American Fidelity Companies

American Fidelity Companies is a family-owned supplemental benefits provider, headquartered in Oklahoma City. It manages a defined contribution plan with $650 million in assets, 4,300 participants and a participation rate of 98.2%. It is also been named to Fortune magazine’s list of 100’s best companies to work for 15 times.

The employees at American Fidelity have an average tenure of ten years. Thayla Bohn, the senior vice-president of human resources at American Fidelity, says of their employees that the company “expects them to work here for a long time.” The firm’s defined-contribution plan is an important part of its retention strategy in a competitive labor market.

Employer matching contributions vary by affiliate and are vested after two years, a tenure which the average employee meets five-fold. Some groups offer an increased match based on tenure. For example, American Fidelity Assurance Company employees get a match of 100% on their first 6% of deferrals and an additional 50% for every 1% past 6% after five years of service. This maxes out at an 8% match for a 10% contribution, according to Linda Mikolajczak, a senior relationship director at Principal, the plan’s recordkeeper. Bohn also says that they offer a discretionary profit sharing match if certain goals are met.

Bohn explains that American Fidelity also manages a closed defined-benefit plan. She says that the additional matching contribution past 6% was implemented to make the DC plan more generous for those hired after the DB plan closed, showing a commitment to equity among the two employee categories.

The plan uses both auto-enrollment and auto-escalation. Participants are automatically enrolled at 3% and escalated by 1% per year until they reach 10%. They also “sweep” participants who are giving less than the default back up to 3% once per year, so anyone who contributes less than 3% must explicitly reaffirm that decision annually.

Mikolajczak says that the choice to use the Vanguard TDF series was because of Vanguard’s track record, competitive expenses and its glidepath philosophy.

American Fidelity is also active in quarterly meetings and regularly looks for new ways to improve the plan, says Bohn. It was recently able to significantly lower the average expense ratios of investment options from .25% to .1%. Bohn explains that the plan’s adviser, Cerity Partners, helped to consolidate investment menu options to accomplish this fee reduction.

Going forward, Bohn says that American Fidelity is following the regulatory environment around SECURE 2.0 closely and a student loan repayment program is “something we have been interested in” but it is awaiting clear guidance from the Department of Labor and IRS on how to implement it.

Financial wellness education is also key to the functioning of the plan, according to Bohn. She explains that participants have benefited from enhancements to financial wellness education and tools, including a retirement readiness calculator.

Mikolajczak says that when it comes to financial education offerings from Principal, she has “never seen an employer that is as integrated as American Fidelity.” Whenever Principal has a webinar on financial wellness, American Fidelity will reliably promote it in its own communications which dramatically increases participation in those webinars because employees are more likely to read an email from their employer than from their plan’s recordkeeper.

—Paul Mulholland