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TRAK Software Helps Increase Participant's Deferrals
TRAK's Paycheck 1040 Analysis calculator helps clients find additional retirement contributions.
| Brian Heckert, CLU, ChFC, is owner and president of PENFlex Services, a corporate retirement plan services company that administers over 200 retirement plans that he has headed since 2001. Heckert is also owner and president of Financial Solutions Midwest, LLC, an independent financial advisory practice dedicated to providing objective strategic advice and services for individuals and businesses in south-central Illinois. |
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The Advisor Speaks
I started my financial services career in 1985. I focus primarily on retirement plan administration and business planning.
The Situation
When I did 401(k) enrollments, I saw that while people certainly needed guidance on investments, it was not their top-of-mind issue. Counseling people on asset allocation models really just did not hit most people where they really live.
I saw that the toughest part about a 401(k) plan was getting people to put enough money away. I believe that 90% of people are on a fixed income, that is, they have to spend nearly all of what they make. If they had the additional three to four percent to put into their plan they would be in good shape but many folks can only afford to do what they are doing now.
Small to medium sized companies are where the opportunity is for independent 401(k) advisers, but the employers understandably want help for their employees. With the Pension Protection Act of 2006, a greater onus will fall on the employer to make counseling available.
However, the basis point compensation structure of most plans does not make it readily feasible for most advisers to do one on one counseling.
One afternoon, I brought up the idea to participants of taking their refund check and redirecting that money to their retirement check, and their eyes lit up. Everyone's overwithholding, and once I served the idea of systematically investing that money rather than letting Uncle Sam hang onto it, I had a very relevant idea to serve to plan participants and plan sponsors.
All that was missing was a good tool for conveying this idea to plan sponsors and participants. While there are a lot of retirement calculators out there, most of them convey a lot of information but very little knowledge. Then I found out about TRAK.
The Solution
My plan is simple. I charge a fee for my services; let's say $1500. I charge this fee to the plan, not the employer. Employees in the plan are charged $50 against his or her individual plan, an annual fee to help them stay on track for retirement.
I approach employees in partnership with the employer. The employer issues a notice of a meeting where each employee in the plan can get individual professional counsel about their 401(k) plan and states the meeting date and time.
While the employees do not have to attend they usually do because they want to get their $50 worth of counsel. This is well targeted to the small to medium size population, up to at least 60 employees.
I then spend about 15 to 20 minutes with each employee and that is where TRAK comes in as an employee education tool.
I use TRAK's payroll analysis feature to show the participants how to increase their W-4 deductions so that they are no longer overwithholding. Putting the difference into their 401(k) plan can double or triple the participants' contribution to their plan.
TRAK allows me to instantly show participants what each withholding adjustment and contribution increase in their plan means to their take home pay as well as the size of their nest egg at retirement.
The total clarity with which TRAK helps me show employees their 401(k) plan options makes it easy for them to make decisions on the spot while I am with them.
That means TRAK software allows me to focus on the important thing - how to help each employee get more money into their plans.
The employer reaction has been very positive. I have had ten companies sign up with me because they know no one else is doing this. The TRAK software makes it easy to see benefits of putting more money away into the 401(k) plan.
I come back each year to see if each employee is on track to hit their retirement goal and suggest additional saving adjustments if they are not on track.
The Result
I am generating a significant fee-based recurring annual income through this method, so it has been very good for my practice. This is possible because the education program is very unique in the marketplace. No one else is doing this to tell employees how to save for retirement through their 401(k) program, especially in the small-to-medium size plan employee marketplace and the TRAK software makes it very easy to illustrate how this is possible.
The education plan and TRAK software allow me to affordably penetrate a marketplace and work with participants one on one.
It is a win-win-win system. If the employer puts in $1500, a truly small amount of money, an adviser like me can be compensated for his time and employees can get a meaningful measure of counsel for their retirement.
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Contact Edward Dressel at 503-831-1111 or dressel@TBInc.com.
Have your own TRAK success story? Share it with us by sending an email to TRAKStories@TBInc.com. Please include your contact information so we may give you a call.
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| What TRAK users are saying
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I've been in financial services over 20 years and never used a better program.
S. Brannon
Hartford Equity Sales Company | Our whole presentation is based on using TRAK.
C. Spina
Personalized Financial Service | TRAK Software has helped my clients understand that they can take control of their financial future.
John Davidson
NAIFA President |
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