Business Innovators Radio - Interview with Shaun Clearwater, with Full Focus Financial Discussing Enhancing a Company Retirement Plan

Episode Date: March 18, 2024

Shaun’s start in the financial services industry came from his desire to share both standard and advanced financial strategies with middle America across the kitchen table. Since his start in 2004 he’s shifted his focus to the 401(k) space where it can have a greater impact as he can impart knowledge broadly and efficiently. Shaun is fortunate to be surrounded by his 3 amazing daughters and loves to enjoy a glass of red wine with his beautiful wife.Learn More: http://www.fullfocusfinancial.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-shaun-clearwater-with-full-focus-financial-discussing-enhancing-a-company-retirement-plan

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with the Sean Clearwater with full focus financial and we'll be talking about enhancing a company retirement plan. Sean, welcome back to the program. Thank you, Mike. Appreciate being here. You're welcome. You know, we've been talking in our little series about how you help optimize and point out issues in retirement plans and how you should manage them, some of those key metrics that way. Well, now that we've pointed out some of those things, what can you do to optimize? Because, you know, you can't just point it out and say, that's a problem here and this is a problem and this is a problem and then let it go. So get us started with the mindset of once you identify these, what are, are you watching for to start enhancing and optimizing that retirement plan?

Sure. Yeah, I think we could spend a day talking about all this topics. I'll try to summarize it to the ones I think are most valuable to everyone out there. You know, education is one. So in the area of participation, you know, how many people are contributing to a retirement plan that's being offered and how well they participate and how much they contribute has a lot to do with education that's provided to them. And for people that are just getting started, I mean, I've run into accountants and other professionals that have never heard of the savers credit. It's an opportunity for people that think that they can't afford to set money aside to actually start putting money into their retirement plan. You can get credit back on your taxes for putting money away.

And that's beyond just a tax deduction. You actually are getting a credit in some form. So there's opportunities for people to save money and have it not actually affect their net income, which is just mind-blank. flowing that more people aren't taking advantage of it. But just like most things, if they don't know about it, how are they supposed to take advantage of it? So it's an education component there. Let's see.

So that's one. Let's go, let's see. You said, what are some of the other key opportunities for enhancing? So education, improved performance. And then bringing administrative fees in line with, you know, averages, if not better than that. And so one of the things that we identify are excessive fees. and where they come from and where they can be trimmed back. And so some of those come from just minor tweaks and adjustments to the fund lineup.

So the investment options that are on the platform, you know, which one is there and why and which share class and all these different things that most don't know they have options in. And so I'm able to often do an analysis and find an opportunity to change from one thing to another and save significant amounts of fees and not have an effect at all on how that money is invested. And that's just ridiculous that there are even choices out there. But because of the way that this environment has changed because of technology and whatnot, you know, we've seen cases years ago where these plans were set up. And at the time, you know, there were only certain options.

And so they have those options and those options stay. And they don't go away in the marketplace because there's money in them. So you can't take something out unless there's nothing left. And so there's all this evolution and improvement and lower costs that are that are available out there. And so just making people aware of the small tweaks that they can make, that can really have significant effects on bringing the fee structure in line with averages and even better and more cases than not. And then the last thing I'll mention is just helping these companies that have large employer-sponsored plans, large retirement plans, they typically take a lot of time and energy away from the human resources team, from the HR team. And so we're able to reduce fees, improve education, and offload a lot of the day-to-day

activities out of the HR department and over to our team where we can manage all of this for them. And so it really allows them to stay focused on their core business, which is really valuable to the company. These HR teams are often stretched really thin. And so asking them to handle engagement. with people that just got hired and helping them enroll, dealing with hardships and loan requests and all of the things that come along with having a large company and a retirement plan, we can help eliminate all of that noise from the HR team and allow them to stay focused on the core business.

