Archives for June 2022

Recently overheard a 401k participant mention their account was fully diversified since they are invested in the S&P 500 Index and don’t feel they need other investments. While the S&P 500 accounts for 70%-80% of the market value of the U.S. equities market, did you know the top 10 biggest stocks make up 29.5% of the index’s market value as of March 31, 2022. Therefore, 10 stocks represent approximately 30% of the index value and 490 stock represent the remaining 70% of the index value. The S&P 500 index top 10 stocks include:

1. Apple Inc. (AAPL)

2. Microsoft Corp (MSFT)

3. Amazon.com, Inc (AMZN)

4. Alphabet Inc. Class A (GOOGL)

5. Alphabet Inc. Class C (GOOG)

6. Tesla, Inc (TSLA)

7. Berkshire Hathaway Inc. (BRK.B)

8. Johnson & Johnson (JNJ)

9. UnitedHealth Group (UNH)

10. NVIDIA Corporation (NVDA)

Source: https://www.slickcharts.com/sp500 This information is for general and educational purposes and not intended as legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Information obtained from third-party sources are believed to be reliable but not guaranteed. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing. #4823893.2 Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Advisor. Member FINRA/SIPC. Rose Street Advisors is independently owned and operated.

Scott Higgins

AIF ® CFP ® CPFA ® | FINANCIAL ADVISOR

Since 2012 at Rose Street, Scott has been responsible for helping the firm’s individual wealth management clients with income strategies for retirement and consulting with employers with their employee retirement plans. In free time, he enjoys golf, biking, skiing, cooking, and traveling. Fun fact, Scott has a hobby of filling growlers with coins!

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Have you talked about compensation with your employees lately? Chances are that you have, and it was not an easy conversation for either party. What’s driving these challenges?

As of the end of May, the reported rate of inflation was 8.6%. Consumer prices were up 8.5%. Those are budget breaking numbers for many families. On the flip side, compensation increase rates are averaging in the 3.0 to 3.4% range for 2021 into 2022. Less than half the rate of inflation. Nationwide, our unemployment rate is 3.6% making it a job seeker’s market.

Employers are feeling the same economic pressures as their employees as expense costs rise and employees look to them for compensation increases to relieve their financial stress. Paying employees more may not be feasible or sustainable, but losing employees is also expensive when you consider the cost of sourcing, recruiting, and training new employees and the impact of losing their institutional knowledge. With these rates, employees are finding it advantageous to move to a new organization to increase their earnings. Employers are struggling to hire new talent while maintaining their internal equity.

Is there a good solution? Yes, but it’s not simple. First off, while compensation is important, it’s only one factor in the employment relationship. If you don’t have a healthy work environment, employees aren’t likely to stay regardless of compensation. Some of the nontangible factors that way into the employment decision for employees that don’t break the bank include:

Provide a Positive Work Environment

- Employees appreciate a positive work environment that recognizes the value they bring to the team and encourages them in their work.

Make the Work Interesting

- We must do the filing at some point, but there are ways to make certain that there is variety in the assignments and employees have opportunities to learn new skills.

Offer Flexible Work Arrangements

- Post covid, employees have come to expect some flexibility in their work arrangements to provide for a good work life balance. Demonstrate enough trust in them to do their work productively while flexing hours/locations when feasible.

Create a Team-Based Atmosphere

- We crave connections. Building a team-based work environment by bringing people together in intentional ways is powerful.

Make a Difference in People's Lives

- We want to know that our work has meaning and makes a difference. If your employees aren’t on the front line where they see the impact directly, make certain to communicate the results to them.

If you are looking at your compensation options, know that an employee who is compensated at or near the market is unlikely to leave unless they are motivated to look by one of the intangible factors. Some compensation options to consider:

Know the Compensation Rates for Your Market

- If you know the current market rates, you can make better quality compensation decisions for your employees to ensure that they are at or near the market.

Pay at the Midpoint of the Market

- If you can, pay at the midpoint of the market. That makes you competitive in the market and sends a message to your employees that you value them. An employee at the midpoint is going to be less inclined to entertain other options.

