Opinions July 29, 2021

Finding the Right Plan Adviser

Eric Dyson, with RFP 401k Advisor, shares tips and a suggested line of questioning that could help sponsors of any plan type with the RFP process for a plan adviser.

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Art by A. Richard Allen

Let’s face it, searching for an Employee Retirement Income Security Act (ERISA) adviser is about as enjoyable as finding a new cellphone plan or cable TV provider. Best practices suggest an adviser search be done approximately every three years. But doing something once every three years will make few people an expert on it.

The key to making this complicated process a success is asking the right questions. It’s to the benefit of both the adviser and the plan sponsor to be as transparent as possible. The plan sponsor’s fear is that with too much transparency, the adviser will simply say whatever it is the sponsor wants to hear. The adviser’s fear is that without enough transparency, it becomes a guessing game.

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Here are some tips and a suggested line of questioning that will help with the request for proposals (RFP) process:

Core questions. Yes, there still needs to be a line of basic qualifying questions regarding experience, capabilities, assets under management (AUM) and company history. Include those questions, but quickly move on to those that help you differentiate.

Have a 30-minute request for information (RFI) interview with each advisory firm.  If there are six firms that you plan on sending the RFP to, then the 30-minute RFI, by definition, creates three hours of additional work upfront. Consider this “extra” three hours an investment of your time. You might find out very quickly that your personalities do not match. If you simply “don’t like,” one or more of the advisers, then save yourself and save the adviser wasted time. Don’t send the RFP to an adviser team where personalities don’t match. Your three hours invested will save many more hours later in the process.

Ask questions that require results-based answers. When evaluating most adviser RFP responses, it’s tough to discern differences. If you ask philosophical questions, you will get philosophical answers that might have limited practical application. Furthermore, such a line of questions doesn’t help you evaluate an adviser as a good cultural fit. Ask carefully worded, results-oriented questions. You need concise answers that demonstrate proven concepts for your plan and your employees.  

Sample questions that will allow you to differentiate between advisers:

  • How will you help employees to better understand the value and importance of the company’s defined contribution (DC) plan?
  • How will you help reduce employee financial stress and how will you measure this?
  • How will you measure the success of our plan?

Who is going to show up? Sometimes an adviser will provide an elaborate organization chart to let you know about all the smart people who work at the advisory firm. In many cases, it’s difficult to determine who you are going to see regularly at future committee meetings. In your RFP question set, ask a question in such a way that it is unmistakable. Ask who the “core team,” will be and who will be the supporting “subject matter experts.” The core team would be expected to attend each committee meeting, and subject matter experts serve in roles such as ERISA attorneys or employee communication consultants, used only on an as-needed basis.

Financial wellness is very hazy right now. Financial wellness is becoming more in-demand as an employee benefit. But defining “financial wellness” and a “financial wellness program” is still very nebulous. Be sure to distinguish between a financial wellness program, a wellness platform and wellness “apps.” Understand basic, generic possibilities for how your potential adviser could deliver a financial wellness solution. Ask the adviser how he will structure a wellness program within these options:

  • If your current recordkeeper provides a robust financial wellness program, the adviser may leverage tools from the recordkeeper;
  • The adviser may have an in-house proprietary wellness offering;
  • The adviser may conduct a search on your behalf of third-party financial wellness vendors; or
  • Any combination of the above.

How will your adviser assist you in monitoring him as a plan fiduciary? Best practice dictates that you periodically do a formal evaluation of your plan providers. This includes your adviser. A good adviser will provide you a recordkeeper benchmark annually. But how will the adviser help you benchmark his own services? Ask what reports the firm will provide and ask to see a sample.

Ask your adviser how he measures key performance indicators (KPI) for your employees and for his own firm. Your recordkeeper provides you KPI on participation rates, deferral rates, asset allocation and projected income replacement ratios. Ask your adviser how he will add value. If the adviser keeps referring to data that is readily available from your recordkeeper as the end data point, then what value does he add? It is possible, however, that the adviser will use plan data from your recordkeeper to then provide deeper insight.

The bottom line: Ask results-based questions to get answers that help you differentiate.

Eric Dyson is the executive director of RFP 401k Advisor.

This feature is to provide general information only, does not constitute legal or tax advice and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Institutional Shareholder Services Inc. (ISS) or its affiliates.
Products July 28, 2021

An Employer’s Foundation Gives Employees a Start on Emergency Savings

The KFC Foundation’s collaboration with a fintech provider uses technology, gamification and matching contributions to help KFC employees achieve at least $500 in short-term savings.

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This week, the KFC Foundation, an independent 501(c)(3) non-profit organization primarily funded by KFC franchisees, launched an innovative emergency savings program for KFC employees; in its goals and approach, the program reflects some of the broader financial wellness trends that are reshaping the employee benefits landscape.

