After five years of experience leading a TPA call center in North Carolina, Andrew decided to move west to explore parts unknown and follow his passion of helping others. Walking through the doors of Ubiquity Retirement + Savings, formerly The Online 401(k) for the first time, he knew he’d found something special. Continuing to delight clients and partners alike and 10 years later, Andrew has been able to develop new teams, co-found a non-profit of strategic alliances, co-produce a hard-hitting documentary about the looming retirement crisis, and still had time to spread the savings gospel far and wide. Using social media and actual media alike (Wall Street Journal, Fox Business, PlanSponsor, and more), you’ll find no one who likes talking retirement more than this guy!
In this week’s Andrew Answers, we hear from Bob, an entrepreneur looking to do right by his employees. Bob wants to open a small business 401k. Bob needs help getting started.
Get a short rundown on what to do before the year-end as you’re opening that shiny new retirement plan. I touch on timing, plan features, and what to look out for.
If you are a small business owner who wants to start a 401k plan by 2014, or an employee of a small business in need of the option to save for retirement at work, this episode is for you!
Oh, and I’ve got a mustache. Here’s why.
You asked I answered!
Rolling over all your old 401k accounts into one sounds like a huge hassle, but one (like saving) is worth the trouble. While every provider has a slightly different process, the same things basically happen. Take a few minutes today to find out what those are and get moving on simplifying your life. After all, managing one account is far better than managing many!
Andrew Answers / 21 Aug 2013 / Retirement Trends
Each year, EBA names an adviser of the year that exemplifies nimble management and engagement in the ever-shifting waters of employee benefits. Dr. Gregory Kasten, the founder, and CEO of Unified Trust Company, took home the honor of Retirement Adviser of the Year. Dr. Kasten took some time after the recent award to speak with us about retirement, the move from medical to financial, and provide some advice to small businesses and their employees.
Andrew: Let’s just jump back into things and go a bit back to basics. What would you say is the largest challenge as a retirement plan advisor?
Dr. Kasten: The biggest challenge, I think for the modern retirement plan advisor, is to get clients to focus on the right metrics. The major metric is whether or not participants will be able to retire with an adequate benefit. Most plan sponsors focus on simplistic metrics such as participation rates or what type of mutual funds are in the plan. When plan sponsors start thinking of 401k plans as actual retirement plans, they will focus more and more on whether or not the participants will retire with an adequate benefit. That’s the only metric that counts.
Andrew: What advice would you give small companies looking for a retirement account? What would you say to their employees?
Dr. Kasten: I would encourage the company looking to have a successful 401k plan to think of it as a retirement plan. That means they need to work with an advisor, third-party administrator and a discretionary trustee that is focused on participant outcomes and can reliably demonstrate how they can have an impact on that metric. Plan sponsors and advisors should be satisfied with nothing less [than improvement in outcomes].
Employees should understand that this retirement income decision they face is the largest financial transaction they will likely deal with in their life. For most employees, the purchase of retirement income is 2-3 times larger than the value of their home. But yet they generally spend less than 10-20 minutes a year thinking about their 401k plan. So, it’s no wonder that they fail. They would do well to partner with an entity that is focused on their outcome, receive communications that are clear-cut, can be trusted, have faith in the process, and let the expert engineer a successful outcome for them.
Andrew: Anyone not willing to think about and take that advice to heart should rethink their retirement goals! Thank you so much, Dr. Kasten, on your thoughts and advice. It’s been a real pleasure.
For folks wanting more information about Dr. Kasten, please visit Unified Trust. For folks still interested in learning the basics, be sure to tune in to our weekly Andrew Answers video blog to take your retirement to the next level!
Andrew Answers / 20 Aug 2013 / Retirement Trends
Each year, EBA names an adviser of the year that exemplifies nimble management and engagement in the ever-shifting waters of employee benefits. Dr. Gregory Kasten, the founder and CEO of Unified Trust Company, took home the honor of Retirement Adviser of the Year. Dr. Kasten took some time after the recent award to speak with us about retirement, the move from medical to financial, and provide some advice to small businesses and their employees.
Andrew: Dr. Kasten, congratulations for the EBA Retirement Adviser of the Year Award! What an honor! Thank you for taking the time out to answer a few questions. What would you say makes you so passionate about our industry?
