Grow Retire Ready Clients

Joe Williams | CSi Advisory Services

November 05, 2019 Season 1 Episode 5
Grow Retire Ready Clients
Joe Williams | CSi Advisory Services
Chapters
00:00:16
About Joe & CSi Advisory Services
00:01:13
Obstacles in financial services
00:02:03
Customizing client expereince
00:03:08
Purpose behind the job
00:06:21
Engaging particiapants
00:08:43
Participant stories
00:16:10
Portals vs one page gap report
00:20:30
Getting data from plan sponsors
Grow Retire Ready Clients
Joe Williams | CSi Advisory Services
Nov 05, 2019 Season 1 Episode 5
RetireReady Solutions
Show Notes Transcript Chapter Markers

Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through CSi Advisory Services, a registered investment advisor and separate entity from LPL Financial.This information is not intended as authoritative guidance or tax or legal advice.



Edward D:
0:06
Welcome everyone. This is Ed Dressel with RetireReady Solutions for our podcast. We have Joe Williams out of Indianapolis this morning. I'm excited to have him. Joe, welcome to our podcast.
Joe W:
0:14
Thank you.
Edward D:
0:16
It's great to have you. Tell me a little about yourself before we get started.
Joe W:
0:19
Well, I am a financial advisor, also our education specialist for our firm, CSi Advisory Services. We're out of Indianapolis, Indiana. The firm has been up and running since 1971. And we're actually a retirement focused firm. And so my job really is all about going out and educating participants around the retirement plan to make sure they know exactly how it works and how to really best utilize it.
Edward D:
0:54
How long have you been with CSi?
Joe W:
0:57
I'm going on a year, a little over a year and a half now that I've been doing this with them.
Edward D:
1:01
And before this?
Joe W:
1:03
Before this I was an advisor at a bank for almost 20 years. So I've been an advisor for quite awhile.
Edward D:
1:13
What obstacles do you find in your business?
Joe W:
1:17
Obstacles? Really it's how to establish value, you know, when we're working with customers--or working with clients now--because we see the emergence of the robo advisor and so now there's a much cheaper solution out there that's virtual but clients can really use and now we as advisors are really having to show our value when working with customers to make sure that they understand that by working with us, the costs associated with working with us are certainly justified as opposed to basically the virtual experience.
Edward D:
2:04
And what are you doing to, to justify, "Hey you need to hire an advisor for your plan?"
Joe W:
2:10
Well, it could be a number of things. I mean really it's all about customizing the experience to the client because it's something that they don't necessarily get with the robo advisor. It's more of a plug and play type situation with robo, whereas we are providing a lot more of the customized solutions for them to where it's more tailored to what their needs are. And we are able to kind of think outside the box to ask those additional questions to really, identify additional needs based upon the conversations that we're having. And so I think that's really where we start to establish that value with the customer, you know, going deeper in making sure we're having those extended conversations that are going to be more fact finding to identify those needs that they haven't even really thought of.
Edward D:
3:08
So, I'm going back a little bit on what you said to me. You left the bank after 20 years, came to CSi you're the education specialists. What made you go, "That's the job for me."
Joe W:
3:20
Well, I noticed that if we look at what is important to people in where the majority of their investment assets are really coming from, they're definitely with the 401(k). With the bank as an advisor, some of our biggest tickets that we had were from 401(k) rollovers and meeting with people and looking at how these 401(k)s were allocated and I just saw some really horrible, horrible allocations. And we don't have to think back too far to the financial crisis when the market's dropping 30, 40% and you have all of these folks out there that were allocated way too heavy in the stock market. And so we saw a lot of retirements that got postponed. And so in meeting with people and looking at these things, I'm thinking, "Wow, who in the world is advising these people in these plans?" And really the answer was "No one." Very few advisors have that capability to make those recommendations over the investments inside of the retirement plans. And so with our firm, we are fortunate enough to have the ability to do that. And so that was what was really attractive to me--to be able to form the relationships with people when they were still in their working years and guide them on how to invest the funds inside of their retirement plan so that we get better outcomes for them when it comes time for them to retire. And so that's where my job is--going in and sitting down with them and saying, "Let's take a look at this retirement allocation. Is this really appropriate for you?" Because the human resources department really isn't qualified to have those discussions with people and the record-keepers aren't going to do it either. So I really like that aspect of this job, of being able to have those conversations and make those recommendations and put ourselves in the driver's seat so when the people do retire, they're really grateful for us and all the help that we provided them along the way to put them in that position. And so, it's a pretty easy transition when we ask for the business for them to continue the relationship with us. On the personal side, I really liked being at--I guess I almost think of it like the grass roots effort here. We're working with these people, helping them to accumulate so that when one day when they are going to make that transition into retirement that we are right there in the great position to be able to ask for that business.
