Times are changing and retirement plan documents and plans need to change with the times. We will be reviewing current and effective plan design strategies to enhance the retirement readiness of your employees and review best practices for plan compliance.

1. Thrive. Grow. Achieve.
Retirement Readiness:
Evaluating plan health to
define success
Ed Gimenez, CFP®, AIF®
September 20th, 2016

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POP QUIZ…

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AGENDA
 Industry trends
 The need for benchmarking
 Review of the traditional plan health metrics
 The new (and improved) way to report on plan health
 A call to action

4. Securities offered through LPL Financial, Member FINRA/SIPC.
INDUSTRY TRENDS
Participant Readiness: Current State
According to the Employee Benefits Research Institute’s (EBRI) retirement readiness
ratings in 2010, the percentage of participants “at risk” of having insufficient income:*
*For basic retirement expenses and uninsured health costs.
Generation X
ages 36-45
44.5%
Late Boomers
ages 46-55
43.7%
Early Boomers
ages 56-62
47.2%

5. Securities offered through LPL Financial, Member FINRA/SIPC.
THE NEED FOR BENCHMARKING
Plan Participation Benchmarking
 A critical measure of a successful retirement plan is a healthy
participation rate. It is important to understand what drives
participant behavior, helping you increase both participation rates
and increased contribution to the plan.
 Key metrics include:
– The participation rate in your plan among eligible employees
– The percentage of active participants deferring enough of their salary
to take full advantage of the employer match offered
– The average number of investment options held by plan participants

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THE NEED FOR BENCHMARKING
Plan Design Benchmarking
 It is important to keep up with new features to ensure your plan
stays competitive, and addresses the needs of your participants.
Comparing your plan’s features with the industry benchmark
averages provides a basis for comparison.
 Key metrics include:
– Do you provide a match?
– If yes, how does the match your company provides compare to industry
benchmarks?
– Are you using automatic-enrollment?
– Have you established a Qualified Default Investment Alternative (QDIA)?
– How many investment options are available to your participants in the plan?

7. Securities offered through LPL Financial, Member FINRA/SIPC.
THE NEED FOR BENCHMARKING
Plan Review Benchmarking
 It is imperative for plan sponsors to implement a well-documented
process for reviewing plan features. Plan sponsors are ultimately
responsible for the oversight of the plan.
 Partnering with a financial advisor who understands the
retirement plan space can help you stay on course.
 Key metrics include:
– How often you review the investment options available in the plan
– How often you review the plan’s total costs and fees
– How often you evaluate your plan’s current service providers
– Implementation/review of an investment committee for your plan
– Design/implement/review an Investment Policy Statement (IPS)
– Utilizing the services of a financial advisor

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BY THE NUMBERS
30%Participation Rate
24%Not Maximizing Employer
Match
25%Do Not Offer Employer Match
70%Do Not Use Auto Enrollment
21Investment Options
Source: PLANSPONSOR Defined Contribution Survey, 2010.
The average rate of eligible employees NOT participating in a
defined contribution plan being offered by their employer
Over half the plans surveyed reported that nearly 24% of
active participants DO NOT defer enough salary to take full
advantage of the employer match offered
25% of plans DO NOT offer either an employer match or non-
elective contribution
Nearly 70% of plans DO NOT automatically enroll eligible
employees into the plan
Across all industries, plans offer an average of 21
investment options

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ON AN ANNUAL BASIS
Source: PLANSPONSOR Defined Contribution Survey, 2010.
Across all industries

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TRADITIONAL METRICS

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WHAT’S IMPORTANT?
 The #1 goal is a dignified retirement for every participant
 One key to retirement dignity is having enough money
 Replacement ratio is the benchmark we use to determine
likelihood of a dignified retirement
 Participation rate, account balance and investment performance
data points give us insight into desirable plan design attributes
 Plan fees help determine if investment performance is likely to
deliver sufficient results to arrive at a dignified retirement

12. Securities offered through LPL Financial, Member FINRA/SIPC.
NEW EVALUATION TECHNIQUES
Funding Metrics Investment Metrics Participant Metrics
Focusing on average
deferral rates and
account balances
From:
Focusing on the number
of employees
participating in the plan
From:
Focusing on the number
of participants that are
invested in a particular
investment option
From:
Focusing on the average
income replacement
ratio
To:
Focusing on the number
of participants that are
on track to meet their
retirement goals based
on income replacement
benchmarks
To:
Focusing on whether
participants are properly
diversified to pursue
income replacement
targets and tolerance
for risk
To:

13. Securities offered through LPL Financial, Member FINRA/SIPC.
A CALL TO ACTION
The Retirement Plan Health Check Report
 It is essential that an accurate measurement of a plan’s
value exists
 This comprehensive and sophisticated program will provide
qualitative plan statistics in a simple, straightforward format
 The Retirement Plan Health Check report allows advisors to
report on the "Health" of a plan by presenting key plan attributes
compared to a valid peer group

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THE RETIREMENT PLAN HEALTH CHECK
 Historic and age group based plan participation,
deferral rates and average account balances
 Highly and non-highly compensated employee statistics
 Age group segmented and total participant
contribution levels
 Current and historic portfolio diversification data
shown in total and divided by age groups
 Aggregate plan performance
 Plan fees
 Ability to save historical results regardless of
plan provider

15. Securities offered through LPL Financial, Member FINRA/SIPC.
THANK YOU!
Ed Gimenez, CFP®, AIF®, RPA
Direct: 240-403-2563
E-mail: ed@raffaretirement.com