Grow Retire Ready Clients

Alex Dancy | Saxony Securities

January 21, 2020 RetireReady Solutions Episode 7
Grow Retire Ready Clients
Alex Dancy | Saxony Securities
Chapters
00:00:05
Introduction
00:01:28
Obstacles faced in the 401(k) market
00:02:25
Participant response to reports
00:03:54
Value of reaching participants
00:05:10
Plan sponsor response
00:06:57
Prospecting with the Participant Gap Report
00:08:13
Trustee Feedback
00:11:16
Why use TRAK
00:12:03
Collecting data from record keepers
Grow Retire Ready Clients
Alex Dancy | Saxony Securities
Jan 21, 2020 Episode 7
RetireReady Solutions

Alex Dancy is the managing director with Saxony Securities. He has been in the business since 2003 and has built his practice up to managing 31 companies. His book of business is over 100 million dollars, with average plans around 3 million dollars and 75 participants. 

When asked what he would tell an advisor who hasent heard of RetireReady Solutions Alex says, "I work with 18 different record keepers. You know, all the big ones--the Fidelitys, the Empowers, John Hancocks, the Cunas, Mass Mutual, Trans America, you name it. No one has this software and it's software that requires precise data because you have to go into the payroll, but once you get that, it's worth its weight in gold. So I would encourage other advisors to start using that as part of their practice and make time for it."

Show Notes Transcript Chapter Markers

Alex Dancy is the managing director with Saxony Securities. He has been in the business since 2003 and has built his practice up to managing 31 companies. His book of business is over 100 million dollars, with average plans around 3 million dollars and 75 participants. 

When asked what he would tell an advisor who hasent heard of RetireReady Solutions Alex says, "I work with 18 different record keepers. You know, all the big ones--the Fidelitys, the Empowers, John Hancocks, the Cunas, Mass Mutual, Trans America, you name it. No one has this software and it's software that requires precise data because you have to go into the payroll, but once you get that, it's worth its weight in gold. So I would encourage other advisors to start using that as part of their practice and make time for it."

Edward Dressel:

Welcome everybody to another podcast with RetireReady Solutions. I have Alex Dancy, managing director with his company on the 401(k) side. He's got some exciting stories, grown a business in the 401(k) world. Welcome Alex. Wonderful to have you.

Alex Dancy:

Thanks, Ed, for having me. I appreciate it.

Edward Dressel:

Why don't we tell people a little bit about your business, a little bit of what you just told me prior to getting started.

Alex Dancy:

Sure. So , I've been in the business since 2003. I dabbled in 401(k)s. In 2008, I decided to go full time and to focusing on the defined contribution space. And , over that time , I've built my practice up to 31 companies currently. So I'm adding them about three to four a year. You know, the participants in my clients, have never had a lot of the hand holding because they're smaller businesses. So , my book of business right now just eclipsed 100 million, it's about 105 million, 31 companies. So the average plan is about 3 million with 75 people. When I discovered the RetireReady reports , it was really a jem because none of the record keepers were offering this. They have great tools online but not as specific. So I gravitated towards that and it's been fantastic to have that in my toolbox.

Edward Dressel:

And we'll get down there a little bit and I appreciate the kind words, but what obstacles do you find in your business?

Alex Dancy:

So there's multiple. The biggest obstacle is just reaching the participants. And to me that's the most important thing. And when you have an hourly workforce that makes it a challenge. And I have a lot of department management company clients and so, you know, they'll have 50 to 100 different apartment complexes they manage. So getting to those people is nearly impossible face to face. But through the RetireReady reports and emailing those out, I have a connectivity with them. And the other thing I offer is that they can schedule time with me until 10 o'clock at night to go over those reports Monday through Thursday. But Fridays I shut down at five. That's probably our biggest challenge.

Edward Dressel:

And where are you at? We didn't go there.

Alex Dancy:

Sure. I'm in North Georgia, a little town called Cumming, Georgia. So Atlanta is my market.

Edward Dressel:

Okay. You mentioned you emailed those reports to the participants. What's the response when they get those reports?

