Grow Retire Ready Clients
Grow Retire Ready Clients
Jonathon Schultheiss | Gate City Advisors
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As head of corporate retirement plans, Jonathon Schultheiss shares how their 401(k) management feeds into their wealth management services. He highlights the success they have had with participants and plan sponsors, particularly through the use of TRAK's one page Gap Analysis Report.
Welcome everyone. This is Edward Dressel , president , owner of RetireReady Solutions. I'm excited today to kick off our podcast series with Jonathon Schultheiss, an advisor out of Greensboro, North Carolina with Gate City Advisors. Did I get that right?
Jonathan SYou got it right.
Edward DIt's wonderful to have your Jonathon , welcome. Good to have you here.
Jonathan SYeah, thanks for having me.
Edward DYou bet.
About Gate City Advisors
Edward DI don't like to talk about our self, I like to make these really about the advisors . So why don't you tell those listening a little bit about yourself and your business?
Jonathan SAbsolutely. Gate City Advisors really has two core focuses and we have a wealth management practice, but then we also have our corporate retirement plan practice and I'm the partner in charge of our corporate retirement plan practice. And so a lot of what we do is even though 100% of my time is spent in the 401(k) side, the other thing that we try to do too is we try to s pill over and feed into the wealth management side. And we do that through t rying to work with the C suite, but we have also found a nice little niche and a sweet spot in really developing relationships and working with the individual participants outside of the C suite. And one of the ways we do it is using your tool.
Finding business in the participant model
Edward DI hear that from advisors , "there's not a lot of money to be made in 401(k) plans with the participants. It's all about the C suite". Why don't you tell a dvisors who are listening, how are you finding any business inside of the participant model a nd working with participants?
Jonathan SSo one of the things that we try to do with every one of our plans is we deliver what we call the on track reports. And that is your basic one page gap analysis that you guys have. But we brand it to more of the Gate City theme. And so we really play off of of the train theme here and its interesting Gates City Advisors that Greensboro is called the Gate City. And even very few people here in Greensboro understand why it's called the Gate City. But it goes back to the 1800's when the governor of the state, John Motley Morehead, actually petitioned all the railroads that come to one central location. And that central location is the Depot in Greensburg , which is still at working Depot today and it's just a couple of blocks from our office. And so if you wanted to go anywhere in this state, you had to come to Greensboro to get there. And so it became known as the Gate city. And so we actually play off of that theme and we say, Hey, when our clients are trying to get to retirement, they need to come through Gate City Advisors to get there. And so we play off of that theme and we tell that story and then tell all of our plan sponsors that we have what we call on track reports and on track reports are basically one page gap analysis that we give to each participant that tells them if they are on track for retirement or not. And so we use your tool, we download the spreadsheets, we get data from the plan sponsors and we generate these one page reports. And then we have a group meeting. And in that group meeting, the thing that we do is we actually take that one page report, we put it in an envelope with the participant's name on it and we hand it out to the participants as they come into the room. And so we tell them, hey, hold off, there's personal information in here, don't open your report until we can kind of show you what's on here. And then we put a sample on track report up in the front of the room, usually on a TV or a projector or whatever. And so we actually run through how to read these reports. And as we get to the bottom of the report, you'll know there's a thing on there that says other possible solutions. And i t'll say if you're not on track and here's a couple other things that you can do. And one of the things on there is h ave an additional lump sum today. And so we really drive that home and say, and it's funny, I actually say this in the meeting and it's true, but I've never done a meeting where I haven't had at least three or four people sitting in the room r aise their hand and go, H ey Jonathon , I have exactly that much or maybe a little bit more than that in my old 401(k). The thing that we do is we say, Hey, if y ou just get me your statement we'll be happy to include it and help you get it rolled over. And so just by doing those meetings with groups w e see a lot of those participants email us statements, they'll get a s t atement. And we usually have a minimum size that we deal with. A lot of times if it's smaller than say between 30 and 50,000, we'll just roll it into the 401(k). Otherwise, if it's much more than that we'll have a conversation about, you can ro ll it to yo ur 401(k) or you could do this or you could do this. And so we give them multiple choices on which one makes sense for their situation, but a lot of times just from developing the relationship, by having that rapport and having that conversation and then giving options, i t 's interesting, we pick up quite a bit of business out of the individual rank and file employees.
