Salas O’Brien

Salas O’Brien Inc., headquartered in Irvine, California, is an employee-owned engineering and facility planning firm that has grown 3,100% since 2011—153% in just the past three years. The company has expanded organically and through acquisitions, merging with five or six engineering firms in each of the past four years. Every merger brings new employees into the retirement plan, often from plans with less-attractive benefits.

“They’re smaller plans, and they don’t have the efficiency of scale,” says Renee Fourcade, senior vice president – investments and senior institutional consultant for UBS Financial Services, the plan’s investment adviser. More than 92% gained an automatic enrollment feature, 67% increased or added a company match, and 92% acquired a further discretionary match when they joined the Salas O’Brien plan.

“One thing that attracted me to the organization is its massive success and massive growth,” says Lucas Hellmer, director of compensation and benefits for Salas O’Brien, who joined the company in 2021. “That speaks volumes to the amount of excitement it brings to the industry and the firms coming in. There’s a lot of interest in the marketplace to join Salas O’Brien—they’re excited to join the organization, and they’re excited about the 401(k) and benefits plans. They really want to be involved with the plan. And we have a very inquisitive—as you can imagine, with engineers—very engaged staff.”

The new employees get involved quickly. The participation rate went from 85.7% in the first quarter of 2022 to 92.4% and continues to climb; average balances increased over the past year from $121,281 to $124,386.

Salas O’Brien switched recordkeepers in 2021 with the goal of lowering plan fees, and it enhances the experience for new employees who are merging in. It has also made changes to the plan to share the company’s growth and success with all the plan participants. The committee chose to structure its current plan as a safe harbor plan with an automatic enrollment at 6% pre-tax, which ensures that employees get the full company match. It also adds an annual matching contribution to participants’ accounts in company stock so everyone becomes an owner. “The company stock ties in with the excitement to get the participation started early,” Hellmer says.

“We purposely set the auto-enrollment at 6% so they can get not only the company match and the discretionary match off the bat, but the average deferral is now 9.1% overall,” he says. “Individuals are engaged, and they don’t just stop at automatic enrollment.” Average deferrals increased over the past few months.

When the firm switched recordkeepers to Principal Financial Group, participants had questions about costs, fees and investments. “The engineers were going through with a fine-tooth comb and asked if it was less expensive,” says Fourcade, who walked them through the changes. UBS lowered the cost from the previous investment adviser; additionally, the third-party administrator and recordkeeper reduced their costs. Salas O’Brien saved even more money by including the company stock on the same statement when the stock became part of the retirement plan, she says.

The management team and its adviser, recordkeeper and TPA have an operations call every week and a separate weekly merger call “not only to clean up some of the things we’ve inherited over time, but also to strengthen how well things are working out,” Hellmer says.

Salas O’Brien’s next goal is to focus on education. “Phase two is to refine education for plan participants,” Hellmer says. The company plans to add more layers to its financial wellness program, focusing on different life stages. “We’re trying not to do blanket communications that go out to the whole pool of participants,” Fourcade says. “It’s beneficial to target the participants based on demographics, age and savings.”

—Kimberly Lankford