Alex Dancy:

So I'd probably say it's the old 80/20 rule. 80% don't respond, but the 20% that do respond we walk through that and usually those people are putting themselves at a contribution rate equal to what the company's matching. And I tell them, look, you know, just because you're putting in 5% and getting the 4%, it's not going to get you there. Let's take a look at what this means in real dollars with these assumptions. And my assumptions are pretty conservative. I look at a 6% growth long term and 4% growth in retirement. And you know, you can obviously change this any way you want, but I always ask them if they have a spouse, if they'd like to have them on the phone with them. And I spent an hour last week with a couple up in Boston. And so it was great. They got to sit down and we looked at the report that I emailed them and we discussed what their social security statements were looking like. And we combine those together to look at what their monthly income would be. And they were like, this is not enough. And so this one individual decided that he was gonna move his contribution rate from 7% to 15%. So just by the 8% increase , it's gonna help him long term and he's got another 20 years. So obviously we can't promise returns, but with the assumptions, things look brighter for them. His wife was excited as well.

Edward Dressel:

You put a value on reaching the participants. It's important to you. What makes that important to your business?

Alex Dancy:

It helps me stay motivated because if I'm not helping people, I, you know, I don't think I could do a job. I feel like what we're doing is really important and it'll affect generations. So if someone can position themselves where they're not going to be a liability on their children--I call that the sandwich generation--I just say, "Look, you're the top of the bread. Your kids are gonna be the meat and cheese and your grandkids are going to be the bottom of the bread and all three generations will be living together if you don't start saving more. So don't be a liability to your adult children when you're in your seventies. And then the other conversation is with the CFO and the business owner . They can increase the value of their business if they can have people leaving on their own terms at say, age 65 versus hanging out into their seventies. That creates higher salaries, it puts more of a burden on the benefits for the group medical. So there's lots of positives that these reports can do for the investment committee, the business owner, and then obviously the participant as well as their children.

Edward Dressel:

Let's talk a little bit more about that plan sponsor and your interaction with them. What is their reaction after you start using this report with the participants?

Alex Dancy:

So at first they're--you're questioning whether or not they're gonna understand that. And so what I always do is offer a group presentation either live or at the office. So a lot of my businesses are single offices and then obviously on the ones that have multiple locations, we will do a WebEx. And then what I do is I schedule individual consultations after that to go through them. And really, once you studied these reports as the financial advisor , it's just like riding a bike. You learn the lingo, you learn how to flow through the document. Obviously I'm not going to touch on every single piece of it, but the ones that I think are most impactful are the paycheck portion of the report, which shows the difference in take home pay. Then obviously the monthly income projections based on their current contribution rate and future contribution rates. And then if they say, "Well, I'm going to think about it," then I fall into the middle of the report to say, "Well, if you wait, let's assume you do wait to increase your contribution rate by X percent, I can assume that you're going to lose this much money based on the fact that the market grew at X percent." And I, you know, I'll walk them through that. But once they understand that, that there is a loss due to time and not being at an increased contribution rate, they figure that out. And if we could just get people to think about increasing their contribution rates by even 1% per year for the rest of their careers until they max out the IRS limit, I mean the country would be better off.

Edward Dressel:

When prospecting, do you use the participant gap report?

Alex Dancy:

Absolutely. Every one.

Edward Dressel:

And what's that looked like? Does it make a difference in their response?

Alex Dancy:

Absolutely. I asked them, I said, "Are there participants receiving this type of information? Is the advisor out there talking to them about their specific situation? And do they have the capability of showing what they would have to budget if they increased their contribution rates." And so when you go out and you meet with somebody, you tell them to increase their contribution rate by say 2% and the report, and they're paid, say $50,000 a year, which is $962 a week and increase it 2% after taxes. That's like $14 or $15 a week. And I've had some guys laugh, they say "That's beer money." And I'm like, "Absolutely!" So they won't even increase it 2%--they'll go in and say I'm going to increase an additional 6%. I'll go from five to eleven versus five to seven. And so once those participants get engaged, I rarely ever see them increase their contribution rate just one or 2%. It's usually four, six and sometimes even 8% so, y eah. So for prospecting, it's a great tool.

Edward Dressel:

Have you been to a trustee meeting after the reports have been used and gotten feedback from the trustees on the value that report has to them?