Edward D:
6:12
So you're doing what I'm passionate about--helping middle America retired successfully.
Joe W:
6:17
Absolutely.
Edward D:
6:17
That's part of, that's what we love to help advisors do. Before you can tell somebody what they need to do with you know, how to allocate their money, you've got to engage the participant in a meaningful way. Otherwise they gloss over and don't engage it. How are you engaging participants towards retirement readiness?
Joe W:
6:36
That's a great question because nowadays, you know, you see that there's all these different programs out there and financial wellness is everywhere. And so, we try to make sure that we are using some type of a tool that will give participants a pretty accurate picture of what their retirement outlook looks like. The RetireReady Solutions, the actual TRAK program that we use--we use that quite a bit in our practice to kind of give people that outlook. It presents itself in such a simple way that instead of presenting someone with a 50 page retirement plan document that they're probably not going to go through and read all of, I mean, this is, you know, a nice one pager that they can look and see, "Okay, do I have any red?" If I don't have any red, I'm in good shape. If it's all green, I'm great!" And if we do see the red, we talk about how we get the red out. It sounds like a Visine commercial, but for the most part, that's what we're really trying to do is figuring out how we get the red out. That report really helps to start some really great conversations around what we need to be doing for them to get them where they need to be. Also it helps us to kind of incorporate any other things that they might be doing outside of the plan.
Edward D:
8:21
I think you're talking about the one page Participant Gap Report. It shows them their gaps, shows them what they need to do and it gives them a few more options, but really keeps it clear, as we've tried hard to make it, so that participant goes there and you can be proactive in handing it to them versus saying, "Hey, go out to the portal and figure this out for yourself."
Joe W:
8:43
Right.
Edward D:
8:43
Do You have a story of, maybe an anecdotal story, of something that happened recently with the participants that said, "Hey, there's my situation, here's what I need to do."
Joe W:
8:53
Yeah, you know, it's funny because the stuff, it's all relative. And you have a participant--one particular participant I'm thinking of making $250,000 a year and thinking, "Okay, I'm saving, I have this much saved up and I'm doing great and I should be able to retire." But what they didn't realize is that when we start thinking about retirement in terms of the income that you need, we're trying to target around 75-85% of what your working income is as far as your income in retirement. And he never really thought about it that way. And so once we started taking a look at what he had and what he accumulated, because he was contributing the max to his 401(k) but after running the Gap Report, it still wasn't getting him there. And so he never really thought that, "Hey, wait a minute. Even though I'm doing what I can, I'm contributing into my plan, I never thought that I would come up short." He never worked with anyone that really ran the numbers for him to show him that, "Hey, by the way, if you keep doing what you're doing, it's not enough to be able to provide the type of income that you're living so you can maintain your lifestyle in retirement." So after running the report for him--and it was nice because it was just a one page report and it showed everything--and he could see where, "Holy cow, all right, I know I'm doing this and this is still creating a short fall." It helped to drive the conversation around, "What else should I be doing?" And so in this particular case it helped us to put together a scenario for him where he could actually save outside of the plan to help make up the shortfall that he was going to have in retirement. It helped lead to more assets and to gathering leads to additional business with this particular client. So I really like the program. I really like using it to engage the customers around their retirement situations.
