Archives for April 2023

Why Benchmarking is Crucial for Choosing the Right 401(k) Solution: Bundled vs. Unbundled

When it comes to choosing a 401(k) plan for your business, there are several options available. Two of the most common options are bundled and unbundled solutions. A bundled 401(k) plan is an all-in-one package that includes all the necessary services and products, such as recordkeeping, administration, and investment management, from a single provider. An unbundled 401(k) plan, on the other hand, allows you to choose separate providers for each of these services. While both types of plans have their benefits, it's important to benchmark them against each other to determine which is the right fit for your business. Here's why benchmarking is crucial when choosing the right 401(k) solution:

1. Comparing Costs:

One of the most important factors to consider when choosing a 401(k) plan is the cost. Bundled plans may appear to be more expensive upfront, but they often come with lower investment fees and administrative costs. By benchmarking bundled and unbundled plans against each other, you can compare the costs of each option to determine which is the best fit for your business and in the best interest of your employees.

2. Evaluating Services:

Another factor to consider when choosing a 401(k) plan is the level of services provided. Bundled plans offer a comprehensive suite of services, while unbundled plans allow you to pick and choose the services you need. By benchmarking the two options, you can evaluate the services provided and determine which plan is best suited for your business's needs.

3. Analyzing Investment Options:

Investment options are a crucial aspect of any 401(k) plan. Bundled plans often use proprietary products for their investment options which can lower costs and offer specialized investment strategies but can often times limit the range of investment options available to employees. These proprietary products often come with surrender charges that may make it more difficult or expensive for employees to move their investments if they are utilizing those proprietary investment options in their portfolio. Unbundled plans typically allow you to choose from a wider range of investment products allowing employees more options for diversification of their individual portfolio. By benchmarking the investment options offered by each provider, you can evaluate which provider offers the best investment options for your employees.

4. Considering Employee Satisfaction:

Ultimately, the success of your 401(k) plan will depend on how satisfied your employees are with it. Unbundled solutions tend to be a better fit for more complex or complicated plan designs because a TPA firm specializes in just the administration for the plan as compared to a firm that takes on more responsibility by doing the recordkeeping and administration for the plan. By benchmarking bundled and unbundled plans against each other, you can determine which plan is more likely to meet the needs and expectations of your employees. To benchmark a 401(k) plan, employers should work with a qualified advisor who can compare the plan to others in the industry and provide recommendations for improvements. The advisor should consider factors such as plan design, fees, investment options, and employee participation rates.

Why Benchmark an Existing 401(k) Plan?

A 401(k) plan is an important retirement savings tool that allows employees to save and invest a portion of their salary on a tax-deferred basis. However, not all 401(k) plans are created equal, and it's important for employers to regularly benchmark their plan to ensure that it is competitive and meets the needs of their employees. Benchmarking is the process of comparing a company's 401(k) plan to other plans in the industry to identify strengths, weaknesses, and opportunities for improvement. Here are a few reasons why benchmarking is important:

1. Ensuring Competitiveness:

One of the main reasons for benchmarking a 401(k) plan is to ensure that it is competitive with other plans in the industry. If a company's plan is not competitive, it may struggle to attract and retain top talent, which can have a negative impact on the company's bottom line.

2. Identifying Areas for Improvement:

Benchmarking can help identify areas where a company's plan may be falling short. For example, if the plan's fees are higher than those of comparable plans, it may be time to negotiate with the plan provider or consider switching to a different provider.

3. Meeting Fiduciary Obligations:

As a plan sponsor, it's important to fulfill your fiduciary obligations by ensuring that the plan is in the best interest of your employees and establishing that the fees paid are reasonable for the services provided. Benchmarking can help ensure that the plan is meeting this standard and that all investment options are appropriate and properly managed.

