Reasons to Offer a Financial Wellness Program

Posted on by Jerome.Pfeffer

Why Financial Wellness?
Could financial wellness be the answer? Companies of all sizes are constantly searching for  ways to increase employee engagement, improve productivity, build and/or retain a quality team, and enhance benefit programs. Financial wellness could be a simple solution for reducing employee stress creating a more favorable work environment.

Offering your employees a financial wellness program can have a dramatic impact on your bottom line, both on a short-term and long-term basis. By offering financial wellness programs, you can help employees make positive improvements to their financial behavior. The details of these programs will vary depending on the specific needs of the company’s workforce, but they all share the same goal: to help employees achieve balance and control over their finances, leading to a healthier, more productive workforce with less absenteeism and higher retention rates.

Personal finance issues are a huge distraction for employees and may contribute to “presenteeism”– a state in which employees are physically at work yet mentally adrift in their own troubles. Nearly half (46%) of all employees say they spend three or more hours at work each week thinking about or dealing with their personal finances[1] – that’s 156 hours (19.5 days) over the course of a full year! By offering education and support for employees to help them better manage their finances, you may be able to reduce presenteeism.

It has been said that it is more cost effective to keep an employee that to hire a new one. Employee turnover costs companies time, money, and other resources. Research suggests the average cost of turnover was 21 % of an employee’s annual salary.[3] Employees are more likely to stay with an employer that they feel cares about their well-being, and 85% of employers agree that offering a financial wellness program is the right thing to do.[4]

Health Care Costs
Whatever health condition you can think of, stress has been proven to exacerbate it. The health risks associated with stress are pushing healthcare costs higher and higher for employers and employees alike. Employers who offered financial wellness programs saw an average reduction in operating costs of $348 per employee per sick day.[5] Many plan on delaying retirement in an effort to combat low account balances. That delay can be  costly: for each employee who puts off retirement, employers could be looking at an  additional annual cost of over $5,000 in health insurance premiums.[6]

Pay it Forward
Financial wellness is like investing in your employees, offering employees greater retirement security can help employers cultivate a less stressed, healthier and more engaged workforce.[7] Whatever reason makes you decide to establish or enhance your financial wellness program, you’ll be offering a priceless asset to your employees and taking steps toward helping them control their financial futures.


At Investment Solutions Group, we care about helping you prepare your employees for retirement. We work alongside you to offer the most effective employee benefits, from well-designed retirement plans to comprehensive financial wellness programs.

Securities offered through LPL Financial. Member FINRA/SIPC.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. This material was prepared for Jerome Pfeffer’s use.

1.     PricewaterhouseCoopers LLP. “Employee Financial Wellness Survey” (2016): Pg. 8. PWC. April 2016.
2.     Based on 2016, employer costs for employee compensation (ECEC) $34.15 per hour. Bureau of Labor Statistics. “Employer Costs for Employee Compensation- Sept. 2016.” Dec 2016.
3.     Boushey, Heather. “There Are Significant Business Costs to Replacing Employees.” Center for American Progress. Nov. 2012
4.     Aon Hewitt. “2016 Hot Topics: Retirement and Financial Well-being.” Pg. 6. 2016

5.     Financial Wellness Landscape Analysis:  An Overview of the Need for Workplace-Based Financial Wellness Programs.  ING Employee Benefits, 2013.
6.     “Aon Hewitt Analysis Shows Upward Trend in U.S. Health Care Cost Increases.” Aon  Hewitt, Nov. 2014.
7.     Nyce, Steve. “Which Employees Are Delaying Retirement and Why?” Willis Towers Watson. Sept 2014


2017 Compliance Calendar

Posted on by Jerome.Pfeffer

As we quickly approach a busy season of deadlines, it’s important to have a clear outlined schedule that your team can refer to. We have provided a complimentary retirement plan compliance and notice requirements calendar to guide you through the rest of the year, so you don’t miss a deadline.

Download your free copy!