Alex Dancy:

Yeah. They , the trustees, usually the business owner or slash president , and even the VP of HR will tell me stories. And there was one where I had a company, they had an in house attorney and I was sitting down with a participant and going through the report and then she left crying and the in house attorney came into the conference room where I was conducting these one on one sessions and he's like, "What'd you say to her?" I showed her the report and then we put those numbers together into her situation and she was crying because she was so happy. She didn't realize that it wasn't too late. So that report changed her life and that attorney smiled and he said, "Thank you, Alex for being here for our participants." So yeah, that was, you know, that made me feel good. Another lady that I helped out , she was facing an eviction from her apartment and we made some changes and now she's cashflow positive with her income and her expenses. We talked about her situation and she just told me recently that she's looking at buying her first home. So you know, what did that report do for that person? It made her become a homeowner. And that was the leading tool to get her in that direction versus being evicted from her apartment. So budgeting and then this report, those combined--I have different budgeting tools I use--but you know, those are the days where you're like, all right, I cannot wait to get to work tomorrow to go and do my next education workshop and meet with participants.

Edward Dressel:

I love that. That's awesome. You've given me a couple of fun stories. Do you have another story or two that go, you know, this was really worth my time to work with participants.

Alex Dancy:

Sure. So , I've done so many of these that I guess the main thing is that people don't realize and understand money and the way it works and how it works after taxes and just having the long term five year, 10 year and retirement numbers, those different tables in the report can really be eye-opening. And so , in my opinion, Ed, your software should be required software for people to learn to get a high school diploma. It really should be because it doesn't matter if they work for a company that has a 401(k). This stuff could also be used in a simple IRA or an IRA account. People just need to understand that. So all three of my kids, my youngest one is only 14 at this time, but , all my kids are working that are teenagers--I require them to put away 10% of their pay and they've seen these reports. So, you know, it, it, hits home as well.

Edward Dressel:

These are fun stories.

Alex Dancy:

Yeah.

Edward Dressel:

What would you tell somebody who hasn't seen our software, who hasn't looked at it, is out in the 401(k) participant world? What would you tell them? Why use this?

Alex Dancy:

Yeah, the question, I have for them is "Why are you not using it?" Because , you know, I work with 18 different record keepers. You know, all the big ones--the Fidelitys, the Empowers, John Hancocks, the Cunas, Mass Mutual, Trans America, you name it. No one has this software and it's software that requires precise data because you have to go into the payroll, but once you get that, it's worth its weight in gold. So I would encourage other advisors to start using that as part of their practice and make time for it.

Edward Dressel:

How hard do you find it to get the data from the record keeper, the plan sponsor? How hard is it to get the data and get it in the system?

Alex Dancy:

So the plan sponsor--generally we'll have some what they call learning patterns to populate the data--what I think they need to understand is that as long as we can get the tax data , if the names are--the first and last names are in one column or two columns or whatever that turns out to be--we can massage that data. But once they figure out that the long term effect on how this is going to help the company, I think they finally realized that on the second round. So I have some companies that are doing the second round on this and they're popping it out. So once you get over that first occurrence of doing this--that first hurdle--after that, it should be pretty easy and simple for them. The data from the service providers , getting the acetate, is pretty simple. I've got one plan that has eight different sources and you know, we just take seven of those sources and add them together for the pretax. And then of course we have the Roth, but once we've got that, it's pretty simple. So yeah, it's not a huge headache.

Edward Dressel:

Any other comments before we wrap up?

Alex Dancy:

I would just say that, Ed, you guys are doing a great job. I hope that you all continue to do this because I plan on working another 17 years and I hope you don't go anywhere. So thank you.

Edward Dressel:

I appreciate your time, Alex. It was, you know, some fun stories. I just did a podcast with another individual published soon on the 403(b), talked about somebody crying in the same vein that you talk about it. Just the delight of helping somebody who doesn't understand how well they're doing and that they can make it.

Alex Dancy:

That's wonderful to hear.

Edward Dressel:

It's a lot of fun to help participants engage. I tell my employees we are in the poverty alleviation business and we're helping America retire successfully. I appreciate your time and wish you the best in the market place today. Have a great day.

Alex Dancy:

Yep. Thanks Ed for having me.

Introduction
Obstacles faced in the 401(k) market
Participant response to reports
Value of reaching participants
Plan sponsor response
Prospecting with the Participant Gap Report
Trustee Feedback
Why use TRAK
Collecting data from record keepers