Why Choose Atlas 401(k) Retirement Specialists? First you need to know our story, second we need to explain why we feel confident that we have a “Best-of-Breed” Service and Product Offering. Don’t forget, ask us about our “Give Back” program. This is a special program where we return a specific percentage of annual fees towards qualified non-profit and charitable organizations that are associated with the company.
Our Story – Why we got into the 401(k) business?
Stop me if any of these sound familiar, “I hate my company 401(k)”, “Our company 401(k) plan sucks”, “My company 401(k) is high in fees and there is nothing I can do about it”, and so on. We heard this many times over the years from our clients on our Investment Advisory side of our business. Many of them are business owners and heard these statements several times and eventually they asked us to take over their 401(k) plans. We thought it would be easy enough until we did research. We learned that setting up and managing 401(k) plans was a completely different business, despite having the same commodity at its core. Before our company committed to adding 401(k) Plans to our business model, we needed to understand why people disliked their company 401(k) plans. We developed a product and service offering that makes sense, well-received with a high adoption rate and most importantly, provide a plan that hopefully people to rave about it.
We believe we developed a well-received 401(k) product and service offering, but how did we do it? The Principal of Atlas Wealth Management, LLC is Ronald Lang. His background is in finance, business strategy, technology, CRM (Customer Relationship Management) and business process engineering. The first step, re-engineer the processes of a typical 401(k) Plan. To simplify it, figure out what doesn’t work, what people dislike, and basically, don’t do that! Sounds too simple to be the actuality, but it truly is. The second step is to figure out how all the big name brand investment houses, national payroll companies and banks were able to get high 401(k) acquisition and understand why people didn’t like or want to stay with them. Through survey’s and dozens of conversations we came up with a Top 5 list (although there were much more) of reasons why people switch their company 401(k) Plans.
- Service (lack of) – Rarely get calls from service provider or provides guidance to the company 401(k) plan. As your business changes or evolves so should your company 401(k) Plan. Your 401(k) plan design should have many creative ways to build adoption rate and incentivize your participants that will help with attraction and retention of employees. Part of this is a lack of “Fiduciary Compliance”. In order to mitigate much of your fiduciary risk, you should insist on a 3(38) and 3(21) designation from your service provider.
- High fees – Most companies are not aware of how much they actually pay either at the Plan Sponsor level or the Participant level. A benchmark analysis and review of your 408(b)(2) Form (full transparency of fee disclosure required by the DOL) will help. Sometimes what is provided, isn’t very transparent.
- Education (lack of) – This is one of the most important components to a successful 401(k) plan. Most people, especially the millennial group don’t realize the power of consistent investment contributions and compounding dividends over time. The earlier your start the better chance you have of being “Retirement Ready” when you want to retire. There are so many formulas, calculators and processes to better understand how much you need to save from a specific age to attain your goals. Understanding how to invest that money is just as important to know how much to save and when to modify those investment as you move through life stages.
- No Dedicated Contact – Feedback from several clients, “We had someone from a big brand institution or bank sell us a 401(k) plan and then we never heard from them again.” “Our point of contact left the company.” “The person that sold us the plan has nothing to do with Plan Design or improvements as we grew as a company.” Do any of these sound familiar? We are sure they may sound familiar, especially if you are with a big brand investment house, national payroll company or a bank. Their goal is “numbers” and you are just a number. Typically they don’t have the flexibility with whom your investments are with. They are just tied to a specific company and their investment and fee options. This is the situation more times than not when you go with one of the big brand solutions.
- Lack of Investment Choices – Typically, when you are in a situation with a big brand choice, they can only offer their group of assets (i.e. Mutual Funds and specific class shares). In so many circumstances there are at least three or more hands in the pot collecting fees with Mutual Funds. This is why fees are typically higher than average and the reason you don’t own the lowest class of shares in many situations. Too many Plan Sponsors burden the participants with many of the administrative fees which may raise Audit Flags from the DOL if they are too high. Benchmarking your plan will surface this information and provide you a baseline of where your plan stands for fees and compares it to DOL standards and your industry and peers.
The Atlas Best-of-Breed Offering
- ETFs over Mutual Funds – This significantly reduces the participant burden of paying administrative fees that the company (Plan Sponsor) should be paying. Usually you can find an equivalent or better ETF (Exchange Traded Fund) asset over a Mutual Fund (almost any class of funds). By using ETFs, you reduce possible Audit Risk of higher fees and mitigating other administrative fee burden on the participants. Also, by reducing fees you are “increasing” participant returns which should increase adoption rate and contribution rate.
- Model Portfolios vs. Target-Date Funds (TDF). We feel very strongly against most TDFs as they rarely ever perform as expected and is very misunderstood what TDFs actually do. We’ve asked several prospective clients what they believe a TDF is and who should benefit from it. The majority of the time it’s the same answer, “The target date is when I’m looking to retire and I don’t have to think about managing my money. They do it for me”. If you agree with that statement, we highly recommend that you read the prospectus of the TDFs in your asset lineup for your 401(k) Plan. You will be incredibly surprised what they are, how they work, and who is best suited for. Call us to discuss further on the pro’s and con’s of TDFs if you don’t want to do the research on your own. We offer custom Model Portfolios that are based upon a participants Life Stage and Risk Profile. This helps the participant determine which is the best portfolio for them based upon where they are in their life stage and how much risk they are willing to take or usually willing to handle. We also offer an “Ultra Conservative” portfolio for those that want very little risk, earn some dividends to be reinvested, do not want to keep the money in just cash.