Consider Bonus Options

- Inflation isn’t going to last forever, so increasing your base compensation rates may not be the best long-term bet. Consider offering an incentive option to help your employees keep up without committing your firm to a long-term fixed cost.

Finally, our current compensation challenges are impacting the budgets of both employees and businesses. Keeping clear lines of communication about your compensation strategy can help keep everyone on the same page.

What creative solutions have you implemented at your organization? We’d love to hear what’s working for you!

Kevin Brozovich

SPHR | CHIEF PEOPLE ADVISOR

Meet Kevin Brozovich, energetic entrepreneur, people-focused team-builder and HR practitioner-turned consultant. For almost 10 years, Kevin was Founder and Chief People Officer of HRM Innovations, a Kalamazoo-based Human Resources consulting firm many would consider the top in the region. After pulling his hair out making daily decisions about running the business (does it matter where the coffee comes from?), Kevin joined forces with the Rose Street Advisors team so he could solely focus on what he loves most: working with clients.

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Excellence In All We Do

The pursuit of excellence is the target; if we miss, we own up to it, make it right and move forward.

It's possible that everyone has their own definition of what excellence means to them. They might have similarities, but all vary in one way or another. When I started thinking about writing this blog, I looked at our Rose Street Advisors’ team. Are we excellent? Are we great? Are we perfect? Excellence surely isn't perfection. Of course, we've seen gymnasts receive a perfect 10 on a routine or a 100% on a multiple-choice test. But let’s be honest, how often are we all, really, perfect? We can strive for excellence and perfection, though, and many of us do each day.

Even for that Olympic gymnast scoring a 10, that excellence didn’t come without individual effort and a team to drive their success. At the end of the day, it's the preparation, the behind the scenes work that happens when no one is watching that delivers the end-product of excellence. So how do we arrive at excellence? Let’s peel back the layers…

Ongoing Personal Education

⚪ Investing in your craft. Spend the money and the time to improve so that you may strive for excellence.

Do The Work

⚪ Learn about the common issues your internal and external clients are having. How did we arrive here and where do we want to go?

Who Will This Impact?

⚪ Both positively and negatively. How do we increase the positive impact and decrease or eliminate the negative impact? Is the solution(s) equitable?

What is Important, Not Only Today, But In The Future?

⚪ A band aid is only a temporary solution. A temporary fix may be the answer in some cases. But ultimately, we need a plan for stability and the future.

Set Goals and a Timeline

⚪ Realistic and stretch goals are a great way to achieve and hype up the ability to overachieve!

Presentation and Education

⚪ What is the best way to present a change, how might it be heard or interpreted and how we can assist in the transition? We're human and resistant to change.

Change can be much easier when the picture is accurately painted and resources are provided to eliminate barriers.

Follow-Through is Key

⚪ Did we do what we said we would do? Were we transparent? Did we hit our goal? What could we have done better? Collect feedback.

Debrief and Implement Necessary Changes

⚪ Go back to the drawing board, if needed. Every day comes with change, so be ready to pivot, improve your craft and keep in tune with the needs of those around

us.

You might find that one or all of these work for you. The important thing is that you take what works for you, your role and your clientele and be intentional about it. Imagine the possibilities when we hold ourselves accountable. If you're working in a team format to roll out a new idea or solution, start an email thread or group text checking in on the updates, feedback and if there's a need to make small changes during the process. Celebrate those small successes. All of the small things added up are what lead to the greatest success stories!

It's a team effort here at Rose Street Advisors. We believe in sweating the small things, the personal touch and working on our craft, so that we consistently bring “Excellence in All We Do” to ourselves, our team and all those we serve!

Shannon Thomas

LIC | EMPLOYEE BENEFITS ADVISOR

Shannon values working closely with business leaders to make a positive impact at their organization. With over 6 years of experience at a major HRIS company, her skills include consulting with organizations on their HR processes and creating efficiencies within the employee lifecycle. She understands the importance of clear communication and meeting deadlines. Her outgoing nature and ability to communicate across many levels makes her an important part of our team.

In her spare time, she enjoys traveling, spending time with family and friends and anything outside during the warmer months.

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