Edward DSo there's a couple of questions, for everyone that sounds like a lot more work than most advisors want to do. Do you find meeting with everyone a lot?
Jonathan SUsually when we're doing a group meeting and we're doing that, you'll tell the people who are engaged, right? There's people who are not engaged and they're not going to come meet with you, but the people who are engaged are great opportunities. And so one of the things that we do is we actually have some of our advisors that work on the wealth management side and they're the ones that will meet individual one-on-one with participants. And yeah, it'll take a full day depending on the size of the company, but just the ancillary opportunities that you get out of that are well worth it. So yeah, you're going to put in a hard day's work meeting with with as many participants as you can. But a lot of those participants, and what's interesting is when you go to a different level with a participant and they start to open up with you and they start to show you, Oh yeah, I have this, Oh by the way, I have this too. We've met with some participants who you would think there's no way they have that kind of money, but they'll end up with $400,000 and $500,000 accounts that they really need help with. And so yeah, you gotta do a little bit of work on the front end, but man, it's so worth it when you start to see the opportunities that come from it. So not going to lie, I mean it is work, but it's so worth it.
Edward DAnd I've heard that same thing, that TRAK is a good filtering , the reports are a good filter into that one page that will get people engaged that you want to talk to. And the people who don't want to talk are generally, you don't want to talk to aren't engaged because they don't have the outside assets.
Jonathan SYeah. It's funny, most of the time when we sit down and somebody is concerned about having enough money for retirement, they didn't just become concerned. They've been concerned for a while and they tend to be super savers as well. And so when somebody is really engaged and want to have a conversation, those tend to be some of our best opportunities.
Portals vs one page gap report
Edward DSo tell me a little bit, I mean you're using TRAK, you're bringing TRAK to the meetings, the reports, that one-page gap report, which is really popular. And there'll be a link to it, if your getting this off the website there will be be a link next to that to see a sample of it. But a lot of advisors just go, "I've got the portal, I let them go there" . Contrast using the portal versus using the one page gap report.
Jonathan SI like using the one page versus the portal and I think is more probably a personal preference, but it's one of those things where I know people are coming into a room and I know that they're going to walk away with the report. And I feel like we have more success by actually delivering that report and participants don't have to do anything about it. So when they come into a meeting they get an envelope. And one of my favorite things to do is, I share a statistic and I say the average American spends more time planning for one annual vacation than they do their entire retirement. And when I say that, it's so funny, I look around the room and there'll be like a third of the people in there shaking their head yes and kind of pointing to themselves g oing, y ep, I'm one of those. And so what I do is I say, listen, at the end of the day today , you guys are no longer going to be that statistic because you're going to leave with the report that's going to show you what you need to do to get on track for retirement. And so I think while you have them there and you can put a report in their hand, we feel like we get more success that way. So it takes a little bit of work on my a ssistant to generate the reports and put them in envelopes. At the end of the day, once those people have become engaged, the amount of business that we get out of it, in my opinion, way more than pays for herself. Now I don't know, the portal might be a method of using that works well. But we've had success here and we k ind o f stick with that.
Edward DAnd I always tell advisors, you being proactive in the most important part of the plan rather than being passive, which is "how do I retire successfully?" And you're active there and I hear from advisors that that's helping
Getting data from plan sponsors
Edward Dthem. The other part, the objection I hear is " I just can't get the data". How are you getting the data from the plan sponsor to create these reports?