The savings program was created in partnership with SaverLife, a national non-profit fintech company that helps working families pursue prosperity through modest-but-regular savings. Formally, the program is known as MyChange with SaverLife. It was piloted with some KFC employees last year, according to the firm, and it is now being rolled out nationally.

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Though there are other objectives, MyChange is primarily designed to help KFC team members build at least $500 in short-term savings while instilling lasting positive savings behaviors.

“To be able to offer these types of resources means a lot,” says Justin Stewart, a KFC franchisee and the board chair of the KFC Foundation. “Programs like MyChange with SaverLife help us develop the financial acumen of our team members, setting them up for success in their future, while also strengthening our organization from the ground up.”

The program is relatively straightforward in its approach, relying on scalable technology and gamification to encourage participation. Eligible employees of KFC corporately-owned and franchisee-owned restaurants who sign up and enter the Savings Match Challenge will get a $20 sign-up bonus, and by saving at least $10 a month, they will receive a $1-for-$1 match of up to $40 per month over a six-month period. The goal is to get workers to create a $500 short-term emergency savings fund—or boost their current savings by $500.

In an email to PLANSPONSOR, Emma Horn, managing director of the KFC Foundation, said it was not hard to build consensus on the KFC Foundation’s board about the importance of this program.

“The heart of what the KFC Foundation does is take care of KFC restaurant employees across the U.S.,” Horn wrote. “Having an emergency fund has always been important and valuable. The uncertainty that came with the pandemic emphasized the need to create a program like MyChange with Saverlife to help equip KFC restaurant employees with resources that would help them grow their financial knowledge, build a habit of saving money, and create a short-term emergency savings fund.”

As Horn explained, the program is viewed as a complement to other existing programs.

“The KFC Foundation offers charitable assistance programs for eligible KFC restaurant employees to help them earn their GED, go to college, make it through a hardship or crisis and build their financial knowledge,” she said. “We created this program to equip KFC restaurant employees with valuable financial skills to create lasting savings behaviors. The programs we offer KFC restaurant employees, made possible by the support of our franchisees, show them that we care and that we’re invested in their personal development and wellness, which leads to having a stronger organization.”

Asked if she expects many of KFC’s peers in the restaurant industry to move in a similar direction, Horn is hesitant to make any specific predictions. However, she noted that the program has already sparked a strong positive response from KFC’s workers.

“While we can’t speak to what our peers may do, the KFC Foundation’s charitable assistance programs are great resources for eligible KFC restaurant employees and help KFC franchisees attract and retain top talent in their restaurants,” Horn said. “We hear time and again how grateful and proud KFC restaurant employees are to work somewhere that these types of opportunities are available.”

Reflecting on the progress her nonprofit organization has made since its founding 20 year ago, Neha Gupta, vice president of marketing for SaverLife, tells PLANSPONSOR that early on, the organization provided in-person, one-on-one financial coaching to people in need. Staring six years ago, SaverLife embraced a technology-focused approach designed to deliver financial wellness coaching and simple, gamified savings tools at significant scale.

“We try to anchor people around the $500 emergency savings figure because that is about the cost of a single unexpected financial challenge—a tire change or a new appliance,” Gupta says. “Of course, getting people to $1000 or even higher is going to be better, but for lower-income and minimum wage workers, we have to be realistic. Many of the people we work with are starting out from a place of living paycheck to paycheck.”

Gupta says she has high hopes for the partnership with the KFC Foundation, citing success seen in working with the national clothing retailer Levi via its Red Tab Foundation.

“These corporate-linked nonprofit foundations can support people in a way that the internal human resources departments cannot,” she explains. “Formerly, these types of foundations would focus on giving cash grants or emergency loans. Increasingly, alongside the broader shift in focus towards promoting financial wellness, these organizations are promoting self-help, and they are doing so by making matching savings contributions, for example. We know from the 401(k) world the importance of matching and messaging.”

Gupta says one lesson her organization has learned since taking its approach digital is the importance of promoting engagement—and not just upon the launch of a new savings program.

“To this end, we have really worked hard on improving the gamification aspect, setting up store versus store participation competitions, for example,” she says. “One very interesting thing we’ve realized is the power of offering even simple prizes or incentives. You can inspire people to enroll and save more merely by raffling off a few nice pairs of socks. In fact, for whatever reason, that’s a very popular strategy right now—giving away a nice pair of branded socks to those who enroll.”  

Gupta agrees that entities like SaverLife and the KFC Foundation, working in concert, can have a direct positive impact on peoples’ financial lives. However, she warns, the lack of broad-based financial wellness in the U.S. is a systemic and pernicious problem that is going to require a society-wide approach to redress.

“A huge part of what we are thinking about right now is how we can have a positive impact at the systemic level,” Gupta says. “We are seeking ways to work with policymakers and communities to get the necessary financial support to millions of people. We are very excited about the new child tax credit, for example, and we are big advocates of such policies. We are trying to make sure our members are aware of this new credit and the steps they have to take to get the credit.”  

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