2017 Contributions Limits

Posted on by Jerome.Pfeffer

On October 27, 2016, the Internal Revenue Service announced cost of living adjustments  affecting dollar limitations for pension plans and other retirement-related items for tax year 2017. Most of the limits were unchanged because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment. The following table is provided to help you determine how much to set aside for retirement planning in 2017.

2017 Contribution Limits [Click to Download]

Understanding Plan Fees and the Power of 1%

Posted on by Jerome.Pfeffer


These costs may add up:
Even a 1% increase in fees can amount to a difference of thousands of dollars!

Example of a Highly Compensated Employee (HCE)
Example of a Non-Highly Compensated Employee (NHCE)

Securities and advisory services offered through LPL Financial, a registered investment adviser. Member FINRA / SIPC.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. This material was prepared for Jerome Pfeffer’s use.

1 Aon Hewitt. “How 403(b) Plans are Wasting Nearly $10 Billion Annually, and What Can Be Done to Fix It.” Jan. 2016

403(b) Plan Costs

Posted on by Jerome.Pfeffer

403(b) Overview
403(b) plans have historically been the default choice for nonprofits as they may be easier to administer than 401(k) plans, but they’re not without their downsides. Recent lawsuits against 403(b) plans are taking aim at excessively high fees for investments, recordkeeping, and administrative services. These types of participant raised suits are surfacing and plan sponsors could be held liable for damages. If you’re a 403(b) plan sponsor, you need to be fully aware of your fiduciary responsibilities, understand possible ramifications, and know how to be prepared if you get hit with a lawsuit yourself.

403(b) Plan Lawsuits
The laws governing employee benefits, or Employee Retirement Income Security Act (ERISA), have grown more complex over the years, and litigation is on the rise. The latest salvo was fired back in August, with the start of a wave of lawsuits against higher education 403(b) plans where participants have alleged that poor oversight of plan investments has resulted in exorbitant fees taken out of their retirement accounts. Not all of these cases have gone to trial, but there have been some huge settlements: just last year, Novant Health settled a suit involving their hospital’s nonprofit 403(b) plan for $32 million.[1]

linkedin-blog_-graphExcessive Fees
403(b) plans have traditionally been known for their high costs. As seen in the chart on the right, a recent study by Aon Hewitt shows approximately 43% is held in fixed annuities (which charge 1.15% per year on average), 33% is held in variable annuities (which charge 2.25% per year on average), and 24% is held in in mutual funds (which charge .97% per year on average)[2]. These charges add up: even a 1% increase in fees can amount to a substantial difference over time.

Fiduciary Process is Key
There’s nothing you can do to avoid being sued; however, you can be prepared. ERISA is meant to ensure that employers follow a consistent, prudent process: if you document your process thoroughly and in detail, you may have the opportunity to circumvent costly mistakes. Here are a few basic actions you can take as a plan sponsor to help your company’s retirement plan comply more readily with ERISA guidelines:

1. Document everything
2. Assemble and formalize a retirement plan committee
3. Draft and review an Investment Policy Statement (IPS)
4. Conduct annual benchmark reports
5. Conduct periodic RFPs
6. Delegate fiduciary responsibility

It bears repeating: document everything. Once you’ve established a solid documentation process, you need to identify your plan fiduciaries. Many organizations assign this role to their retirement plan committee; its members are thus legally obliged to act in the best interests of participants, as defined by ERISA regulations, and all should be aware of their roles and duties as fiduciaries.
Additionally, the committee should create and follow an established document, or set of documents, that describes the details of the plan as stated in the Investment Policy Statement (IPS). The IPS should describe the available investment choices for plan participants as well as specify the criteria for when an investment should be placed on the watch list or remove list. Additionally, the IPS should outline the set standards an investment must uphold to be considered an acceptable option.

Plan sponsors also have an obligation to make fees known and reasonable. Performing an annual benchmark report displays prudent oversight. It is also recommended to periodically conduct RFPs for your plan service providers in order to keep fees competitive.