Jonathan SSo I think you have to have buy in from the plan sponsor on the front end. And we've actually included the on track reports as a part of our sales process. When we're going through the sales presentation, we're educating the plan sponsor on that and we're getting the buy in on the front end. Even in our committee meetings when we are reviewing the retirement plan, they understand that once a year we are going to do these on track reports. And there's some great back end stuff that TRAK has too where we can go in and run plan level reports and often will bring those plan level reports and explain that Hey, this plan level report, it gives us kind of the overview of the plan. But each individuals report we can bring out of the system here too and deliver to individuals and get them engaged and we can see progress. We talk about it as a overall process and when you get buy in at the plan level, it makes it so much easier. And there's been time when we've gone to the payroll manager and we've said, Hey, we need salary and we need this, and that payroll manager will sometimes kind of throw up a red flag and go, I don't know about this. And we have copied in the CFO and the payroll manager and said, Hey, we're needing these reports like we talked about. Would you mind just giving authorization to the payroll person to give us this data? And once the CFO or whatever says it's okay to give them the data, then we'd get it. So we've had occasions when there's been a little bit of resistance, but I think that resistance is really taken care of if you have those conversations at the plan level and the committee level and they understand the intent of the reports because most of the committees, they see a lot of value in getting their own reports. There's been times where I've shown up to meetings and some of my committee members come running over to me and go, "let me have my report, I want to see my report". So they're excited about getting the reports as well.
Edward DThat's awesome.
Jonathan SI think the more and more that you do it, the more they come to look for it. And it's funny, I've got companies that we go to now, and this is funny, we showed up and did one a couple months ago and one of the participants showed up with three previous reports, "here's my report from last year and here's a year before and here's the year before that". And they were able to show how they were trending getting better prepared for retirement. So once you've created that kind of a culture where it's expected, then the participants look forward to it. And even some of the committee members look forward to getting their reports.
Edward DSo forgive me, I'm not a plan advisor, but I can't imagine them having any piece of paper for three years and bringing it to a meeting. Does that happen anywhere else? What else do you give them that they have three years later?
Jonathan SI can't think of anything, but I can think of at least four people at different companies that have shown up with their past reports. I don't know that it's the original piece of paper, but maybe they scan it and save it in a document somewhere, I don't know. But they have shown up and we've looked at the reports and it's funny that we had some back before we branded it with our Gates City logo stuff on it. They brought some of the old reports and it's funny to look at them and see how we've changed it up over the years.
Edward DThat's a great story. You're not the only advisor that's told me that, but it's just three years of data, that's pretty stunning. Kind of fun to be there in the room when they're doing that . It's like, hey, have we engaged them? I think they're engaged. Tell
Successful participant meetings
Edward Dme about one of your successful participant meetings, what did it look like?
Jonathan SSo, you know what's interesting? I can remember probably one of my favorite stories of using on track reports is I actually went through and gave a presentation and was talking about it. And at the end of the presentation I had a lady that came up to me and she was probably in her mid, early thirties, and she brought her report up and I looked at it and I said, Hey, congratulations, you are on track to replace 100% of your income at age 67. And she looked at me and she was like, 67? I don't want to retire 67. She says I want to retire at 55. And I remember going, oh wow, okay, great, let's sit down. And I actually pulled up the TRAK software and was typing it in and I couldn't quite get her to 55. I tried a lot of things and saving more and this, that and another. However, I was able to get her to 57. And so it was so interesting that you see how engaged she was and right there , this company, the plan sponsor would actually give us paperwork for them to make increases so we had an increase form and she bumped up her contribution by like 2% right there on the spot. So she was able to retire at 57 or whatever it was. So it was pretty cool actually seeing people getting engaged with these things.
Edward DDo you see success when you go back to the same people the second year in a row, the third year in a row, you shared some of it, but what other success are you seeing there?
