Seth Retzlaff is a professional retirement plan consultant for Leading Retirement Solutions, Seattle WA. He works directly with clients, primarily business owners, to design retirement plan solutions for specific business needs and overarching goals. A keen eye for trends, Seth is on the front lines of the retirement industry and is happy to share his own insights of what he is seeing.
So, what is it specifically that you do for your clients as a retirement plan consultant?
The first job I always have is talking with these folks finding out about their business, finding more about themselves as business owners and sense of where they plan to take their business.
From there I’m assessing the needs of the business, and if there is an existing plan, I examine the compliance needs of that plan. Then I begin to make recommendations based on those needs and overall goals.
The third component is implementation of changes. And this is everything from addressing the way you track your hours of your work force to things like making substantial changes in terms of enrollment and getting employees to participate. So, I would assist in supervising the implementation of whatever we setup for you.
What trends do you notice with business owners needs and retirement plans today?
The questions and requests we hear during plan design cover a huge range of topics, and I think it speaks volumes about the current retirement plan space.
I would say that in general, the first conversation I have with business owners is either tax sheltering opportunities for themselves and their business or they’re looking at this from an employee retention and acquisition perspective. Generally, they’re looking at retirement plans either as an employee benefit plan or a way to lessen their own tax burden.
Furthermore, I am increasingly speaking with business owners in search of non-traditional investment options. The days of business leaders content with their nest eggs sitting in a pension plan or a few generic mutual funds are behind us. People are looking for ever more unconventional methods of diversifying their investments.
So, we’ve heard about customizing a retirement plan over going with a prepackaged solution, is there really an added benefit?
In short, absolutely. Business owners, particularly those in the startup space who are just beginning to consider a company sponsored plan, are often very concerned with short term factors such as implementation costs. This is understandable given where they are at in terms of getting a business off the ground, and within that mindset a “prepackaged” retirement plan solution can be appealing.
What’s often overlooked, and what I encourage my clients to carefully consider, is that a retirement plan solution goes way beyond the implementation period. When we design a retirement plan, I factor in not just where the business is now, but where it’s likely to go, particularly as it pertains to its workforce and tax sheltering needs. We want to anticipate the development of that business and what it will need from its plan.
Of course, no one can predict the future, and when the unexpected occurs you also need a service model that can roll with the punches and prepackaged retirement plans won’t do that. Plans on our platform are not set in stone; I regularly work with our clients to amend, and even overhaul their plans. It’s actually one of the most common reasons I hear from new clients of why they bring their existing plan to our group: “my cookie-cutter plan just doesn’t fit anymore, and my service provider can’t help me make a change.”
Do you have an example of a company that needed this type of solution? What was their situation and what kind of solution did you find for them?
A recent new client of mine, I will omit the client’s name for their privacy, had previously engaged in the Rollover as Business Startup (ROBS) business financing strategy, otherwise known as the qualified employer securities transaction several years ago. Since that time the business had grown to employ more than a dozen employees. Despite the success, however, there had been no activity in their prepackaged retirement plan since the original investment in the business. The client came to me looking for assistance in terminating the plan based on the total lack of interest from his workforce.
We did a holistic review of their plan, we looked at their workforce and realized they had a healthy business and a workforce that should want to participate in a retirement plan. The problem was in incentivizing employees to participate. We made several changes to the plan based on their workforce and concerns including implementing a safe harbor matching program, introducing the client to an investment advisor, and then working with both to put together a customized investment lineup on our open architecture recordkeeping platform.
The combination of these factors not only quickly incentivized employee participation in the plan, it freed up the owner of the company to make his own contributions and exercise considerable tax sheltering opportunities for the business.
If I owned a company and I was thinking about offering a retirement plan benefit for my employees, where should I start?
Most business owners I talk to who are considering offering a retirement plan are doing so for one very focused reason, employee acquisition and retention or tax sheltering for themselves and the business. I would encourage you to start by evaluating the full scope of your goals, and the goals for your business. Ask yourself, “where do I want to take myself, my staff, and my company with this plan?” And then of course, give us call! (800) 974-2814 (toll free)