Edward D:
11:21
So you have a pretty high net worth, high income person story there, which is good because it got him off of autopilot and said, "This is something you need to get your hands on," and not just assume that giving the max is going to solve the problem. I've seen that problem before. People have called me, advisors ask, "Why isn't this working?" Exactly that. Pretty close to that amount of money. Tell me about a story about a middle America person that you know, middle-income $50-100,000 that you engaged with, the report made for them.
Joe W:
11:56
I am thinking about one particular participant that I work with and she was working on contributing. I want to say she had about 3% if I remember correctly, she was contributing about 3% to her plan. The employer had a match 100% up to that 3% so that's why she was doing three. So, you know, we started looking at the plan and looking at her situation and I saw that her balances were probably around 30,000 or so and she was fairly young. I mean probably early thirties or so, and just not a clue about this. And she was just doing the 3% because that's what she told she needed to do was the 3%--max out what your employer is giving you. That's the advice that she got, which we see with a lot of participants. It's like, yeah, you want to contribute at least what the employer's matching, and so a lot of people do that. Once we did the retirement analysis for her and determined that about 3%, even with the employer match, 6% was still not getting her there. The nice thing about it is, the Gap Analysis gave us a recommended contribution amount. It told her basically to raise her contributions up to 10% to get her where it needed to be. And it's really cool because we have the ability with the program to adjust the assumptions. And so for us, we use an 80% income replacement ratio and then we also are able to include social security, but typically we'll include social security at about 70% of whatever the actual benefit that they're supposed to get. So it really creates action on the participant's part when we show it like that, because everyone has it in their minds that social security just may not be there in its current form when they retire. So running it at a 70% assumption, we never get any pushback on that. We've never had one person say, "No, I think I'm going to have full social security." If anything, they go the other way and say, "Hey, can you run this without social security?" For her we ran it like that and it helped us to get a recommendation to raise those contributions up to the 10% mark. And you know, for her, going from three to ten was a tough, tough jump. We realized that. And so that sparked additional conversations around, well, let's take it a little deeper look at your finances and what your budget really looks like. After doing that, we started realizing that there was a lot more money there that she was making that was basically being spent, for lack of a better term, and could have been otherwise saved. And so after going through the exercises of looking at the budgeting, we found we were able to find enough cushion there to where we could raise those contributions to--we ended up around eight--it was 8% that we ended up at. But then what the plan was, is that getting to that 8% level now, but in a year from now, we're going to bump it up by 1% and keep doing that 1% and timing it out around the time that her pay raises come. So that way the impact on her is pretty minimal, but at least it gets her to that savings level that was where she needs to be. So again, using the program, it just really helps to drive those conversations and make sure that we're able to get people to where they need to be. And it presents itself in such a simple fashion that it's really easy for them to read and it's not the 50 page retirement planning document that really intimidates people. And you know, once they get that huge binder of stuff, they take it home and they never look at it again because they just don't want to have to read through all that to figure out what they need to be doing. At the end of the day they still come back to us and say, "What should I be doing here?" But this one page report, it's so simple. It makes it really, really easy for them to understand.
Edward D:
17:02
Yeah, exactly. And I, I don't want to read, I'm a technical person. I don't want to read 50 pages.
Joe W:
17:08
Yeah.
Edward D:
17:08
Different perspective, different angle on this. Many advisors tell us they don't want, they don't pick up our software because, "Hey we have the web portal, we can go to the portal. And just tell the participants, go to the portal and figure it out." What are the advantages of having the Participant Gap Report for you and your business?