You know, I would suspect that this is accurate, so correct me if I'm wrong. But if a large company has, you know, someone like yourself, take a look at their company retirement plan, they typically are having an external third party currently manage it. So if you're able to point out opportunities to improve and saving that fee structure, now all of a sudden they're getting better service, better quality, and saving a good amount of money. So it's not like, oh, well, you know, Sean's a company is going to cost us so much more. It's probably with this fee structure you're looking at, you're locating opportunities to actually drop the cost, right? That's correct. It's kind of one of those sounds too good to be true type scenarios where it's a win, win, win all the way around the table. I can help them reduce their fees, improve their plan and engage a service that's more comprehensive than what they currently are likely using. The struggle is that we've got these retirement plans are so complicated. You've got all these different roles that are assigned and available and all these different cooks in the kitchen. And a lot of times you've got a business owner that's trying to manage.

all these different subcontractors that handle all these different areas. And they don't know who's supposed to be doing what. And so because that's not their core business. You know, that's not what they do for living. And so when we're able to come in and offer kind of that overarching executive chef type role where we can manage the full menu and everything that goes on inside of there, it's really a breath of fresh air for them to not have to worry about all of that stuff. And we can give them really clean update reports that show them about,

where they were and where they are now, and it really give them kind of mind-blowing confidence and comfort that they don't have to worry about this anymore, that they don't have to worry about future potential liability, like some of these large organizations that are household names, that are in the news because they were improperly managed. So we can take all that. That's huge. It is. You know, you mentioned HR, and I want to dive in just to touch right there because I can only imagine that there is HR people listening to this going, let me just show you my job description.

It's like three reams of paper long, right? And if you could offload some of these items you're talking about, that is, it reminds me of the concept of opportunity cost. If an HR professional is working on these things you're talking about, then they are not able to work on the other things that are highly necessary in their job. And so if you're able to offload that, their job satisfaction goes up dramatically. That's wonderful. and more important work is getting done where their focus should be on. Yeah, and that's a really hard thing to quantify because a lot of the business owners don't even realize that that's an option.

They just assume that this is some added energy that their HR team needs to put in just because it's something that they have to do. And so bringing to light the fact that they have an alternative, there's an option out there is really empowering. So, yeah, I think you can't even quantify the improvement that would come from being able to offload a lot of those day-to-day tasks. Yep. So, you know, we touched on before the fiduciary responsibility, which is this nebulous thing,

which basically says there's a lot of stuff that you need to be aware of. And if everything isn't just exactly the way it needs to be, there could be some trickle up effect that of impacts the company or some of the officers. So having that third party take that responsibility is a huge benefit. But we've been talking about saving money on fees and eliminating, you know, day-to-day management. Can you touch on like some specifics, like how much are you able to save? Like, you know, we can reduce fees, but is there a number that someone could kind of think, is there a range that you can estimate there? Yeah. So there is a common range that we've been

able to identify with all of our clients over the years. We've been able to reduce overall plan management fees on the order of 32 to 65 percent from where they're currently at. So we're able to save them notable amounts of money. And almost all of that is money that's going back to the participants because everybody's having to pay a proportional amount of all of these administrative costs more often than not. And so that can make a significant difference, especially as time goes on to the ability for these people to accumulate wealth that they've worked really hard to set aside and make a part of their retirement plans. And so being able to save these plans, 32 to 65 percent is significant. eliminating up to 99% of the day-to-day management is significant.

