Lawyer Up? Really?

Are you liable for the decisions on your retirement plan?  Even if you’re a small employer? Whether you know it or not, and my guess is that you do not, there has been quite a bit of news recently about retirement plan fees and fiduciary liability.  The Supreme Court made it quite clear (in a unanimous decision) that employers need to protect the interests of their employees.

This is getting serious.  I have seen a lot of scare tactics over the years from consultants, advisers, and other industry practitioners on the fiduciary liability of plan sponsors.  Plan sponsors should look past these ridiculous tactics and simply realize that excuses for unnecessary plan fees won’t work much longer. Employers of all size can have much lower cost plans with direct payment arrangements and employer friendly contracts.

As a smaller employer, take the responsibility of managing your plan seriously.  Review your plan more frequently than once every 7 to 10 years.  Make sure that your costs are, in fact, reasonable. Take the following steps and your plan will be a lot better – and you will be a lot better protected:       1)  Eliminate all revenue sharing and other unnecessary fees (insurance costs, commissions, sub T-A fees, etc.); 2)  pay flat fees for your advisory and record keeping services; and 3) use primarily low-cost index funds.

Taking these three steps will be a huge improvement for your plan.  These are the big ones.  There are some additional steps you can take as well, but once you get on board with these, you are on your way to having a great plan with much lower than reasonable costs.

Of course, there is always

Gravie: An Alternative to Group-Based Health Insurance


I recently came across a young Minneapolis-based firm that my caught attention.  My wife works at a small non-profit and she is evaluating their group-based health plan.  In her evaluations, she reached out to Gravie.  As I learned more about how much they could help her organization, I was excited about how they could help our Family set-up our health care plan.

I also became more interested in how they are poised to help small to mid-sized employers – the kind of clients that we work with as well.  I think they are an interesting story and represent an exciting development in how employers can shop for and improve their health care insurance benefit for their staff while providing quality, personal service to the employees.  Andy Minnich, who works in sales at Gravie, agreed to share more about the Gravie story.

Thanks for your time, Andy.  We really appreciate it. 

Can you briefly describe what Gravie does?

Gravie helps businesses move their employees from traditional group-based health insurance to individual plans. We help employees shop for, buy and manage their plans, apply for government tax credits and use money from their employer to pay for health insurance.

How long has Gravie been in business?

Gravie launched in November 2013 at the beginning of the 2013 open enrollment season.

Can you characterize what would be a good candidate client for Gravie?

Gravie is a no-brainer for nearly every company with less than 50 employees, and often makes sense for companies with less than 100 employees. We also work with companies that have more than 100 employees. Gravie works across all industries.

What do you help your clients accomplish?

Gravie helps employers save money (typically 20-40%), eliminate the hassle of a group plan (paperwork, compliance issues, general headaches), and provide employees a much better healthcare experience (year-round help is available for free to all Gravie members — it’s like having a personal concierge for health insurance).

Describe what one of your client’s employees’ experience might be when they work with Gravie.

  1. Employees are introduced to Gravie through a kick off meeting led by Gravie’s account management team. Employees learn who Gravie is, what they need to do to pick a plan, and how Gravie can help them throughout the year.
  2. Gravie sends communications and reminders to employees to encourage them to pick a plan before the deadline.
  3. An employee can shop entirely online using our plan comparison tools and recommendations or they can call a Gravie advisor and shop with assistance over the phone.
  4. Once an employee picks a plan, a Gravie advisor submits the employee’s application and gets any outstanding information to the health insurance company.
  5. Once an employee is enrolled, they can contact a Gravie advisor at any time of the year for help managing their insurance. We can help with questions like, “Why was my claim denied?” “Is my doctor covered?” “How much with this prescription cost?”

What are the specific benefits to your clients’ employees of working with Gravie?

  • Save Money: on average, employers save about 20-40% over traditional group plans when they work with Gravie.
  • Eliminate Hassle: we help your employees with healthcare, so you don’t have to. No more annual renewals, open enrollment meetings, endless rate increases and dealing with insurance companies. We’ll also take care of getting the money you provide your employees to them.
  • Better Experience: instead of offering 1-3 plan options, you can give your employees access to hundreds of different plans to choose from. Plus, we’ll help your employees with any health insurance-related questions they have, at any time of the year.

Can Gravie currently work with any employer in the country?  If not, what are your limitations?

Yes, we can work in all 50 states. However, employees will only receive the full web experience if they live in Minnesota, Indiana or Florida. We are expanding to additional states in early 2015.

If an employee lives outside of these three states, we will do plan research for them based on their wants and needs. Then we’ll deliver a few plan options for them to choose from.