- Education Program – This program evolves based upon each clients needs, but this something we insist on and not just for Enrollment and On-Boarding. We want consistent education offered to your participants. Depending on the size of your company and anticipated growth of your employee roster, at least semi-annual or quarterly is recommended. The average person is quite shy to ask for advice or guidance when it comes to finances and investing. We understand this and offer one-on-one and off hour availability including the weekends if that works best for them. Offering education is a fiduciary responsibility of the Plan Sponsor. Atlas prides themselves on fiduciary compliance and related services.
- Fiduciary Compliance – Most Plan Sponsors are not aware of their fiduciary responsibility and this is something we (Atlas) take very seriously. You need to understand what a 3(38) and 3(21) Fiduciary is and why both are important to your company. Many web-based 401(k) companies (i.e. cheap costs, no frills) don’t offer one or both of these because they are trying to provide the most basic, bare-bone service offerings for business acquisition. By offering this type of service it is putting your company at potential risk of a DOL audit, even if you believe you are doing everything right. Even many of the big brand investment houses and banks don’t offer both fiduciary levels because they would have to charge for it, again putting you potentially at-risk of a DOL audit. Atlas provides BOTH levels of fiduciary responsibility and it is included in our Investment Management Fees.
A great 401(k) Plan cannot be underappreciated. We know this and make sure that our Best-of-Breed offerings is consistently fine-tuned on a regular basis. Remember, a 401(k) Plan in general is meant to Attract, Retain, Motivate and Reward employees. If you took a simple survey of your current employees, you would be surprised at their response at how important a 401(k) Plan is as a benefit of working for your company, if they like and contribute to it on a frequent basis.
If you don’t know where your plan stands as far as reasonable fees, how good your asset lineup offerings are, or if your group is in fiduciary compliance, request Atlas perform a 401(k) Plan Review and Benchmark Analysis.
What makes Atlas different from their competitors?
We speak to much of this in “Our Story” in the “Why Atlas?” section, but we feel that the core components of our Best-of-Breed product and service offerings makes us different. Offering ETFs over Mutual Funds, Model Portfolio’s over Target-Date Funds (TDFs) and providing Fiduciary Compliance Services such as 3(38) and 3(21) to help both the Plan Sponsor and the Participant make sure they are in fiduciary compliance and getting the right guidance, makes us different and the right choice. We have this flexibility since we are not affiliated or have any allegiance to ANY big brand investment house or banking institutions. Essentially, Atlas acts as the General Contractor and manages all the relationships and coordinates the communication among all parties. We are not bound to any investment house, institutions, quotas or geography. We only want to work with the best clients. The buck stops with Atlas.
What is Open Architecture and why should we insist on that structure?
Essentially, offering an “Open Architecture” feature provides you the greatest amount of flexibility for Asset Choices in your 401(k) Plan. Since Atlas is not beholden to any big or little brand investment house or banking institution, we have the ability to mix and match asset choices to provide the most diverse choices, with low to reasonable fees and equal to or greater performance to its peers. We offer a set asset lineup, but if you have a specific Mutual Fund or ETF that you really like, as long as we don’t already have something equal to or less in fees or equal to or greater in performance, we have the ability to add it into the lineup. Most service providers cannot offer you that flexibility. The power of an Open Architecture format and the flexibility of not being tied to any fund family or investment house. When we review the asset lineup on an annual basis to decide if we need to replace any asset in the lineup, we can essentially offer almost any ETF or Mutual fund from any investment organization.
Why are offering ETFs better than Mutual Funds?
ETFs have become very popular in the last 20 years as they are essentially Mutual Funds, but trade like a stock. You can identify any Mutual Fund in an asset lineup and we can usually find an equivalent ETF, that is significantly less in fees and has equal to or better in performance. The reason why most service providers won’t even offer this is because they can’t make any money off of them. Usually the Mutual Fund has 3-5+ hands in the fee pie being split across several parties. Because it is very difficult to understand who gets what and how much, Mutual Funds are attractive to big brand investment houses and banking institutions. Since there usually is usually no line item of fees on the participants activity, it helps keep the Plan Sponsor and the Participant in the dark most of the time. Also, many times some Plan Sponsor administrative fees are included in the Mutual Fund fees and now that burden is on the participant. This isn’t illegal, but does reduce the participants performance over time since they are now absorbing those fees. ETFs eliminate all of those most of those issues and mitigates your Fiduciary Risk.
Model Portfolios vs. Target-Date Funds (TDFs)?
We offer 13 different custom Model Portfolios to help a participant choose based upon their age and life stage along with their risk profile. This helps them spread out their risk and not think about additional diversification for their 401(k) portfolio if they choose. Every participant has the ability to change their desired model portfolio as they change age brackets or their risk profile changes.
TDFs have been highly criticized because they usually do not follow through on their fund profile or objectives. We have a lot of data and examples to back up the lack of performance behind TDFs. We always ask prospective clients that like TDFs why do you like them? They typically will say its easy for the participants to choose one based upon their desired retirement date. If you read the prospectus on many TDFs, the actual date/year associated with the TDF has nothing to do with a retirement date. You would assume as you get closer to that date then less risk would be taken out of the fund. Is a matter of fact if you look up a TDF that has already past (meaning look up a 2015 TDF). This would mean that if you wanted to retire in 2015 then since we are past that year there should be very little to no risk in that fund. Look up any 2015 TDF and you will find it to be a much different make-up of assets and risk than you would have thought. Go to www.Morningstar.com as a good free resource to research this information.