4. Enhancing Employee Satisfaction:

A competitive 401(k) plan can be a valuable employee benefit and can help enhance employee satisfaction and loyalty. By benchmarking the plan and making necessary improvements, employers can demonstrate their commitment to their employees' financial well-being. In conclusion, benchmarking is a critical component of maintaining a competitive and effective retirement savings program. It’s important to compare costs, evaluate services, analyze investment options, and consider employee satisfaction, so you can make an informed decision that will benefit both your business and your employees in the long run. By regularly reviewing and improving the plan after establishment employers can ensure that it meets the needs of their employees and help them achieve a secure retirement.

JULIA MUNSON

AIF®, CPFA® | Retirement Relationship Manager

Meet Julia, a people-focused life-long learner with several years of experience in the retirement plan industry. Throughout her career, Julia has been committed to maintaining strong client relationships by providing incredible customer service. She is passionate about helping clients define and plan for their retirement goals. Julia’s daily role at the firm energizes and reinforces her commitment to client-focused work.

This material and the opinions voiced are for general information only and are not intended to provide speciﬁc advice or recommendations for any individual or entity. To determine what is appropriate for you, please contact your Rose Street Financial Professional. Information obtained from third-party sources are believed to be reliable but not guaranteed.

Investments in securities involve risks, including the possible loss of principal. When redeemed, shares may be worth more or less than their original value.

By accessing any links above, you will be connected to third party web sites. Please note that Rose Street Advisors, LLC, is not responsible for the information, content or product(s) found on third party web sites.

Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc. A Registered Broker/Dealer and Investment Adviser, Member FINRA/SIPC. Rose Street Advisors, LLC is independently owned and operated. File #: 5641297.1

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WHY DO YOU NEED AN EMPLOYEE BENEFITS ADVISOR/AGENT/BROKER?

An employee benefits agent or broker is a great resource for both employers and employees. An advisor, agent or broker manages a number of different areas of employee benefits, including: • Advocating for the employer and employee with insurance carriers, vendors, and providers. • Subject matter expertise related to employee benefits, from plan design, trends, financing and compliance. • Educating employees on how to use their benefits, tips and tricks, etc. • Providing employee claims assistance between the carriers and providers. • Assisting in enrollments, changes and terminations with carriers. • Providing online benefits administration assistance (i.e. a Ben Admin system). In some cases, like Rose Street Advisors, an advisor will also actively build, manage and integrate, the benefits administration system internally on behalf of their clients. • Being a strategic partner in achieving each organization’s goals and objectives and driving recruitment and retention efforts through employee benefits.

Ben Cohen

CEBS | EMPLOYEE BENEFITS RELATIONSHIP MANAGER

Ben Cohen, CEBS, is one of our large group Employee Benefits Relationship Managers. Following graduation from Central Michigan University (Fire Up Chips!) with a degree in Human Resources, Ben began his career in 1997 as a benefits consultant with Kushner & Company. After 18 years in that role Ben joined Rose Street Advisors in 2014. Ben’s daily focus is working with clients to offer benefit options that help recruit and retain a productive workforce in a compliant and cost-effective manner designed specifically for each employer. He also enjoys educating employees about their benefits in a fun and informative manner. Outside of work, Ben is passionate about community involvement and volunteering. He currently donates his time as a board member with the Portage Community Center, volunteers with Hospice Care of Southwest Michigan, and participates with volunteer opportunities through Rose Street Advisors’ SWEET committee. In the past, his involvement has included the American Red Cross, United Way, Volunteer Kalamazoo, Optimist Club, Jaycees, KHRMA, and the Michigan Maritime Museum. Ben loves spending time at home and at their cottage in South Haven with his wife, Jen, and their dogs. He loves travel, cars, golf, sailing, and recently started a group with friends rowing vintage wood shells (42 N’ Rowing).