Joe W:
17:24
You know, being able to run that gap. I mean going to the portal, we tell them go to the portal and you know, cause pretty much every record-keeper now has a portal that a participant can use. And what I find with the participant is they don't use it. At the end of the day they still, for most part are pretty intimidated by the computer in some cases. I mean because we're working from, you know, people who are factory workers in some towns in very, very, very rural communities to your technology firms. We have a couple of clients that are in fact technology firms at technology security firms and it's funny--you would think that a technology firm--that they would be all over this stuff and really know what they were doing but even still we find they are not using the portal. And so when we show up on location, in doing our one on one appointments with the participants, we are going through things with them about their retirement plan and we're showing them around the website and showing them the portal. And now, unless I'm there doing it with them, they're still not doing it. I mean, there's people where I've seen, we walked into their website and looked at the retirement plan online and I've gone back and met with them again six months later and I still see that they haven't touched it from the last time we were in there. And so even though the stuff is there, people are really not using it. So when we, when I'm able to have these one-on-one discussions and start talking more about, "Look, you need to retire, we need to figure out if you're on track and I've got a way that I can do this calculation for you and it's a little bit more detailed than what you're seeing in your portal and I think it presents itself in such a simple fashion that you'll be able to follow it and understand it." And so when we use the Gap Analysis with our participants, we see probably about a 75 to 80% increase in the participant outcomes, whether it be them increasing their 401(k) contributions or perhaps they're engaging with us on some type of a personal wealth management plan of some sorts. So I think the tool itself--I mean using it certainly helps to initiate some type of outcome. And that's what we're really after with our plans, just to make sure that people are making the adjustments that they need to make to ensure that they're on track for a successful retirement.
Edward D:
20:31
So getting the data from the plan sponsor, how do you find that process?
Joe W:
20:38
We think it's pretty simple. I mean, because a lot of this information is things that they're providing anyway for us, in a census. And so what we've done is basically created a template that all they have to do is basically cut and paste stuff into. And it makes it super easy for them. So when we are requesting, because they understand if we're going to be doing this for their whole company that we need the data and so they have it. It's just a matter of cutting it from one spreadsheet and pasting it into our spreadsheet. And once we have that spreadsheet, at that point it gets pretty simple to just input into the program and a couple mouse clicks and then we have the report done for, in some cases, with one our clients over 300 people that we did it with and it took us next to no time to really produce those.
Edward D:
21:35
What's been the response from your plan sponsors?
Joe W:
21:39
They love it because they understand that it actually creates or drives outcomes with their participants to really think harder about what they need to be doing in order to have a successful retirement. Because at the end of the day, they want to see their employees retire because it's pretty expensive to keep people around. The aging employees anyway, that are past their retirement age. It starts to get a lot more expensive. I thought I saw a study somewhere that it costs about an extra $50,000 a year or something like that, to keep employees on payroll thereafter their retirement ages because all the different expenses that come about. So if we can do things to help them to do the right things so that they are not there longer than they should be, they're all for it.
Edward D:
22:38
What would you tell another advisor who's just saying, "Go to the portal that's, that's sufficient." What would your response to them be?
Joe W:
22:45
I'd say, you might want to rethink that just because half the time when we tell participants to do things, they're never going to do it. The only time that they really think about the stuff or that they will do anything about this stuff is when we're there walking them through to do it. Once we leave they're back into their normal life. And so, to ask them to go back into the website to the portal when most of them probably don't even know their login information, you're not going to get any outcomes that way. I think also if you have any type of personal wealth management business in addition to doing retirement plan business, you're going to want to engage that participant with this program because it's going help do a couple things. Either one: it's going to drive them to increase their contributions to get closer to where they need to be. Or two: it's gonna really bring to light any other assets that they may have out there. Because one of the things I see a lot of is once I run this report and it comes back as a shortfall, that customer is gonna say, "Wait a minute, I've got more stuff. This is only talking about what I have here. I've got more stuff." And so that's going to drive another conversation where we can start talking about this other stuff. You know, where is this other stuff? Who's working with you with this other stuff? Why aren't they doing things like this to where you know what your current retirement readiness situation looks like? And so it helps us to win more business. So if you're not doing it now, I would highly recommend to start doing it and not just taking the easy way out and saying, "Yeah, just go to the portal," because they're not going to do it.
Edward D:
24:56
Well, Joe, I really appreciate you taking the time this morning. Appreciate you interacting with these questions and I wish you the best in today's marketplace and thank you for your kind words about our solution.
Joe W:
25:08
Yes, thank you. Hey, I'm a big fan, so we use it quite a bit here in our practice and we will continue to.
About Joe & CSi Advisory Services
Obstacles in financial services
Customizing client expereince
Purpose behind the job
Engaging particiapants
Participant stories
Portals vs one page gap report
Getting data from plan sponsors
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