Jonathan SYeah, I do, I see a lot of success with participants who, like I said, stay engaged in and really bring those reports back and have those conversations. And I'll tell everybody in the meeting, I said, "the further away from retirement you are", I said, "it's a moving target". This report actually becomes more and more accurate every year that we get closer to your retirement. If you will engage with us, we are more than happy to provide this value. I love saying this in a meeting because I think it helps with full fee disclosure stuff too, I always say, listen, there's no additional costs for you to come and see us and do these reports. And I'll say there are fees that you pay on your 401(k) that pay us to deliver these reports and if you want to continue to pay us and not use us, we really appreciate it. Thanks. Thanks for inviting us. And everybody kind of chuckles. And then I said, but if you want to get the value out of the fees that you're paying, then put us to work. Come and challenge us and let us customize these reports for you. And when you talk about it in a way like that, that people go, I'm already paying these people, I might as well be taking advantage of what they have. And that is a couple things that happens there too, is we bring light to the fee disclosure. It really helps us in ancillary business too when we say, listen, you're already paying us on your 401(k), you might as well let us take a look at that Edward Jones account that you have or Merrill Lynch account that you have because you're already paying for this service. Why don't we include it and see how it plays out into your overall picture. And I'll say that's how we get a lot of ancillary business.
Edward DThat's excellent. Sounds like a good engaging process with participants. What's
Response from plan sponsors
Edward Dbeen the response from the plan sponsors or do you have a story you can tell about a satisfied plan sponsor?
Jonathan SYou know what's interesting, I had a plan a couple of years back that hired us. It was funny because in the sales process we thought that they weren't really interested in employee education. And so one of the things that we did is we said, okay, we have these reports, we're still gonna leave it in the presentation and kind of have a conversation about it. And so we talked about the old track reports and gave examples to everybody that was in the sales presentation. And then probably six months later after they had hired us and we'd on boarded them and everything else, I'm actually doing some stuff with the CFO and I'm having a conversation. I said, Hey, can I just ask you something? And I said, what made you choose us over that competitor? And that competitor is a national competitor and very, very strong firm. I said, what made you choose us over them? And she said, we really liked that one page report that you gave everybody and now your competitor had something like that, but it was like five pages. But we really liked that yours was one page and it was super simple. And it's so funny that in my mind I'm going, but in the discovery process, before the sales pitch you told me that wasn't important, but t hat's one of the reasons that you hired me. So I thought it was interesting and so now i n every presentation I make sure that we leave the talking about on track reports in there. I think making it a part of the sales process and then when you deliver it and they see the value, and not only that, but plan sponsors that we've done, our total process have gotten such great feedback from the employees that it's really helped a lot. And so when an employee says, man, I really did not want to come to this meeting b ecause I thought it was just g oing t o be a very boring 401(k) meeting. I'm so glad that I did because now I have this report and I know what I need to do to be on track for retirement. When a participant tells the plan sponsor that man, that's better than me telling them. That's actually their employee telling them.
Revenue generating from using TRAK
Edward DWhat differences has that one page gap report made to your business?
Jonathan SIf I had to quantify in a number, I would probably say it's in excess of $500,000 a year in revenue. Just because the amount of ancillary business that we get out of our retirement plans just from using it and that we've been using it year over year and it's really been a process that we've, we've perfected over the years. But I would say as far as return on investment for what I pay for that tool, man , it's been exponential. Like I said, probably just off the top of my head, I would assume at least $500,000 of revenue. I bet if I actually truly calculate it is probably more than that.
Edward DAny other thoughts before we wrap up? Any comments?
Jonathan SI would just say keep doing what you're doing. I really appreciate that you guys are innovating and you're coming out with new, like the portal and different things like that that really tries to help advisors . I'm so glad that I actually stumbled across this tool. So I really appreciate everything that you guys do.
Edward DWell, Jonathan, I appreciate you taking the time today. It's Jonathon Schultheiss out of, I want to say gateway city, but it's Greensboro .
Jonathan SYeah. Gate City Advisers .
Edward Dit's great to have you here and I wish you the best in 2019. And thanks for your time today to share about how TRAK has affected you in working with participants in the 401(k) plan side. Thank you everybody for listening, have a great day.