While you can’t delegate away all your fiduciary responsibilities, you can reduce your liability exposure. Plan sponsors may consider teaming with a 3(21) co-fiduciary or 3(38) investment manager to assist them in selecting, monitoring, and replacing investment options available to participants under the plan.
Developing a consistent process that aims to monitor your investments and assess fees associated with the plan are keys to fulfilling your fiduciary responsibly. Regularly benchmarking your plan will help to manage plan costs, but can be a daunting task without the help of a third party.

At Investment Solutions Group, we have been investment fiduciary advisors for over 20 years, we are well-versed with compliance regulations and advanced plan design for both 403(b) and 401(k) retirement plans. If it has been over 4 months since your plan was thoroughly benchmarked, there may be opportunities to reduce your plan fees.
Feel free to contact us to learn more about complimentary benchmarking.

Securities and advisory services offered through LPL Financial, a registered investment adviser. Member FINRA / SIPC.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. This material was prepared for Jerome Pfeffer’s use.

[1] Belfiglio, Jeff. “Excessive Fee Litigation Hits 403(b) Plans: What Nonprofit Fiduciaries Need to Know.“ Davis Wright Tremaine LLP. Aug. 2016.

[2] Aon Hewitt. “How 403(b) Plans are Wasting Nearly $10 Billion Annually, and What Can Be Done to Fix It.” Jan. 2016


Posted on by Jerome.Pfeffer

Pfeffer_Am I a Fiduciary_Video_Approved_1-515127 from 401(k) Marketing on Vimeo.

Securities and Advisory Services Offered Through LPL Financial a Registered Investment Adviser. Member FINRA / SIPC.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. This material was prepared for Jerome Pfeffer’s use.


Posted on by Jerome.Pfeffer


In 1974, Gas was 55 cents a gallon[1], Muhammad Ali regained his heavyweight title, sealing his fate as the greatest of all time, 401(k) plans did not exist, and IRAs had just been authorized. This was also the year the Employee Retirement Income Security Act (ERISA) was first enacted. Since that time, there has been a dramatic shift in the retirement savings landscape. Forty years ago, the world was one of defined benefit pension plans, while today America’s primary retirement vehicle is the defined contribution retirement plan. Interestingly enough, even with the drastic change in utilized plans, the rules have not been meaningfully changed since 1975.[2]


Evolution of the Fiduciary Rule:

ERISA Timeline Image

The changes in the retirement savings marketplace over the past 4 decades have increased the importance of sound investment advice for workers and their families.  On April 8, 2016, the DOL released the long-awaited Conflict of Interest rule. The rule “affects how investment advice is provided to every 401(k) plan, every IRA, and every rollover or distribution to or from either,” according to a U.S. Chamber of Commerce issue brief.[3]  This begs the question: How does this new rule affect Plan Sponsors?


Surprisingly, before the Conflict of Interest rule, advisors did not have a legal duty to act in the best interests of their clients.  They could choose to serve under a fiduciary or a suitability standard; the difference lies in the language used to define each. ERISA requires advisors to act as “prudent experts” and uphold the fiduciary standard, acting in the best interest of the client; whereas FINRA requires that advisors “have a reasonable basis to believe” that a recommendation is “suitable.” Under the new rule, all advisors will be required to act in the best interests of their clients. Some may choose to file an exemption known as the Best Interest Contract Exception (BICE or BIC), which allows advisors to receive variable compensation; we will discuss this in future posts.


Although the regulation is aimed at protecting investors, the final rule may impact advisor relationships, compliance obligations, and costs for plan sponsors.  Understanding how it may affect you is key and can be broken into three main points.



Many predict that the fiduciary standard will lead advisors to switch to either a flat-dollar or percentage-of-assets fee for their services, rather than receiving payment from commissions or from mutual fund revenue-sharing arrangements.  As a plan sponsor, part of your fiduciary duty is to keep retirement plan fees known and reasonable.  Now is a great time to open this conversation with your advisor.  Ask your advisor how they are compensated, and benchmark your plan with others in your peer group.


There is a difference between advice and education, one could trigger fiduciary responsibility while the other does not. The regulation carefully carves out education from the definition of investment advice so that plan sponsors can provide general education without triggering fiduciary duty. The final rule describes the types of information and activities that constitute non-fiduciary education, including plan information and general financial, investment, and retirement information. However, specific investment advice would need to abide by a fiduciary standard.


