TOTAL PLAN ASSETS/PARTICIPANTS:
PARTICIPATION RATE: 94%
AVERAGE DEFERRAL RATE: 8%
DEFAULT DEFERRAL RATE: 4.5%
Vanguard Target Retirement Funds
Match of 100% up to 4.5%
ADDITIONAL PLANS: Not Applicable
Having a 3(38) fiduciary adviser has allowed Medical Associates of Northwest Arkansas (MANA) to help the 500 participants in its $80 million plan get the personalized advice they need about investment choices and closing their retirement-savings gap.
The Fayetteville, Arkansas-based independent physician group first moved to a Registered Investment Adviser (RIA) serving as a 3(38) fiduciary in 2007, and the RIA began offering risk-based managed models for participants. “We found that most of our participants were not at all experienced with investing, and were uncertain about investment elections within our plan,” CFO Paula Storment recalls. “The managed models seemed easy to understand, and provided participants comfort that someone with investment experience, who they could talk to face-to-face, was managing their funds.”
The plan has changed 3(38) advisers twice since then, but continued offering managed models. Currently, the five managed models participants can choose from, based on their individual risk tolerance, range from conservative income to aggressive growth. “We have consistently had close to 90% of our plan assets in the managed models,” Storment says.
In 2014, MANA took the plan’s one-on-one help a step further and asked its adviser, Overland Park, Kansas-based Qualified Plan Advisors (QPA), to start providing a personalized gap analysis for participants and meeting with them individually to discuss it. With the gap analysis, the sponsor seeks “to help our participants see on paper the value of our plan and to help them make simple changes that allow them to achieve their retirement goals,” Storment says. “Many of our participants had not considered specifically how much money they needed to be saving to prepare for a comfortable retirement. Even though tools are online for them to calculate retirement needs and goals, they were not utilizing them. To have a report hand-delivered to them by our RIA had a much more meaningful impact on the participants.”
The four-page reports provide each participant with a personalized monthly retirement-income goal, a projection of the participant’s 401(k) account balance at retirement, as well as Social Security benefits. “It then tells them if there is a gap that needs to be corrected,” MANA HR Director Vickie Crittenden says. “It gives them four ways to close the gap: defer more, spend less, work longer, and adjust investment allocations.”
QPA meets individually with each participant at initial enrollment, in on-site meetings that typically last 30 minutes to one hour, then afterward whenever a participant requests a one-on-one meeting. From those meetings with the 3(38) adviser, “We want participants to understand the benefit provided through our retirement plan. We want them to understand their investment risk tolerance, and select an investment option appropriate for them,” Crittenden says. “In addition, we want them to understand all plan fees, plan statements, and the online services available to them from our TPA (third party administrator).”
Participants frequently increase their deferral rate after these meetings, and sometimes make investment-election changes, Crittenden says. “We also frequently obtain rollover balances from the participants’ previous employers once the participant more fully understands our plan,” she adds. —Judy Ward
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