Reducing Frustration

Posted on November 11, 2011. Filed under: Uncategorized | Tags: , |

The Problem:
From the 99% group, to the Tea party, or to Greece there is frustration and anger just about everywhere one looks. Plan Participants are frustrated too. After the lost decade, people are worried about being able to retire when and as desired. They are also now clearly sharing their discontent with employers. Participants want help with allocations, real advice not broad education, and broad financial planning assistance…they need and want help! Most Sponsors want to help them too.

RJ20 Solution:
Our online planning solutions are focused 100% on the Participant. We provide allocation advice (not broader education) relevant to specific participant risk tolerance, needs and goals. We tell Participants whether they are on-track for the retirement desired, when even “worst case” assumptions are used. Our goal is to make affordable high value added planning capabilities available to everyone, not just the wealthy. In engaging the Participants in the process, they realize money is a means not an end, and better understand why they are contributing every month. When people keep their “eye on the prize” so to speak, it minimizes fears and keeps them from making short term investment mistakes.

RJ20 technology is leading edge, and easy to use and is clearly differentiated from the competition in its breadth and cost. It is one thing to ask basic questions about age and risk tolerance, and another thing altogether to provide Participants with a road-map to (and through) retirement. We do the latter! We use rigorous financial and behavioral techniques including Wealth Scaling, Adaptive Questioning, Absolute Mapping, Psychometrics and Behavioral Finance. We also use Monte Carlo simulations in our modeling using expected returns, standard deviations, correlations, cash flows etc. to generate allocation recommendations. The advice is holistic and can incorporate all elements of a Participant’s financial picture (beyond just their 401k), if desired.

Why Add RJ20?
In addition to the obvious demand and need from Participants, and accommodation desires by Sponsors, advisors should add Participant advice for several critical reasons.

First is for competitive reasons. Today more than half of existing plans purportedly have specific Participant advice (though I think it much lower when age based plans are eliminated from the group). Additionally, growth of this benefit is geometric, not linear, right now. This includes direct competition from the discount brokers. The last thing anyone wants is for their offering to be behind the eight ball regarding a key client need, especially when competing against the discounters. The fact that we can take this competitive issue off the table for an immaterial cost, may help turn a future “no” to a “yes”. Many of your competitors are highlighting Participant advice as we speak.

Secondly, 408(b)2 becomes effective soon. Many are trying to strengthen their own value propositions ahead of that change. Since Morningstar began to focus on costs, 91% of all mutual funds purchased have been funds with costs below the industry median. I suspect most advisors who think they can counter the new spotlight on costs with excellent service alone may be in for a surprise. Clearly, based on what RJ20 has seen in the mutual fund industry, cost is a more critical piece of the analysis than many advisors previously believed. It may prove equally important for Plan Advisors too. Many advisors may either need to cut costs or improve offerings to compete. We can help!

Even if your firm already offers Participant advice, RJ20 should be added to the mix. Our online solutions will:
• Broaden your reach.
• Greatly improve planning utilization amongst Participants.
• Give many Participants a more desirous means of accessing planning solutions (surveys indicate around 30% of your participants prefer online options).
• Allow you the most economic (time and money) access to the likes of road warriors, expats, remote office employees, retirees, home office workers, third shifters, etc. RJ20 can help you improve your bottom line through the more efficient allocation of your own resources.
• Improve Plan Performance (Investment Returns)!
• Shift future tort liability.

What Distinguishes RJ20?
• Significantly higher utilization rates.
• Extremely Low Cost.
• Fully integrated or stand-alone system.
• Depth of risk questioning.
• Recommendations when “off-track”.
• Fund (vs. asset class) level advice.
• Broader financial planning capabilities.
• Unlimited, top tier, CFP® support for all.
• 3(21)(a)(ii) future tort liability assumed for all.
• Sale to Sponsors is easy.
• We don’t compete with you.

RJ20’s utilization rates are running around 40%. That is not a typo. We understand our key competitors often run at less than 3%. RJ20 does everything in its power to proactively encourage and facilitate contact. We know that a dot in a website tray alone (even one customizable like ours), doesn’t cut it. Our work begins once a contract is signed! If your current planning tools aren’t used, your clients aren’t benefiting from the attendant better performance (often 1.5% – 3% annually), or the planning piece of mind. A benefit is only a benefit if it is actually used. Our solutions are utilized!

RJ20 solutions only cost $15/Participant annually. This translates to just $3000 a year for a 200 person plan. This often works out to 1-3 basis points. The cost should not impact Participant’s performance one iota, unlike the cost of some competitive offerings. It can be paid from plan assets.

All support is provided by Certified Financial Planners. Experts agree solutions are only as strong as their weakest link, and as such all service and support is provided exclusively by CFP®s. These top tier planners are available to every Participant, not just key executives! RJ20 has put as much thought and resources into supporting the solutions as it did in building them. Support is unlimited!

RJ20 solutions shift future Participant tort liability from brokers, consultants, and Sponsors to us. This is a responsibility RJ20 takes on willingly and acknowledges in writing in the first paragraph of our contract. We assume 3(21)(a)(ii) future Participant tort liability for all active covered Participants (with online access) versus just users of our solutions. RJ20 effectively owns the ERISA liability for all active Participants once the contract is paid, and we’ve communicated our solutions. We thus have a very, very strong incentive to encourage full utilization. I am unaware of any others which accept the liability shift when RJ20 does (competitors often require a plan to first run).

To learn more about how you can shift future tort liability, while delivering to Participants and Sponsors what they most need and desire, schedule a webinar with RJ20. Just shoot me back an email and we’ll set it up.

Matthew Craig,
SVP – Sales, RJ20

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