The DOL regulation will have a significant impact on rollovers.  Essentially, a recommendation to roll money out of a 401(k) plan or other defined contribution plan to an IRA is now a fiduciary act.  As a result, more employees may choose to stay in an employer-sponsored retirement plan as opposed to rolling their plan over to an IRA after they have left the company.  This may increase the administrative burden on your Human Resources team to keep track of former employees.


While these changes will directly impact your company’s retirement plan and place heightened importance on plan documentation, it’s okay.  The rule will raise the advisor standard to genuinely act in the best interests of their clients, helping to protect and prepare the retirement investor.  At Investment Solutions Group, we have been investment fiduciary advisors for over 20 years.  We have always had our clients’ best interests in mind, and we’re proud to continue servicing our clients as investment fiduciaries.


Securities and Advisory Services Offered Through LPL Financial A Registered Investment Adviser. Member FINRA / SIPC.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or

investment advice. This material was prepared for Jerome Pfeffer’s use.


[1] Collins, Bob. “Runup in Gas Prices Exceeds Price Impact of ’73 Oil Embargo.” NewsCut. MPR News, May 2013.

[2] “Fact Sheet.” : Department of Labor Finalizes Rule to Address Conflicts of Interest in Retirement Advice, Saving Middle-Class Families Billions of Dollars Every Year. Department of Labor, Apr. 2016.

[3] Joe, Alice. “US Chamber of Commerce. Assessing the Final DOL Fiduciary Rule.” April 2016.





Posted on by Jerome.Pfeffer

Blogimage2Planning for retirement is an individual journey. The company-sponsored retirement plan (401(k), 403(b), 457, TSP, et al) offers an accessible way for you and your employees to save for the future. We can’t force your employees to save, but we can give them an opportunity.

In this blog article, we are specifically focusing on the retirement planning challenges of higher income employees.  Let’s look at a hypothetical company example and examine the challenges that higher income earners face when they are saving for retirement.

For our example, let’s say the company’s employees are scientists, doctors, and engineers. These white-collar professionals earn incomes above $120,000 per year. Now, that may sound like a great job and a sufficient level of income to save for retirement– yet, these employees do face some obstacles, and today’s article highlights some of the challenges that high-earning employees might encounter.

Three hurdles that high income earners face include:

  1. Saving Caps
  2. Replacement Ratio
  3. Taxes

The first hurdle is savings caps — the higher the income the more savings ceilings. If your company’s retirement plan does not have a Safe Harbor provision, you may max out your annual deferral well below the 2016 annual 402(g)(1) limit of $18,000.[1] If you have a Roth IRA and earn more than the AGI limit, your annual contribution amounts will phase-out as your income increases. Then, with the proposed bill to cap aggregate tax-deferred saving in 401(k) and Individual Retirement Accounts at about $3.4 million, the accounts become less tax-friendly as you earn more income.[2]

The next hurdle is an adequate income replacement ratio. We define income replacement as 80% of pre-retirement gross wages. With higher your incomes, the larger your nest egg needs to be which, presents a savings challenge. Let’s say you earn $250,000 per year and you retire. To replace 80% of your income[3] – including expected Social Security benefit payments of $2,640 per month – you would need to withdraw approximately $8,000 per month.[4] To have sufficient funds in retirement for 20 years, your nest egg needs to start out at approximately $2M.[5]

Whereas, according to an Aon study, Social Security replaces a larger portion of pre-retirement income at the lower wage levels of lower income earners. However, higher income earners are responsible for the larger margin of separation.
For your approximate Social Security benefit calculator, click here.
Lastly, the third area: taxes. We don’t want to belabor the point, so one quick question: do you think taxes are going up or down in the next 10 years?
If you are a high income earner, what can you do today to save and prepare for your retirement?
We recommend that you speak with your employer about the plan contribution limits and how you can take advantage of saving through your company’s retirement plan. Next, talk to a financial professional about calculating your retirement replacement index and see how you score for preparedness. As we said, retirement planning is a journey, and it’s helpful to check-in with a map every once in a while. Taxes are here to stay, so talk with your tax professional about strategies to efficiently save for a happy retirement.
Thank you for reading, and feel free to contact us with any questions or for more information.