Dr. Kasten: I am most passionate about improving participant outcomes. The industry has spent the last 20 years trying to educate participants and the impact on outcomes has been negligible. Last year, the industry spent over $1 billion on employee education. Most of that money was wasted. A recent study showed 56% of participants were either unaware that they had educational materials available, or completely ignored them.
The desired outcome should be an adequate benefit. “Adequate benefit” means replacing the participant’s paycheck. The problem is most participants don’t have a goal of benefit adequacy. They don’t know how much retirement will cost and whether or not they are on track.
Andrew: I find most would love to have a frank discussion on how they’re doing for retirement, comparable to how folks want to talk to someone they can trust when finding a physician. What drew you to finance and away from a career in medicine?
Dr. Kasten: I was initially drawn to the retirement world to take care of my own retirement plan. Later, I found many other individuals were asking for the same type of help.
What I looked to establish in my financial practice was the same standard of care in the financial world that exists in the medical world. In other words, in the doctor-patient relationship, concern for the patient is first and foremost. Secondly, the Hippocratic Oath requires that one should function in a way that “at first does no harm.” Thus, the doctor-patient relationship is very similar to the fiduciary duties under ERISA, which require a duty of loyalty, and duty to act as a prudent expert standard of care.
I was always amazed how much product and analytical effort is conducted in the financial world with no analysis as to whether or not it is beneficial or not. It just sounds like an impressive thing to do.
Andrew: I agree. I’ve always looked at working in the finance world as helping others understand something confusing. As the CEO of your own retirement firm, what has been your vision for Unified Trust for the past (almost) 30 years?
Dr. Kasten: Beginning in 1985, I was a 3(38) investment manager well before that term gained popularity. I first started as a registered investment adviser, but quickly realized that many advisers do not have enough capital or dual controls to be able to safeguard the client. Most clients do not ask the right questions about the ability of a registered investment adviser to make for fiduciary mistakes or even to be able to protect the client.
So, in the early 1990’s, I decided to charter a trust company because clients would be better served in the trust environment. We first chartered a state trust company named First Lexington Trust Company. In 2000, we converted our state-chartered to a national bank charter under the Department of the Treasury office of the Comptroller of Currency and renamed the company Unified Trust Company, NA.
Andrew: It’s always inspiring to see how bigger, successful businesses come from small ones. I’ve got plenty more questions for you. Sit tight Dr. Kasten and we’ll get to those next time.
Stay tuned for the second part of this interview for more insight from Dr. Kasten on working as an adviser and what companies should look for when searching for the perfect provider!
As winter slowly approaches, I am reminded of a comment my father often made to me: “Don’t be a grasshopper, son,” a reference to Aesop’s classic tale about saving and frivolity. My father always encouraged me to be like the ant, and work diligently while the summer sun still shone.
As the years’ progress, I now find myself in the late summer of my life. Though I am making hay while the sun shines, I know that many members of my generation and the one following are naught but hordes of grasshoppers, fiddling away their time. When do we really ever think about our 70-year-old selves?
Speaking about retirement to a 20-something is likely to get you a face full of “there’s time for that later!” To the 30-something, it’s likely to be more like “I know, I know. I’ll take a look at that on Monday.” But, by the time we’re 40-something, we’re in a mad dash to catch ourselves up.
But what if there isn’t?
As traditional retirement support systems like Social Security and pensions diminish, personal savings become the most important way to save. It’s here that lives the need for personal savings. Sadly, many younger individuals do not understand that $100 saved now in their 20’s will yield almost 40% more than $300 invested in their 30’s.
As Einstein was once purported to say “compound interest is the most powerful force in the universe.”
In the multi-media, instant gratification society where we live, it’s easy to identify with the grasshopper that spends its time loving the spotlight. Everyone’s a star in their own way. It’s what reality TV is all about. However, it’s the ant, the one of many that know the sacrifice now for survival down the road.
Even though we’re all stars in the global community, accountability for your own savings falls solely on you. Will you become the ant or the grasshopper?
I’m way too young to talk about what the “kids” are doing these days. But I’m far too old to think that those same “kids” today had the same upbringing as I did. The new generation seems much more prepared in the realm of technology, strategy, and the idea of long-term savings and retirement. I get worried that folks aren’t saving enough. Then, I’m contradicted.
You think I’m wrong? Is your “kid” not ambitious?
Think again. Here’s why we’re both wrong.
