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Aggravation or Aggregation

By Jack Towarnicky

A holistic wellness opportunity to gain a competitive advantage for your plan and participants.

I once had a boss who seemed to embrace a motto offered by Albert Einstein: “Everything should be made as simple as possible, but not simpler.” She would challenge me: “… If you can’t get it on a single page (or a single screen, slide, etc. ) you are trying to do too much, to communicate too much.” She liked solutions like “one-stop shopping” and “single view.” I usually failed to meet her standards when proposing changes to our individual account retirement savings plan or our HSA-capable health option - despite carefully summarizing the material, narrowing the margins, using smallish type, and printing on both sides of a single sheet of paper. Don’t get me wrong, however, I always got the feeling she was channeling Einstein, hoping to ensure our proposals were not confusing, increasing the chances that they would be approved in the first pass. She was not emulating Dilbert’s pointy-head boss:1

My former boss and Albert Einstein seem to have had an impact in the financial services industry – especially among some financial advisors who are major players in the High Net Worth (HNW) and Ultra High Net Worth (UHNW) marketplace. Michael Kitces, financial guru extraordinaire, welcomed a guest post regarding the recent Envestnet Advisor conference.2 Looks like concierge service, one stop shopping, single view to me! My former boss would be ecstatic.

So what?! Who cares? What 401(k) service provider/advisor can (and would be willing to) justify a holistic approach for all plan participants? Not just 401(k), but access to credit, insurance?

Concierge, one-stop, single view service isn’t available to most of today’s HNW and UHNW executives. That’s no surprise. There seems to be a bias towards maintaining the status quo, a natural resistance to innovation. So, who would offer concierge service to the rank and file? What would that look like? Sure, concierge processing and services would be a competitive differentiator. But, which service provider would be interested in trying to justify the investment necessary to create that capability for everyday 401(k) participants who have a median account balance of $23,661.3 No one has done it; no one seems interested, either.

Are they?

Today, I also attended the Employee Benefits Research Institute’s 85th Policy Forum.4 Repeatedly, the presenters talked about the need for holistic approaches. Combining input from EBRI and Envestnet, I started to wonder what a holistic, concierge approach for the rank and file might look like - where the plan sponsor, insurers and service providers use traditional benefits to create single view, single plan, single program, banking, holistic, financial wellness for the rank and file – many who live paycheck-to-paycheck today. Ancillary financial wellness services, voluntary benefits, education, etc. would also be available.

Could it be done, and could it be done without adding costs in excess of new revenues?

Maybe, maybe not. But, someday, someone may try it.5

Today, some service providers already have the functionality that would allow you to create a single view of all of the accounts with that service provider - 401(k), IRA, banking, brokerage, etc. Keep in mind of course, that the majority of workers won’t have much more than a 401(k) and a checking account – so – the service provider may not need not make an investment in high-tech software solutions to capture data from other accounts.

Is an integrated, omnichannel experience, a holistic perspective a priority for you, your participants, your service provider? 

Today, Baby Boomers control 90 percent of investible assets – why let those assets leave the plan? And, this may be an opportunity to get in on the ground floor as Millennials slowly, deliberately, take their place.

1Scott Adams, Don’t Stand Where the Comet is Assumed to Strike Oil, 2004 ISBN: 9780740745393, Accessed 5/9/19 at:

2Craig Iskowitz, 17 Takeaways From Envestnet’s Advisor Summit 2019, 5/9/19. Envestnet’s vision is to: “Create an integrated wealth management platform that allows advisors to deliver solutions that support not just financial planning but the “financial wellness” of their clients … (offers an) integrated experience of portfolio management … (includes) credit and insurance exchanges … to differentiate themselves in a crowded marketplace (and fill the) … gap between client expectations of what products they should be receiving from advisors versus what advisors are actually able to provide.” Accessed 5/9/19 at:

3Vanguard, How America Saves, 2018, data as of year-end 2017, Accessed 5/9/19 at:

4EBRI, 85th Policy Forum, 5/9/19, Accessed 5/9/19 at:

