, the majority of our plans started from nothing. "
It's a volume business, he explains, but must be balanced with a personal touch. MFP has
over 70 plans and approximately 2,500 participants. His average plan has 25 or 30 people and
$1.5 million in assets. The team meets with every participant annually, a requirement for MFP
to act as the fiduciary on the plan.
Glomski recently presented to an engraving company with eight employees, a plan he's
" Small 401(k) plan
benefits mean
you can put more
money in, and
a company has
more options in its
design. The benefits
far outweigh
its costs, which
have come down
significantly. "
John Glomski, AIF, CPFA is and
Investment Adviser Representative
with MFP in St. Cloud, Minn.
worked with for 10 years with $1.2 million in assets. The average contribution is 12%, plus
participants receive a safe harbor match, so the total for those contributing is roughly 16% of
their compensation.
" There was one employee at the last meeting that will join in this January, " he recalled.
" He sat through the presentation and afterward said he worked for a very large company for
20 years and had never been told about a 15% goal over time and how he should increase just
1% or 2% every year. "
As a result, the employee set a 3% default to get the previous company's match and never
increased. No one took the time to explain the need to increase the deferral, the miracle of
compounding interest, or any of the other concepts crucial to successful retirement outcomes.
" Workers like him need people in front of them every year explaining it to them, " Glomski
emphasized. " If they do, these participants are much better off in the long run. He was fascinated
that everyone at the meeting had been increasing deferrals every year for the past 10
years. "
When asked about other alternatives, business-sponsored IRAs, for example, that might be
better suited to an eight-person shop, he noted the sharp reduction in costs over the past decade
due to technology, a reason SIMPLEs and SEPs aren't as popular as they once were.
" Small 401(k) plan benefits mean you can put more money in, and a company has more
options in its design. The benefits far outweigh its costs, which have come down significantly. "
And the paternal and maternal attitudes many small businesses have towards their workers'
financial futures shouldn't be overlooked.
" In the micro and small market, I get to work with business owners I admire, " Glomski
concluded. " They're out on a limb, they created a business, care for their people, but they're
wearing many hats. They're the HR, payroll, controller, and CFO. So, they need guidance and
help because they want to provide a retirement plan, but it isn't what they do for a living,
which is where we come in. "
24
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401(k) Specialist Issue 4 - 2021

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