How can an employer contact you and how would you suggest that a prospective employer evaluate Gravie?

You can contact Gravie by emailing, calling 612-355-1590 ext: 3 or filling out this form.

After contacting us, we’ll gather some information about your current group plan and complete a financial analysis to calculate the cost savings of switching to Gravie.

Editor’s note:  This is not an endorsement.  We have no business relationship with Gravie and do not receive any compensation from Gravie.  We are just interested in what they do and how it may help smaller employers!

DOL Considers New Fiduciary Standard?

So you are the fiduciary for the retirement plan at work?   Do you like the responsibility?  How many hours a year do you spend ensuring that your employees have a good plan? Is your current plan overpriced?  Do you have any idea at all?  Or do you do the best you can, and, well, no one is complaining all that much, anyway?

What are the consequences if your plan has unnecessary fees?  What affect will it ever have on you? None of your employees is ever going to sue you, right?  Sure, you might have heard of a few lawsuits at other companies, but that will never happen at your business.

As it currently stands, you are held to a fiduciary standard in managing your plan. As such, you are required to always act in the best interest of your employees and behave in a prudent manner, blah blah blah.  But that sounds a bit theoretical, doesn’t it?  Doesn’t that really only apply to big companies?

What would be a sure fire way to get the attention of all employers?   How could the Department of Labor improve retirement plans overnight?  How could they make sure that all workplace plans, regardless of size, eliminated conflicts of interest and unnecessary fees.  Fee disclosure?  They tried that and it worked a little, but not much.

I would suggest the introduction of a new standard.  Let’s call it the YOUR EMPLOYEES MOVE IN WITH YOU standard.  With this new standard, if your employees can demonstrate that your plan has unnecessary fees (which they can for most plans), the court will calculate how much these fees have cost each employee over time, translate that cost to months of retirement income, and, let the fun begin!  

Look around your office.  Do you like your colleagues?  All of them?  Do you want them to move in with you?  Just for a while.  Maybe 2 to 4 months.  In extreme cases, 1 year or so.  Imagine this for a while.  How about crazy Jack?  Or Linda? OMG! No, not Linda.  How does your future look now?  This new standard would ensure that you have the best plan you can – today!!  This would instantly become the number one priority of all fiduciaries.

Managing other people’s money is serious business with real consequences.  Your decisions today directly impact your employees’ quality of life in the future. Most plans for smaller employers are riddled with unnecessary fees and can be dramatically improved.  Of course the DOL would never implement this type of standard, but if they did it would ensure that  every employee has a much better plan and better prospects for retirement.    

I’m just sayin’!  

Your Employees Act Like They Don’t Care!

The late Rick Majerus, a college basketball coach known for his sense of humor, told the story of calling a team meeting to address his team’s poor performance.  According to Majerus, his players were ignorant and apathetic and he needed to shake things up.  He started his discussion with his players by asking,  “Do you know what your problem is?”  One of the players responded by saying, “Coach, we don’t know and we don’t care!”

Those responsible for helping employees take advantage of workplace benefit plans may feel the same way!  Particularly when it comes to your retirement plan. Many employers struggle to engage their employees in the process of taking advantage of this important benefit.  You try different things, hire different service providers, come up with new angles, but you can’t get the success you want.  It can be easy to attribute much of this to employee apathy.

So how far should you go to help your employees prepare for their future?  Many employer’s grapple with this issue and it just came up in one of our clients.

As a part of our service, we enroll all the staff one-on-one during an in-person, phone, or video conference session.  To get them started, we initiate contact with each employee up to five times! The first three by email, the fourth by phone call, and the final by email again. Typically we never get to the phone call.  The relatively brief appointment we offer can be done during day, evening, or weekend hours. Almost all employees sign up without a problem.

However, some don’t!  They never respond – at all!!  This happened with a few new employees at one of our clients.  This employer has not had much of this problem in the past – their employees have always been responsive – so we discussed how to deal with it.  After confirming how rigorous, thorough and documented their process is they decided it wasn’t an issue.

In many cases, there is only so much you can do.  While it is smart and helpful to do what you can, you can’t make your employees save (you can kind of with auto enrollment – even though they can still opt out), learn about their investments, and plan for their retirement.  So is it apathy or is there something else going on?

People have a wide range of attitudes and experiences that will affect how they plan and save for their future.  And this is key: sometimes your employees are just not in a position to invest much energy and concentration in preparing for their future, or even in enrolling in your plan.  I am not providing a cop out – there are those that are just apathetic about it.  But others have issues in their life that prevent them from investing much time in the process.