All these little things can really add up. And eliminating the legal liability, I don't even know if I could try to put a number one. The drain that going through a court battle would have on hiring attorneys and just the energy that it would take, it could put somebody out of business in reality. So just now, when you hear the legal and things like that,

that could be, you know, viewed as like a scare tactic. So how potentially, how potentially prevalent is that? Is that something that's getting more and more, you know, in the news? Or is it like a one-off and like, we're just going to bang that drum and go, you could be in trouble. But how prevalent is that? Good question. I encourage, you know, anybody that has time to sit in front of a web browser to just Google it. You know, there's some big names. Trader Joe's is a large grocery chain out here in California. and I think they have other locations across the country as well,

but they've been in the news for mismanagement. Target date funds tend to have a lot of bad wraps in the industry and in these retirement plans. So I think the larger the plan gets, the more prevalent they become just because there's more money for the litigants to go after. That doesn't mean that it's any less important or potential for smaller plans. but the bigger the plan gets, the more likely it becomes. So taking the steps to put a plan on a healthy track will eliminate the probability of that ever becoming an issue down the road. If it ever did come up, it would be an easy plan or an easy legal battle to support because all of the eyes are dotted and T's are crossed. And there's numerous support in other individuals and organizations that would be legally responsible for fighting anything.

came up because the plan sponsor, the owner of the company has eliminated themselves from the legal responsibility by not signing the 5500 form anymore. And we can talk in numerous details in that regard. But we'll pause there. You know, I think when you start hearing some of these things like it sounds too good to be true, like you've mentioned, when you hear someone go, well, let me just take a peek. Let me see what you've got now and I'll give you a comparison. And what's needed to produce that comparison proposal? Because is it like so cumbersome? You've got to sit in my conference room for six weeks and then here's this proposal.

But what is that process? What does that look like? Great question. So there's a lot of misconceptions on what it takes to improve a retirement plan. A lot of the situations that we find ourselves in, we're able to provide a lot of guidance and education without them having to give us any information at all because of so much of it being publicly available. I know I've talked on previous episodes about, you know, how anybody that wants to look up information about a retirement plan can do so

because there's a publicly made available database. But so I'm able to do a lot of that work ahead of time before we even, you know, have a conversation with a plan sponsor or business owner. But when we get to the point where I want to be able to really show them side by side, where are they now, where could they be, or where would we recommend they consider making adjustments? in order to do that, I only need two pieces of information. And they should be readily available.

If they're not, it's another indication that they're not getting the proper support and guidance that they should be giving. But there's two things. One's an annual fee disclosure. It's referred to as a 408B2. And the other one is an adoption agreement. So the adoption agreement is what, you know, the plan document that identifies all the roles and responsibilities.

It just, and that hand-in-hand with the annual fee disclosure enables me to eliminate any of the assumptions that I would have made from just the publicly made available information. And so inside of a 15-minute conversation with this information made available to me beforehand, I can show someone side by side exactly where they're at, where the gaps and the holes are, and allow them to be in the dry receipt to truly understand where all of the money is being spent and what services or value they're getting for the money that they're spending. I really don't have a problem with people paying excessive fees if they're getting something for it. it's when people are paying excessive fees and falling short in rate of return and falling short in

participation and and and and so if there's an exchange you know you can justify a fee but i'm telling you it is happening time and time again with every business owner that we sit down with there are wasted dollars being spent and and no exchange of value and so if i can uh you know enable someone to to make decisions and improve where they're at whether they engage us with their with our services or not, it'll empower them to be educated and made aware of what their rights and what their options are. And so it's really comforting to be able to put them in that kind of position. You know, you pointed out several large areas to save money, provide higher value to the employees, which provides a lot of benefits. And then now to make this comparison, a couple pieces of paper that

is very low intrusive. That sounds great. Now let's say that the business owner says this looks excellent. please let's move forward. Well, guess what? In my mind, I'm listening to you saying this and I'm thinking, okay, I know how hard it is to change cell phone plans or change health plans. What is the brain damage and the stress in, you know, changing over and making all of this happen once you've shown the comparison. And even though they see the wonderful benefits, is there going to be a lot of stress in

that changeover? Yeah, fortunately, I have a simple answer to that. And it's minimal to no time or energy needed at all. And there are, you know, I can go into details of why it were able to make it so simple. But it's, it's honestly as simple as signing a piece of paper. It enables us to take control of improving all of that at the discretion and at the direction of the plan sponsor, so the business owner. So they can decide what they do or don't want us to do.