Securities and Advisory Services Offered Through LPL Financial A Registered Investment Adviser. Member FINRA / SIPC.

[1] IRS Announces 2015 Pension Plan Limitations; Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015.  IRS.  October 23, 2014.

[2] Schrager, Allison. “The Problem with Obama’s Plan to Limit Retirement Savings.” Bloomberg Business. Feb 2, 2015.

[3] Scholz, John Karl, and Ananth Seshadri. 2009. “What Replacement Rates Should Households Use?” MRRC Research Paper No. 2009-214. Ann Arbor, MI: University of Michigan Retirement Research Center.

[4] Annual income of $250,000 minus taxes ADP Tax Calculator divided by 12 months ($13,416) minus Social Security benefit ($2,640) equals approximately $10,000.  Then with an 80% retirement income replacement that is approximately $8,000 per month.

[5] $8,000 per month times 12 months times 20 years is $1.92M

[6] The scenario above is for illustrative purposes only. Your individual situation will         vary.





Posted on by Jerome.Pfeffer

Pfeffer, Blog 2


“Where we’re going, we don’t need roads.” However, “without a map, you’re nowhere.”

In this blog post, we are going to explore plan design concepts, so that employers can understand the macro and micro impacts of offering a comprehensive company-sponsored retirement plan (such as a  401(k), 403(b) retirement plan).

Let’s talk about plan design.  Now, just because your company offers a retirement plan doesn’t mean you have an efficient plan. To think of it another way, plan design is like a road.  It is a path that allows a rider to get from point A to point B.  Plan design is composed of the foundation rules that govern what is permissible in the plan.  For example, plan design determines:

Said another way, if you were driving from Albuquerque up through Southern Colorado, would you rather drive on a backroad with tolls, speedbumps, and potholes or a free, smooth, clean highway?

Most people would prefer the highway. As a plan sponsor, you determine the road. Let’s take a peek at the obstacles and repairs.



Examples of barriers of entry in a company sponsored retirement plan include:

  1. Age restrictions – employee must be least 21 years old
  2. Service requirements – employees must complete at least one year of service
  3. Restrictive enrollment dates – limited plan year entry dates[1]

By removing the restrictions, you allow your employees to immediately participate in the company’s retirement plan.   One trend that is quickly catching on is auto-enrollment.  Many companies are now automatically enrolling employees.    If you are interested in learning which companies, click for a public list of companies that support auto-enrollment.


We all save differently.  As a plan sponsor, you have the ability to offer your employees different options, such as, allowing your employees to select from pre-tax and Roth deferrals. When the Pension Protection Act of 2006 was enacted, it permitted the inclusion of Roth deferrals. Now, after nearly 10 years, approximately 1 out 2 (52%) plans offer the Roth feature.[2] In turn, this allows your employees to choose the best savings option based on their financial situation.

By giving your employees the freedom to choose which savings vehicle is best, you individualize the retirement planning choices for your employees.  Also, if your employees have older 401(k) accounts and would like to consolidate, by offering different savings account types, it is easier to roll-in account balances. The employee can just transfer the account in a like-to-like capacity.


In many companies, different people are paid different incomes, and, from a 401k perspective, if you own more than 5% of the business, or if you are a direct blood relative of the business owner, or if you make more than the 414(q)(1)(B) limit, (for 2015/2016 it is $120,000 per year) then you are considered a Highly Compensated Employee (HCE).[3] Well, as you might know, there are different retirement plan testing rules for HCEs and Non- Highly Compensated Employee (NHCE).  If your plan design doesn’t support maximizing retirement plan contributions, then you might experience a failed ADP/ACP and thus you may have to make corrective distributions. Nobody likes that.