I am a perfect example!  In the last six years I have gotten married, sold two homes, moved twice, had one child naturally, adopted another child through foster care (which is quite a process), quit my job to start PlanVision, and had my wife change her career and start her own business.  The point is not that I couldn’t have planned for my retirement – that is easy for me.  My point is that if I had really wanted to invest the time and energy to take on something else, like investing in an adult education program, or a new exercise plan, I am not sure I would have had the energy.

Many of your employees might be interested in planning for their future, but they are just not in the place to do it.  They could be overwhelmed with personal issues and uncertainties that are far greater priorities than putting together a retirement plan.  Maybe they are trying to manage personal relationships that are getting out of control,  maybe they are working two jobs; maybe they have health issues, maybe they are pursing additional education after work; etc.  There could be a whole host of circumstances that affect their ability and willingness to start the process.

Of course, people should not delay planning forever.  But many will get to it when they can.  They need to be in the right place mentally to focus on how to plan for their future.   It seems silly to point this out – it shouldn’t be that hard and it is clearly beneficial to have a plan.  However, most people can only take on so many personal projects at one time.  You might offer some nice services, but your employees will not fit their need for additional education or planning assistance into your retirement plan communication schedule!

It is not your responsibility to ensure a secure retirement for your employees! You have no control over how they spend money, how much they save, the lifestyle they lead, and all of the other decisions and factors which have a huge impact on how prepared they are for their future. You have limited control over how engaged they get in the process.  Do what you can to help and periodically let your employees know what is available, but be careful to generalize about their attitudes.  Sure, some might not be interested.  But others are just waiting for the right time in their life to start the process.  Hopefully it won’t be too late!

What has been your experience with this?


How Do Your Employees (en)Roll?

Enrolling in a workplace retirement plan is an important event for many people. The decisions they make will have an impact on their lives today and well into their future.  One way you can have a great plan is to offer your employees an excellent enrollment experience.

What is your process right now?  Is it anything special, or unique?  Have you even given it much thought?  Do you give them a packet of information or a link to a website or 800 number?  The following is a checklist for an enrollment process which would be better than most:

1)  Provide concise information about the plan.  This should be made available in either an on-line or printed format.  Be smart about the volume of information you provide – most employees will never read a 40 page brochure or review multiple pages of a website.  Information would include a description of the plan features, the investments, and additional services that might be available during enrollment. Employees should be given the option to review this information at their convenience prior to enrollment.

2)  The enrollment should be completed on-line.  Most of the information should be pre-filled for the employee at the plan administration website – the employer uploads the information as a part of the payroll process.  Each employee would verify the accuracy of the information.  Then they would identify their beneficiaries, indicate the amount they want to contribute, and select their investments. If an employee has limited access to a computer at home or on their own, employers should offer a workstation.

3)  Guidance from a human.  This is a critical link.  Most employees struggle to determine the amount to contribute and the investments that make the most sense for their situation.  They are not well equipped to make these determinations.  Some have no idea where to start!  Professional human guidance can make a difference in a few different ways.  An adviser can help each employee assess how their contributions fit into their budget and how to prioritize saving for retirement.  They can also provide an educational overview of the asset classes and funds offered by the plan.  They can provide this guidance based upon each employees’ experience with investments.

4)  Meeting times should be variable.  Employees should have the option to receive guidance either during work hours or non-work hours.  Some people are fine getting this done at work while others prefer doing this at home or in another setting.  This flexibility will enable some to focus better during the process.

5)  Guidance should be optional.  Some employees are comfortable enrolling on their own.  They just need a listing of their investment options and returns and an explanation of how to complete the process.  They should not be required to visit with an adviser or a website or watch a video about how to enroll if they can do it themselves.

6)  Advisers should not use the enrollment encounter as an opportunity to sell other products and services to the employees.  It is common for many retirement plans of smaller employers to be used as a venue for advisers to grow their personal book of business.  This is nonsense.  Advisers should be justly compensated for their time and effort in supporting the plan, but should not use their interactions with staff to sell other products or services.

7)  The encounter should take anywhere from 15 to 45 minutes.  While this may vary from person to person, most employees can have a successful enrollment session relatively quickly.  A good educational and enrollment session can take 20 to 25 minutes.  Some may take longer if they have more detailed questions or issues that need to be addressed.

8)  Use enrollment as a starting point.  Some of your employees may want more personal guidance down the road, either in the form of additional education or planning.  Let them know that the enrollment is just a starting point.  You can provide additional personal guidance down the road, when they are ready for it, and when they are not distracted by setting up their account.

What is your process?  Is their anything special you do for your staff?  How could you make yours better?