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When I was 13 years old, I wanted to learn how to play the drums. I didn’t just want to play the snare drum alone, that’s boring. I wanted to rock out on the whole kit! When I first sat down and tried to play a full drum beat, it was overwhelming – how in the world am I going to get all my limbs doing different functions and actually have it sound good? The music teacher just told me to take a small step of practicing just 10-15 minutes a day. I started with just playing the hihat with my right hand and played that for a while until my brain put it on “auto-pilot” of sorts. Then I could add in the bass drum with my right foot. When playing the hi-hat and bass drum together started to become comfortable, I finally, after a bunch of tries, got the snare drum added with my left hand. I was playing a full beat! While I didn’t wake up a recording artist the next day, it was amazing how the small step of playing 10-15 minutes a day helped me achieve my goal! When we meet with new clients, they often share that their goal is to save enough money while working so that they can retire. We often hear, “how much should I be saving for retirement to be “on track?” While that prompts more questions like – how old you are now, what age do you want to retire, how much do you want to spend in retirement, will you earn some income in retirement, etc, a good number to target is at least 15% of your gross income. Why 15%? A recent study by Fidelity showed that if individuals invest 15% of their gross income into retirement, they can retire or stop having to earn an income at 67. A few questions might be coming to your mind right now….

1.) I have been investing, but I don’t know what percentage I have been using. How do I know if I am on track?

That same study by Fidelity shows a glidepath (in the chart below) for how much you should have saved by different ages to retire by 67. For example, by age 45, they suggest having 5x your income saved for retirement. By 50, 6x your income saved. How did they get to those numbers? They took 15% of the investors salary over their working years and added in an 8% growth rate.

https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire

2.) The second question on your mind might be - I know I am behind.

If you are behind, we would likely recommend saving more than 15% to start catching up. It is certainly easier said than done! Cutting back a little spending now so you can invest more goes a long way with the power of compound growth. There are a lot of ways to “catchup” - employer-sponsored plans, individual retirement accounts, HSAs, brokerage accounts, and insurance products. If you are 50 and over, the government allows some options for making additional catchup contributions for some employer-sponsored plans and Individual Retirement Accounts in a tax-deferred or post-tax manner. Depending on your income, it might make sense to make those retirement investments in a before tax or after-tax manner. Would you benefit from knowing what small steps make the most sense for you right now? Let’s chat. Wherever you are on your retirement journey, taking small steps towards your goal leads to big results…over time

Securities and Investment Advisory Services offered through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Advisor, Member FINRA/SIPC. Rose Street Advisors, LLC is independently owned and operated. File # 5595458.1

Jeremy Heavey

AIF ® | FINANCIAL ADVISOR

Jeremy is passionate about partnering with individuals and families to identify what is important in their lives and creating a comprehensive financial strategy to help them reach their life goals. This holistic approach allows Jeremy and the wealth management team to ensure the specific needs of the client are front and center as they make investment recommendations and collaboratively design custom-tailored financial plans. Jeremy has a professional track record starting, leading, and managing for-profit and non-profit organizations. He is a graduate of Taylor University and has completed business programs at both Hong Kong Baptist University & Harvard Business School. Jeremy is also formally trained and certified in behavioral assessment, conflict management and life coaching. Jeremy, his wife Kim and their 4 kids reside in Kalamazoo. They love spending time exploring the outdoors, fixing up their farmhouse, and living life with friends and extended family. Fun fact: Jeremy has been playing drums since he was 13 years old and made callbacks for the Blue Man Group.

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On Friday, March 24th, almost exactly 10 years after Michigan passed their right to work laws, the State repealed them. What does that mean for HR and business leaders? First off, it is important to understand what the Right to Work laws do. Michigan’s Right to Work law made the payment of union dues voluntary for employees of unionized companies. Under the law, even if most employees vote to unionize, some may choose not to support or join the union. Those employees could choose not to pay union dues even though they benefit from the terms of the bargaining agreement negotiated by the union. The result of employees choosing not to pay dues was a weakened negotiating position and decreased revenue from union dues. The repeal of the Right to Work legislation now means that all members of a bargaining unit in a unionized company will be required to pay union dues. This provides more resources to the unions. The impact on businesses is that this could make unions stronger and, when coupled with the willingness of the NLRB to support unionization activities, could make it easier to unionize additional organizations. If you want your organization to stay union free, we recommend that you focus on creating a positive work environment, paying competitive wages, and treating employees well. That’s the winning recipe for building a great culture and keeping employees engaged. Need help creating the ideal work environment? Give us a call. The HR team at Rose Street would love to help 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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