I was most inspired to craft this blog in response to a recent article in USA Today. It’s easy to be from a different generation and judge the ones following us. Perhaps we should think again about tossing that rock in your pretty glass house.
For the baby boom generation, many did not have much money growing up. Things were hard for them. What did they do? Worked hard to make a better life for the next generation. Remember how much fun the 80’s were? Now that they’re older, the kids who grew up on that middle-class upbringing are affirming themselves as contributing members of society. And sounding a lot like their parents:
“You have it so much easier than I did.”
“The internet? We had to look it up in the Library.”
“My video games had one button. ONE!”
With the economic uncertainty of a few years ago, Generation Y was busy in college and/or spending countless hours playing strategy games like Farmville and World of Warcraft. At the same time, they’re learning about real-life ways to earn gold (err – money) and level up (err – graduate or get a job).
Taking a look at the site referred above, Gen Y’s actually do think about the future. Wouldn’t it be amazing to know that the teachings of saving in economics class actually lead to the application within video games. While playing World of Warcraft/Farmville/real life, they’re thinking why they should spend the money on this soul-eating sword/new barn/expensive car if they save it up and get an even better one down the road.
A Gen Y-er called herself realistic. I believe it’s more strategy and thinking of the long term. Not wanting to fail/lose a life/end up in economic unease, they will prevent that.
When judging that next generation, we should wonder if we’re possibly not just projecting our own concerns on them. So, we may be the ones that lost a bit more in the recent economic crash, but we need to step it up! It’s a game to them and we’re losing.
When asked by friends or colleagues for advice about their 401ks, I’m finding that the topic of rollovers is a common one. There are always questions about rollovers because so many just don’t know what to do.
Let’s take a look at a recent inquiry I received via Facebook:
So, I have a question. I have a 401k that I rolled over into an IRA at my credit union from a previous employer. In the chance that I am employed by a business that offers a retirement plan, how will I know which one to put my money into? I plan on maxing out my contributions – ’cause I gots some catchin’ up to do.
This is a great question. And it’s timely since this person is looking for a job, which definitely speaks to the state of today’s employment rates and economy. Above all, it’s a question I’ve had a few times.
Bottomline: Should I roll over my money to my new company’s retirement plan or leave it where it is?
I know I need to tread lightly in my response. Yes, I’ve been doing this a long time. Yes, I get excited about it. No, I don’t want to turn them off or bore them with my ramblings.
Rather than telling someone what to do, I’d rather err on the side of letting folks know what to evaluate to make their own decision. Every plan is different in design and offerings. And yes, this will take some work on your behalf, but I’ll tell you exactly what to do.
Step 1: The funds. Your biggest cost in moving your money will be the funds. Look at the funds your old company has, research how much they cost in management fees (e.g., that pesky percentage coming out that’s NOT on your statement, so you need to be sure to ask about it). Then, look at the new plan. If the new one has higher fees, it had better be performing better, too!
Step 2: New plan rules. When you become newly employed, find out the details of eligibility and vesting. Why put money into a 401k plan before you’re eligible? That eligibility period is for you and the employer to make sure you’re at the right place, doing the right thing.
Step 3: Your money. Are you looking to roll over pre-tax or post-tax money? Your new plan may have the option to put Roth (post-tax) dollars away, so you should check with your employer. A traditional 401k will not accept post-tax money, so unless your new employer offers a Roth option, you may be better off with a Roth IRA.
This conversation can go in many directions after that, but these are just some basics to be aware of. There may even be other options for you that I’ve not listed. In the end, do your homework, know your options, and just think about what’s best for you.
If you have any questions, don’t hesitate to reach out to me here or on Twitter, @coolest401kguy.
As is apropos right about now, this is the time of year to reflect on the comings and goings of the current year and give ourselves some lofty goals for the upcoming year based on the prior’s experience. I liked “this” about 2011, but I want to change “that” in 2012. Reflection, contemplation, and then a plan of action is created. These are our new year’s resolutions and the VAST majority of folks fail tremendously. That’s the fun of it, right?
I tend to steer clear of resolutions. While these are great goals with every intention of success when made, I cannot help but feel that the stroke of midnight on December 31 will not change much of anything. Our lives aren’t like that of Cinderella where midnight changes the outcome of some magical spell. The harsh realization is that years can fly by and there may be only small changes that affect our futures:
• Get fit: Eat better, workout more, be healthy.