Therefore, by having a Safe Harbor plan, you avoid the ADP/ACP testing.  For more information on plan design, we recommend that you speak with an experienced Third Party Administrator (TPA) and conduct a plan design review.

Plan design is specific to each company and certain companies might not want to add certain features, which is why it is important to speak with an experienced retirement plan advisor and a TPA.

We hope you have now learned about plan entry, how to increase the types of retirement savings accounts, and the importance of working with a TPA to design a plan that fits the needs of your business.

Thank you for reading and stay tuned for our next post about the retirement planning journey.


This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

Securities and Advisory Services Offered Through LPL Financial A Registered Investment Adviser. Member FINRA / SIPC.


[1] “Guide to Common Qualified Plan Requirements.” IRS. 2015.

[2] 2014 PlanSponsor DC Survey.  All Industries.

[3] IRS Announces 2015 Pension Plan Limitations; Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015.  IRS.  October 23, 2014.





Posted on by Jerome.Pfeffer


Pfeffer, Blog 1_cover image


In a recent Guardian Retirement Solutions study, one-third of the plan sponsors surveyed did not realize that they were plan fiduciaries.[1] That is a frightening statistic, especially considering that 92% of Americans fall short of retirement savings,[2] 60% of households have less than $25,000 in total savings and investments,[3] and the company’s retirement plan is the primary accumulation vehicle for most Americans.

To take this one step further, in 2014, the Employee Benefits Security Administration (EBSA), the government entity responsible for ensuring the integrity of the private employee benefit plan system, conducted over 3,928 investigations; and of those, 2,541 (64.7%) cases resulted in monetary payments for corrective actions. For the year, the department recovered approximately $600M in direct payments, which is an average employer fine of $236,000 per corrective plan.[4]

So, if you are a plan fiduciary, what can you do today to stay informed and compliant?  Below are 4 quick tips to begin the process of practicing plan governance and prudent oversight.

  1. Document, document, document

Document rationale and decisions related to fund selections and changes. If questions are asked years later as to why fund choices were made, the documentation will set forth and explain the logic behind the decisions.

  1. Organize

Establish an investment committee to review the current retirement plan and documents. Make sure roles are established and education is provided for committee members regarding their ERISA fiduciary responsibilities.


  1. Review & Evaluate

Establish a process for an ongoing review of funds and vendors to ensure that selections are aligned with the Investment Policy Statement (IPS). Vendor fees and other service providers under the plan should be reviewed, as well. Quarterly committee meetings are frequently most effective in gathering and evaluating plan components.  If the committee has questions on the information, consult an industry expert.  Areas of common questions include plan design, investments, provider services, and actuarial support.


  1. Monitor

Revisit the IPS annually to update as needed. Review the retirement readiness index of your plan participants.  Discuss fee benchmarking and plan costs for reasonableness.  And most importantly, remember that the goal of a company’s retirement plan is help employees successfully retire.


We feel that managing your company’s retirement plan is an extremely important role, because your decisions and actions impact the retirement success of all of your employees.

If you are unsure whether or not you are a plan fiduciary, we recommend that you read the Department of Labor’s (DOL) Meeting Your Fiduciary Responsibilities brochure and contact us with any questions.

For a complimentary investment committee checklist and for other best practices, please contact us today.

Thank you for reading!


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Securities and Advisory Services Offered Through LPL Financial A Registered Investment Adviser. Member FINRA / SIPC.

[1] Guardian’s Fiduciary Awareness Quiz Asks: “Do Plan Sponsors Understand Their Fiduciary Role?” Guardian Retirement Solutions. August 6, 2014.

[2] Rhee, Nari, PhD. “The Retirement Savings Crisis (2013): Is It Worse Than We Think?” National Institute on Retirement Security. Nari Rhee, PhD, June 2013.

[3], March 2012. No. 369. The 2012 Retirement Confidence Survey: Job Insecurity, Debt Weigh on Retirement Confidence, Savings.

[4] “EBSA Restores Over $599.7 Million to Employee Benefit Plans, Participants and Beneficiaries.” Fact sheet. Department of Labor. August 6, 2015.




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