HORAN provides legendary service, employee benefits consulting, wealth management and life insurance for both corporate and individual clients.
Since 1948, HORAN has served as a trusted advisor providing legendary service, support and partnership in employee benefits consulting, wealth management and life insurance for estate and business planning.
Our Specialities - Employee Benefits Consulting, Financial and Estate Planning, Life and Disability Insurance, Retirement Plan Consulting, Wealth Management, Medicare, Individual Health Benefits, Student insurance, Small Business, Social Security
2. Retirement Plan Consulting
We understand the critical need for a well-managed retirement
plan that maximizes the opportunity for employees to build a
future. Our dedicated team of retirement planning experts
provide insights rooted in industry best-practices throughout
each stage of the process, from plan design to ongoing plan
participant education and engagement.
From implementing plans that drive healthy savings among
employees to providing personalized advisory services to
individuals approaching retirement readiness, HORAN’s
dedicated team is with you every step of the way.
As advisor, our role is clear—we work with your committee,
your plan participants and your chosen recordkeeper to build a
well-designed and well-run plan that best meets the needs of
your workplace culture.
4. Retirement Meditation : Does the balanced fund
belong in an investment line-up?
Author: Paul A. Carl, CHSA, CPFA™Vice President, Retirement Plan Consulting,
Registered Representative
My parents’ families were small business owners, and my parents were incredibly
fiscally conservative. My dad especially, a third-generation stone masonry and
concrete construction business owner, would comment about how hard he worked to
earn money. He worked long hours and we took no family vacations. He literally
worked a 24/7/365 schedule. If he wasn’t on a job site or in the office, he was working
on the books at home or making calls, even on holidays.
As a result of being fiscally conservative and his exposure to the Great Depression,
he favored FDIC-insured certificates of deposit. Reflecting, I guess I intrinsically
absorbed his conservative fiscal nature. I chose a balanced mutual fund, comprised of
both stocks and bonds, as my first investment even though I was in my early twenties
with time on my side. Outside of my own personal investment, I don’t recall balanced
funds being used much in retirement plans at that time.
If I had to pinpoint when the balanced fund began to rise in popularity, I would guess it
coincided with the DOL’s originally published ERISA 404(c) relief for participant
directed investment choices. While that original relief called for diversification through
a stock, a fixed income, and a cash equivalent investment option, I do recall that plan
fiduciaries often adding a balanced fund as an extra option.
The balanced fund gave the plan participant the opportunity to invest in a pre-
allocated investment mix. Whether or not this investment mix was the right mix for
each individual participant, who knew? It was a solution, many argued, that mirrored
the pooled investment accounts of traditional defined benefit pension plans, money
purchase pension plans, and profit sharing-only plans. Each of these were invested in
a one-size-fits-all investment style. Most reflected the comfort of the plans’ primary
fiduciary, who was often the business owner.
It wasn’t too long before asset allocation funds based on risk gained in popularity.
These risk-based asset allocation funds in some cases were nearly identical to the
balanced fund, consisting of individual stocks and bonds allocated towards a specific
risk/return analysis. Some of the risk-based asset allocation funds took on a new look
through a fund-of-funds approach. Regardless, for plan fiduciaries, one of the main
fallacies of the balanced fund was addressed: the risk tolerance concerns specific to
individual participants. Yet, the balance fund persevered.
Today, retirement plan fiduciaries have a buffet of choices available for participants
who seek help allocating their investments. These range from the risk-based and age-
based asset allocation funds to managed models to the traditional balanced fund, and
more.
Does your plan offer the traditional balanced fund?
5.
6. Author: Paul A. Carl, CHSA, CPFA™Vice President, Retirement Plan
Consulting, Registered Representative
For the past several weeks, the Retirement Meditations have been exploring the
more popular options available as Qualified Default Investment Alternatives
(QDIAs) in participant-directed retirement plans. These have included the
traditional balanced fund as well as asset allocation funds that are risk-based and
age-based. Several Retirement Meditations also referenced managed models.
