401(k) Match Strategy: Pandemic Plan Design Decisions

[0:00] JD: Gets Chad going. [0:01] Chad: Gets me going for sure. Katie, were we live last time when you asked me if I would dance in our next live recording? Because I will. Please don't. Oh, yeah. I'm dancing at the next one [0:16] JD: if [0:17] Chad: we ever have one. [0:19] JD: Let's bring Jenya on. And boys, Mark, can you intro Jenna Stowler? Cool is not enough. What? How do you describe her? [0:31] Mark: Amazingly brilliant, extremely confident. Hufflepuff and Slytherin. Butterbeer. [0:46] Chad: Yummy, yummy. [0:50] Speaker D: You guys are funny. [0:51] JD: Daniel. [0:52] Speaker D: Yes. [0:52] JD: Thank you so much. Thank you so much for joining us. And thank you for wearing that outfit that we asked you to wear. Your little Harry Potter outfit. [1:01] Speaker D: Yeah, you know, Napa Summit getting moved to September, still in Orlando. So. I'm still working on it. [1:16] JD: I want to ask you first, is there lots of questions coming your way? Was this noticeably different than the meetings that you're used to? I mean, how did it feel with those clients? [1:25] Speaker D: Well, the way I would describe it, like, last week I feel like everybody was still, like, numb. Like, it, like it was kind of like, is this really happening? You know? And then this week, I feel like people are starting to get their cadence a little bit and figure it out. There's a lot of work that has to be done to help clients understand. Depending on how big your client, I guess it doesn't matter. But if you don't move quickly, let's say in amending your. Let's say you have a stated match and you know, if they're using a record keeper that takes 30 to 60 days to get an amendment out. [2:03] JD: Good point. [2:04] Speaker D: Our largest client, it's going to cost them a million dollars per payroll to wait to take the match off the table. So. [2:12] JD: So you know what I think the misconception is too, is you might say to yourself or think like, well, these big clients that Janice working with, surely they can weather this kind of downturn in this economic thing. And the reality is the first calls that I've gotten are from our biggest clients. Because when you're a big client and you're looking at losing 30% of your revenue in the course of 14 days, it's a big deal for them. Like, they've got to get around that conference room and make some serious decisions very, very fast. I would argue it's the smaller companies that can actually kind of bear it a little better for the first part. So I noticed that. Can I ask you, what about participants? Do you feel like, as an advisor, you guys have a role to play in helping participants with distribution options, loan Options. How do you see yourself in that spot? [3:09] Speaker D: Yeah. So, like, one of the things that we put together was a report that kind of walked. It was a chart that walked through all the different distribution options, kind of as it stands now. And then we've got a column waiting, you know, that's ready to be released once we can safely say. Right. But the. Yes. So the short answer is we have been answering tons of calls. I would say our call volume. We used to get maybe 10 calls a day. Now we're up to like 20 to 30 calls a day. But you know what's interesting about this time, because I've taken calls too. Like, we all. Everyone's got to pitch in at this point, right, and answer any call they can. But in 2008, the. Sorry, your background, Nevin and John. In 2008, people were a lot more panicky and freaked out. And I feel like now the questions we're getting are people are asking us what stocks they should buy. It's so different. I mean, not that we give advice on purchasing stocks. I'm just saying, like, we're not getting as much fear as we are getting opportunity. I'm not saying every call is like that, but I'm noticing a bigger push into this is a buying opportunity than anything else. [4:37] Chad: You think that's because they've already been through it recently, or you think it's because they think once this settles down, it's going to go through the roof again? [4:44] Speaker D: You know, I think I've thought a lot about that and I think it's probably a little both because it's certainly the younger generation asking those questions, but not only there's some older ones too, but I think too just the. If you look at the. The workforce that are in their 20s, it's a different workforce than 10 years ago that were in their 20s. Now we're all technology focused. They've seen Facebook, they've seen these companies that made billions and now they want in on that same kind of deal somehow, you know, like, I think there's a bigger entrepreneurial spirit than there ever has been. [5:20] JD: I know we're getting this massive stimulus and I'm really interested in all that to see how it's going to play out. And I think it's a great thing. But I was worried about the companies, you know, But I like what Justin said, you're right. The biggest difference between this and past things is we actually do know that there'll be an end. [5:41] Speaker D: Just that service industry is just getting hammered and it's so sad. [5:47] JD: Well, back to the original subject. Do you feel like, let's go to the positive when we finally start to come down and things start to get back to normal? Mark had mentioned earlier that you may go into these meetings and get hammered with lots of new questions. Right. How to kind of fix the damage that's been done or they might need to tweak things now that they've been, they see what could happen to them. Obviously participant education changes. But I guess my question to you is I feel like if you normally went to that meeting in say August, you would do a run through of the funds and the scores of the funds and which funds you're removing and replacing and you would do a legislative update and you would talk about what kind of education meetings are on the calendar. You know, just what I would call a normal fiduciary review meeting. [6:40] Speaker D: Right. [6:41] JD: Do you think because of what we've been through at that point that that meeting changes a lot? The agenda to that meeting is different than it was going to be. [6:52] Speaker D: I think that everyone should take a hard look at their plan design. I should get bonuses for saying plan design. What was interesting? So last week I felt like we were like running against the clock and we put together a breakdown of all our safe harbor plans in one massive list. And how many had discretionary matches versus stated matches? Did they fund per payroll or at the end of the year? And so I think that at the next meeting out of this is really reevaluating because what if this does come back next year or two years from now or three years? We need plans to be very nimble. And I would say like I used to be a fan of the stated match, but now I'm like, I'm becoming a fan very quickly of the discretionary match. You can still do it, whatever, you know, 50 cents on the dollar, 6%. But that way if you need to pull the trigger quickly, you can. [7:54] Chad: A client calls tomorrow and says, I need to amend our document to take our stated match out. We're going to guide them, make sure it's right for them. But it's a one hour turnaround if it's that much of an emergency that we can create that amendment and get it back in their hands. When you're working with a record keeper, they're saying, sorry, like this is our process. A, then B, then C, then D, then E. And it's gonna take them. I mean in a good turnaround, you're looking at 10 to 15 days. [8:22] Speaker D: Oh, at least. Like, I mean, I'm not gonna mention names, but a very large one. There's no way it's gonna be done before 30 days. We have an ERISA attorney that we work with that his opinion is like it's. And I agree with him, it's the client's plan. So he'll amend the document without the record keeper. [8:44] JD: And that way someone wants to let Aaron jump in for sure. We can let the champ jump in here in a second. Brandon, if you can hear me, I know you can, maybe we could play one last audio clip for Janya, somebody that she might know, and she can take a guess at it, and then we'll. We'll close the show. If Brandon's reading my mind, I'm taking [9:06] Chad: a idea of what this might be. [9:08] JD: Okay, be clear. Butterbeer. Yummy. [9:17] Speaker D: Yes, I know who that is. [9:21] JD: Okay, good. If you don't know who that is, you gotta go do your research. Don't tell them. Be genius. Mark, you want to sign us? Oh, before we sign off, Brandon wants me to say this. He wanted me to say this when we were 10 minutes in because he's gonna edit it into our show. So I'm gonna say, hey, thanks for the 10 minute version on LinkedIn, but keep watching because this thing goes on forever. We keep talking. There you go. Brandon, you can add that he's getting his hair done, but Mark, can you sign us up? Aaron, unmute yourself. What's our big sign off? [9:55] Mark: Don't touch your face. Ding dong.