5That initiative would anticipate the modest financial literacy of most American workers – adding defaults and various features to traditional benefits. It might include features such as:
401(k) Plan: (1) A core investment lineup using white labeled investment options and collective investment trusts, coupled with a directed brokerage, (2) Fully customized Target Date Models as the QDIA – where, each year, prior to the rebalancing to the new allocation across the core lineup, participants would be solicited for personal information (including information regarding a spouse’s investments, banking, etc.) and then annually prompted with a default that customizes the asset allocation based on their individual financial circumstances, (3) Automatic enrollment (EACA at the level necessary to obtain full employer financial support), escalation (timed to occur anytime there is an increase in salary), investment, perennial re-enrollment, and periodic application of the Qualified Default Investment Alternative (QDIA) should a participant go years without changing his investment allocation, (4) Adding after-tax, unmatched, 401(a) contributions as an emergency sidecar account, (5) Adding Deemed IRA functionality, traditional and Roth, and annually solicit contributions and rollovers so participants can avoid required minimum distributions on Roth 401(k) monies, consolidate Roth 401(k) monies that were rolled over to an IRA, and remain eligible to contribute to a plan they are familiar with should their next job be in the “gig” economy, or if their next employer does not sponsor a plan, (6) Add Roth 401(k) and in-plan Roth conversion provisions, (7) Change the default at separation to continue the account until the worker and a spouse, if any, died, (7) Add installment payment provisions, where annual installments necessary to comply with the minimum required distributions would become the default, to offer participants an “extended warranty” in terms of fiduciary protection, throughout retirement, addressing any cognitive decline, (8) Add disability accrual insurance for pre-retirement disabilities, (9) “Prequalify” participants for credit by adding 21st Century loan functionality (a line-of-credit loan structure coupled with electronic banking) so participants can obtain monies via direct deposit when there is a need, so that loan liquidity (repayment and initiation) will not be affected by separation. The enrollment process would capture the participant’s banking information for two reasons – to timely process the loan should monies be needed quickly, but more importantly, to deploy behavioral economics processes that “nudge” (“shove”?) participants by reminding them that they have signed up for repayment from either the paycheck or the bank account, (10) While employed, eliminate hardship and, with regard to contributions made after the effective date of the change, all other withdrawals prior to age 59 ½ (other than a withdrawal of after-tax 401(a) contributions), (11) After separation, eliminate all withdrawals prior to age 55 with regard to contributions made after the effective date of the change, (12) Add a default form of payout where a distribution is requested prior to the required beginning date designed to encourage workers to consider delaying commencement of Social Security benefits (participants retain full control of the account balance), and (13) Authorize the service provider to pursue all other individual account retirement savings assets via rollover. With respect to other employer-sponsored plans, consideration will be given to maintaining any loan liquidity – as there are situations where a worker who maintains multiple 401(k) accounts has access to more credit than she would have if she combined the accounts into a single plan.
Paycheck Insurance - Life Insurance and Long Term Disability: A worker’s most valuable asset is typically her ability to earn wages. So, options should be made available to ensure an adequate level of coverage is attainable. The plan sponsor would also “nudge” the rank and file by deploying automatic enrollment (re-enrollment, escalation, etc.) processes via a cafeteria plan.
HSA-Capable Health Option: Offer an HSA-capable option (consider “full replacement” strategies and/or remove distinctions among options that impede enrollment in the HSA-capable option). At annual enrollment, or upon hire or rehire, a worker who elects health coverage would be defaulted into the HSA-capable health option. Where the HSA-capable health option is selected (including any default), the election of health coverage would include a default contribution to the Health Savings Account, and potentially, a default contribution to the limited Health Flexible Spending Account. The HSA trustee would be encouraged to adopt a default “QDIA” equivalent. The plan sponsor would introduce a new HSA-capable health option each December 1st for those who are not currently enrolled in a HSA-capable health option but who are interested in tax planning. For those enrolled in an HSA-capable health option, the HSA contribution election would include a default increase each time the worker’s salary increases.
Voluntary Benefits: Workers would be able to continue voluntary benefits coverage after separation using deductions from bank accounts where banking information has already been shared as part of the 401(k) enrollment process. 

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