• Learn more stuff: Speak a new language, take a craft class, do something…more!
• Be money conscious: Save more, spend less, get out of debt.
Yes, yes, and yes. But do you trust yourself enough to get this done? Will this diet actually work? Who will I speak Spanish to once I learn it? Do I have the extra money to put away???
In the end, it’s all about trust. Trust in yourself. Trust in the system. Trust in the future.
Many small business employees do not feel confident or trust in their future. Like many folks read Rolling Stone, Entertainment Weekly, and Cosmopolitan, I enjoy industry rags like Employee Benefit Adviser. In fact, their recent “ByTheNumbers” article really inspired me. How is it that one in five people plan to never retire? Almost one-third of workers feel that they will not retire comfortably. Further, there’s been an 18% rise in the delay of retirement by a minimum of three more years. Even a poll of my own friends and family have shown me that some are simply not saving.
I want to help all of these people. In the end, doing nothing is the worst you could do. Let’s go through this trust again, but let me show it from my perspective.
“Retirement Trust” is not an oxymoron
A retirement trust can be defined as a pooling of accounts with multiple folks managing under one unified agreement. Your 401k or IRA is considered a trust for all of the people working together to help you get to your retirement safely. Your Third Party Administrator (TPA) creates your legal documents and keep your plan running smooth without any IRS hiccups. Your Recordkeeper is there to balance your plan ever day down the penny and ensure timely funding of money into mutual fund. On top of that, you may have a financial advisor, CPA, or your own company backing you up.
You, my friend, are not alone. No one wants to be unprepared for retirement. It seems for the past three years that there have been articles in the Sunday paper all about 401(k) regulation changes. These new regs are specifically designed to protect you. One great example is the creation of Qualified Default Investment Alternatives (QDIAs). It’s long and jargony, but in the end, states that just putting your money in money market by default wasn’t the best idea. After all, how can it grow if it’s earning such a low return?? Now, your money is put into a collection of funds that will likely bring a better return.
Knowing you have an industry of folks behind you and looking out for your interests, should help that trust by a percentage point or two. By learning a bit more about your retirement, you will see the warning signs from providers who are looking to boondoggle you into an expensive plan just because you were confused or didn’t know. Many providers are out there to take advantage of your trust. Buyer beware, indeed.
Here’s to being confident and trusting in yourself and your future. It’s really all we have to look forward to.
Happy New Year! See you in 2012!
This is absolutely great! I received my first question from the blogosphere and couldn’t be happier about it. For many businesses, this time of year is the busiest. Everyone is buying gifts, many are working very hard to be able to create those gifts, and a few are just relaxing and enjoying the time off. But for us in the financial industry, it’s the close of the year and everyone is working toward that last day deadline, December 31
As many folks are out there looking for a home for their 401k before the end of the year, it’s the perfect time to ask questions about 401ks, what’s best for your company, and what type of plan will work best for you! Today is a most momentous day for me as I’ve received my first inquiry from the blogosphere. This one has a ton of elements to it, so hang on and let’s begin:
I’ve been far behind in setting up a retirement plan for my small business. We’re the largest toy distributor I know of and it’s a shame not to provide something for this group that gives so much. While I do provide many benefits in the workplace, such as ample time off (seasonal) and transportation flies them to and from, I’ve not done anything to encourage retirement wellness. They make too many kids happy not to get a little something back.
Here are the details of my organization:
You’ve been on the nice list this year and I look forward to hearing back!
Thanks for the message, Mr. Kringle… if that’s your REAL name. Sounds like you’ve got a small business that’s been quite successful for you. What’s curious is that you seem to be doing it miraculously with such a small group. No wonder you want to reward them! Since you’re being gracious, you might as well throw in a match, too! In fact, if you make it what we call a “Safe Harbor” match, you get a free pass at your testing at the end of the year!
What’s testing, you say?
In short terms, the IRS wants to make sure you truly are opening the plan for everyone’s benefit and not just your own (since you probably make the most money). They deem this discriminatory, but they want you to be able to save. That said, you have to make the plan alluring to employees. Make them want to participate. Make them an offer you can’t refuse. Give them free money. I know, I know, it’s crazy, but if you give them a little bit, you can then put as much away as you like without worry about failing your test. If you do that, you will either a) have to put money in any way, or b) take your own money out. Bah! Humbug!
Happy Holidays from our nest[egg] to yours!