So, what are “managed models?”
Managed models are portfolios of investments actively managed by a professional
money manager. They are generally risk-based but some also have glide-paths. In
a participant-directed plan, the managed models often consist of only those
investment options offered to the participants. This is not exclusive, however.
Some managers incorporate investment funds that are not part of the core
investment lineup in creating their models. Often these investments may be a bit
more sophisticated than should be available to the retirement plan participant.
Unless there is a glide-path associated with the managed model, they are primarily
designed for participants who prefer the “do-it-for-me” approach to investing
retirement assets. Participants choosing managed models are, in effect, hiring
professional money management for their retirement assets. The management
comes with a price that is most often some percentage of the participant’s account
value. That price, by the way, is over and above the traditional fees associated with
the plan and its core investments. These fees can get quite expensive.
While managed models are professionally managed, they may be automated to an
extent through a “robo-advisor” program. Generally, “robo-advisor” programs rely
on asset allocation techniques built through some sophisticated software
technology and methodology. Other managed models are managed by an
investment advisor who is managing the model portfolios in a more traditional
manner.
Regardless, managed models are gaining in popularity as more and more
questions arise regarding the “simplicity” of target date funds and other asset
allocated investments.
Does your plan offer managed models?
Retirement Meditation : What are managed
models?
7.
8. Author: Paul A. Carl, CHSA, CPFA™Vice President, Retirement Plan Consulting,
Registered Representative
In last chapter we defined managed models and we concluded with the question – “Does
my plan offer managed models?”
This week’s Retirement Meditation asks whether a fiduciary should offer managed models
in their participant-directed plan.
A year ago, we were approached by a retirement plan committee to review their plan and
propose our advisory services. The plan had never had an advisor, the committee
preferring a bundled-recordkeeper-direct-approach.
Why the change of heart from the committee?
An employee had questioned why she was 100% invested in the plan’s cash equivalent
option. The committee investigation revealed that the participant had been using the
recordkeeper’s investment management services. The managed model algorithm had
effectively placed her into full stability of balance mode because of several important
factors including her age, her incredible retirement savings history, and her state of
financial retirement preparedness.
Many recordkeepers offer managed models, or the potential to provide managed models.
While this can be a great thing, fiduciaries should be actively aware of the details in and
around the managed model program.
Some of the starter questions:
Is the managed model the QDIA?
Is the managed model a backup QDIA, especially for participants who are entering the
twilight of their career (translation: those aged 50 and older)?
Do participants actively choose a managed account program for themselves?
Is the managed model portfolio advised by an affiliate of the recordkeeper, by an outside
third-party, or by the plan’s advisor?
Are there glidepaths associated with the managed model portfolios? If yes, are they the
correct glidepaths within DOL guidelines?
At the individual participant level, who decides which managed model portfolio is best and
how is that decision arrived at?
What is the fee for the managed model and who is paying that fee?
Managed model portfolios are often a welcome addition to a participant-directed retirement
plan. Just know that the retirement plan fiduciary should be as keenly aware of the nuances
as with all other matters involving the plan.
Which plan participants are using the managed model portfolios your plan is offering?
Retirement Meditation – Should my plan offer
managed models?
10. Author: Paul A. Carl, CHSA, CPFA™Vice President, Retirement Plan
Consulting, Registered Representative
This week I digress from the previous Retirement Meditation cadence. Why? My
fourth (of five children) graduated from college last week. In watching the
ceremonies, my mind drifted: How many new college graduates are thinking about
retirement? Or, at the very least, saving for retirement?
Getting an early start saving for retirement allows individuals to save methodically,
over a long period of time, with the incredible effect of compounding investment
returns. The anxiety of short-term investment markets becomes muted because
long-term, historically, most investment returns have outpaced inflation.
