Guiding Participants Through Crisis: Hardship Distributions & Cash Reserves

[0:00] Speaker A: Oh, what's your cocktail of choice tonight, Mr. Astley? [0:03] Alex Astley: I'm. I'm having a margarita. [0:09] Speaker A: Retireholics. [0:12] Speaker C: All right, Brandon started. [0:13] Alex Astley: J.D. [0:13] Speaker C: you kick it off. We got a little special intro for you, Alex. [0:26] Alex Astley: Hey, this firehole sheltering in place. Hey, [0:33] Speaker C: is it another episode of Money Hacks? No, I don't think so. It's another episode of Retireholics sheltering in place. But we do have Mr. Alex Astley here with us. What did you think of that little intro video we did for you, buddy? [0:48] Alex Astley: I like it. [0:49] Speaker C: Awesome. [0:50] Alex Astley: I might have to take the. Steal that and use that moving forward. [0:53] Speaker C: You can have it. We'll give it to you. Alex, what is your call to action as a financial advisor? I mean, have you been throwing on the red cape and running out and helping those plan sponsors make strategic decisions? Let's start there. Let's start with the employers. What have you been doing to help out? [1:12] Alex Astley: Yeah, so, I mean, definitely two areas we've been focusing on, one with employers and retirement committees, and the other with employees, but with the employers in particular, you know, having some discussions. We're still holding our strategic review meetings, if you recall kind of how we talked about that in our. The last time we did this, back in 2018. I almost touched my face. But we're still trying to have those meetings. But in those sessions, we're having video conferencing like this. We're focusing on priorities first. And so with a retirement committee and with an organization, we're, you know, getting their input on how things are going. What is the state of their, you know, work sort of environment look like, and what does that mean for employees? What does the state of their organization look like? And where are there various levers that we can shift or adjust in a way that is beneficial for them to maintain sustainability for the short and medium term. I was gonna say. And so, you know, similar to two of my favorite people that you had on one of your previous shelter in Place webinars, A.A. ron and Janya. You know, conversations around. Where are you. [2:39] Speaker C: Sorry, where is a Ron? [2:40] Alex Astley: Conversation with clients around, you know, the various matching and employer provisions. Conversations with them around. Just strategy on what, what. What are important fiduciary responsibilities and governance initiatives that they have given, you know, here in the last, I guess, two weeks, we have a CARES act, and there are certain provisions in the CARES act that they may want to implement or may need to implement to benefit their employees. So we're still continuing those conversations. And for some clients, it's a standard strategic review. Meeting and for others, it's really focused on two or three initiatives that are incredibly pressing for them and then they've got to move on to other areas of their business that are more important. [3:26] Speaker C: Right now, let's shift the same question, different, different audience. How are you dealing with the participants? [3:34] Alex Astley: So we've, we've been holding a series of group webinars and financial coaching workshops over the last month or so. And we've had about, I wrote some numbers now We've had about 2600 employees across our various clients join the group sessions. We've held over 550 one on one coaching sessions. So we're reaching out to all of our clients and trying to schedule time to do a live group workshop. Somewhere between 30 and 60 minute workshop. [4:18] Speaker C: And Alex, this isn't, this isn't the same old shit, right? I mean this isn't like, hey, stick to the plan, you gotta, you know, the markets will be up over the long haul. Asset allocation, blah, blah, blah, blah, blah. Don't touch your money. What have I seen all over the Internet now it's don't touch your face and don't touch your 401k. Me knowing you, I'm imagining you guys are still listening to people. Some people might be in tough times, right? Like the rules have changed. Have the rules not changed a little bit [4:50] Alex Astley: for sure. And that's, you know, with the CARES Act, I'm sure you guys are spending so much time with that, these provisions and how to get them into plans and then how to administer distributions. But you know, so if we have a client who says, well, we haven't cut any staff, we haven't cut any of our employees compensation, that's fine, but they may have a spouse or a partner, a significant other who's out of work right now. [5:18] Speaker C: Okay? [5:19] Alex Astley: Yep. Right. And so, you know, imagine two income household, both making $60,000 a year to maintain their expenses in their life and hopefully save a little for emergencies and save a little for retirement. And now one person is out of work, they may need to take a loan or a hardship out of distribution out of their 401k. So we're trying to temper the concerns and the fear around the markets with a real understanding of the concerns and fears that people have with respect to other areas of their financial life. [6:03] Speaker C: Cash flow. I got you, I gotcha. [6:05] Alex Astley: Yeah, for sure. [6:07] Speaker C: And thank God. I mean, we have no idea what the markets are going to do going forward. But yeah, it looked like we were falling off a cliff there for, for a while. And it kind of, for lack of a better term, stabilized a little bit. So I'm sure that helps. But yeah, I get what you're saying. You got to balance sure good old fashioned asset allocation understanding of the market with, you know, what kind of emergencies are they facing. You've always, you've done your money hack stuff. You've always worked really hard at helping people with what I would call, you know, just good old fashioned financial planning and stuff. You've talked with me before about an emergency fund. We've been as an industry talking about emergency funds for a long time. Probably makes a lot of sense now, right? [6:55] Alex Astley: Yeah. So in our workshops and one on one sessions, I mean, this is what the emergency fund is for, right? I mean, there are a lot of other scenarios where their emergency funds are important, but, you know, this is what it's for. And so we've been sharing with employees across the different organizations and companies that. Saving for emergencies are important. But again, you know, the kind of the hierarchy that we build and the hierarchy that we have is a little bit thrown out the window right now. [7:35] Speaker C: You're the first guest we've had that's Internet, Scott and Shoddy, but I love it because. Thank you. My wife just brought me a margarita. Thank you. [7:46] Speaker A: See, your wife brings you a margarita. Brooke just walked in and asked for the papers that she's printing out. I had to mute myself because she's sending print Shay's homework for next week. [7:56] Speaker C: That's what I love about this environment. This is not supposed to be like filtered in any way. This is, you take the good and the bad and the ugly of the background. I'm going to tell you guys, I went into the garage to get a cold beer before the show started and felt like the biggest loser because my wife was in there doing like a yoga class off the screen and I had to get past her to grab my beer. So she's being not grabbing a beer. No, those are, those are insane points. I want to bring up something I thought about with the emergency fund that is probably less in your area, Alex, but more in ours, which is we talk about participants having an emergency fund or employees, and I know your big clients do, but how about small business? I think there's a lot of small business now that are realizing, shit, I should have had an emergency fund. And maybe that's something that advisors could start to talk to them about. [8:50] Speaker A: Yeah, I'll say it's been interesting and I'm curious if Alex has had the same experience. I would say at least 50% of my conversations recently are transitioning from retirement related topics to business related topics. It goes from how to handle document changes to oh shit, I need to have a reserve fund as a business. Or how they're getting through sustainability planning. Like Alex was mentioning it, it completely drifts from the plan into well, geez, if I have someone here that kind of talks to a lot of different businesses, what are other people doing and how can I leverage your knowledge and help me? I'm seeing a lot of that right now. [9:25] Speaker C: I think if we can learn anything, we'd come out of this. And maybe advisors could talk to their small business clients a little more about having three, four, six months of cash flow to get through things like this.