They don't lose any control, but they eliminate all of the risk and worry and hassle of making all of the improvements because we can do them on their behalf. So it's really simple. I mean, inside of 30 to 60 days with signing of a piece of paper, we can start to put all the wheels in motion to make all the improvements that we would have identified and proposed and be able to show them real life data on how things have improved. And they should be able to feel it at some point in the future as, you know, they start to get a point of contact that's a real human that will actually come into their office if they want us to and, you know, meet with the employees and provide the guidance that they deserve the ability to have access to.

And control is a really big word that I keep in on because you don't want to feel like, okay, it was easy. We signed that piece of paper and then all of a sudden here's all these decisions being made and it's not the ones we would have made. So talk a little bit about that control. Yeah. Thanks for let me expand on that a little bit more. So, you know, there is a misconception that, you know, by not having to.

do all of the work, that they lose the ability to be aware of or actually have the ability to direct traffic. So we enable our clients, our business owners to have as much or as little involvement as they'd like. And so we always want to give them regular updates of things that are going on, but they can engage at any degree that they feel the need or desire to do so. So if they want to be involved and be in tandem with us as we make these improvements and adjustments to their plan, we welcome that. But if they, you know, want to disengage and allow us to take the wheel, we're happy to do that as well. So it's a scenario where they have immense responsibilities, a laundry list of them, upwards of two dozen fiduciary responsibilities when they sign on the dotted line

on that plan. And we eliminate all of that and drop it down to just two responsibilities that they have. They need to make sure that we have accurate census data, which is information about their company and their participants. And they need to make sure that they send the money to the plan on time. Those are the only two things that they have to do after they engage services with us. So we can really eliminate all of the hassle and pain and suffering that they've likely endured. Even when they have existing professionals, you know, if they've got third party administrators, they already have advisors and, you know, these brokerage houses and custodians. They've got all these different professionals involved with their plan. but they likely have to put a lot of energy into it the way it stands.

I see it all the time. And so we can really give them a breath of fresh air and allow them to severely limit the amount of unnecessary energy they have to exert on these plans and reduce it down notably. And that's what we love to be able to do. I love it. Well, Sean, let's wrap up with this thought. Is there an example or a case study that you can share with without mentioning names or anything? but what's a before and after look, whether it's saving money or getting better investment rates of return or engagement? What does that look like as far as before and after?

Sure. So we often find that the medical environment, the medical facilities, medical care providers and whatnot have a lot of struggles with turnover. And so they have a lot of unnecessary weight on their plan and burden with terminated employees that are still on. the plan. They also have a lot of complicated infrastructure. So medical facilities tend to have a lot of highly paid employees that need different places to put their money. And so they've got, you know, a 401k, a 403B, and a 457 and a profit sharing plan. And all these things need to harmonize to work together effectively for a quality retirement plan benefit for these participants. And that can be really complicated and convoluted to manage. And so what we've been able to do with a lot of the

medical providers that we work with is help simplify their plan and reduce unnecessary waste and burden and hassle. And that really streamlines everything, not only for their existing employees, but also from them from an administrative standpoint. It's almost impossible to quantify the value that comes from simplification. And less is more. I'm sure you've heard that phrase. And so that's a reality. And we can really bring that to the table in particular with medical health care professionals. I love it. Well, as always, Sean, I really appreciate your insights. And if someone is interested in learning how you can help them enhance and optimize their retirement plan, what's the best way someone can reach out and learn more? Awesome. Yeah, I think the best way to do that is to go to our website at full focus financial and click around on different things that you find of interest. And in particular, you know, the contact us button is always the simplest way to make sure that we can get in touch with you and have a relevant conversation to your situation. and let us show you what we can do.

Excellent. Well, Sean, thank you so much for coming back on. It's been a real pleasure talking with you again. Yes, sir. Thank you. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www.com.