Employee education in the 1990’s through today has focused on retirement
savings accumulation. Examples abound of the 25-year-old who saves
immediately and the colleague who delays saving for 5- to 10-years or longer. In
each illustration, the person starting earliest has a higher account balance at age
65 than the colleague who delays saving. In fact, some of the illustrations go so far
as to have the early saver stop saving for retirement after 20-years. Even in these
illustrations, the early saver – thanks to the investment compounding effect – has a
higher account balance than the delayed saver. Granted, these are hypothetical
illustrations and results will vary. Regardless, here are some solid guidelines for
successful retirement savings:
Defer into your organization’s retirement plan as soon as you’re eligible.
If your organization offers a matching contribution, ensure that you are capturing all
of that employer match.
If you are covered by a high-deductible health plan, save into the health savings
account (HSA).
Do your best to not touch any of these funds you are saving. They carry incredible
tax benefits.
Invest smartly. Remember, if you’re willing to celebrate a +30% annualized return,
you are also indicating that you can accept a negative 30% annualized return.
Investment returns are based on risk. The higher the risk, the greater the potential
for incredible investment gains…and losses.
Let time be your friend.
Even if some or much of your youth has slipped away, still save. You’ll be
delighted with anything you have saved for your future.
When did you start saving for retirement?
Retirement Meditation - When Should I Start
Saving for Retirement?
11.
12. Author: Paul A. Carl, CHSA, CPFA™ Vice President, Retirement Plan
Consulting, Registered Representative
Naming a retirement plan beneficiary is simple, yet many participants do not have
a valid or a current designation on file. Without a valid beneficiary form, the
retirement account will most likely fall to probate with the governing state’s rules
ultimately determining the retirement beneficiary. Without a current designation
form on file, a deceased participant may transfer retirement plan assets to an
unintended beneficiary.
Below are several important considerations:
For qualified retirement plan participants who are married, the spouse must be the
100% primary beneficiary. If the spouse is not the named 100% primary
beneficiary, the spouse must consent to that fact in writing and that consent must
be witnessed by the plan administrator or a notary.
For unmarried participants of a qualified retirement plan, any person can be named
as primary beneficiary.
Selecting multiple primary beneficiaries is perfectly acceptable. However, if the
participant is married, the spouse must consent in writing. Example: Married
participant designates primary beneficiaries as spouse 50% and two children 25%
each. The spouse – even if the children belong to the spouse – must consent to
this designation in writing.
Any person(s) can be named as contingent beneficiary. The contingent beneficiary
is paid if the primary beneficiary has pre-deceased the participant.
When you encounter any major life change, evaluate your retirement plan
beneficiary designations. Marriages, divorces, children may require beneficiary
designation updates.
Seek appropriate professional assistance if you have complex estate matters, such
as high net worth or beneficiaries with special needs.
Designating one or more charities as beneficiary could reduce or eliminate taxes
that would otherwise be imposed on the retirement plan assets. Seek appropriate
professional assistance before naming one or more charities.
Be aware that IRA’s (and life insurance policies) have similar but different rules
than qualified retirement plans.
Without looking – Who is named as your primary beneficiary?
Retirement Meditation : Who should I name as the
beneficiary of my retirement plan account?
13.
14. About us
HORAN provides legendary service, employee benefits
consulting, wealth management and life insurance for both
corporate and individual clients.
For over 70 years, HORAN has served as a trusted advisor and
thorough planner in the areas of life insurance for estate and
business planning, employee benefits consulting and wealth
management.
With offices in Cincinnati, Columbus and Dayton, Ohio; and Ft.
Mitchell, Kentucky, HORAN serves both corporate and individual
clients in 48 states. HORAN has a strong regional presence with
a national footprint. We bring the best services, resources and
value to our clients through premier national partnerships with M
Financial Group, United Benefit Advisors and Retirement
Planning Advisory Group.
Our integrity, commitment to excellence and industry knowledge
are foundations upon which HORAN has built a reputation for
delivering high quality products and services.
HORAN
6805 Avery-Muirfield Dr a2
Dublin OH 43016
614-376-0901
https://horanassoc.com/
