Raymond Jimenez, president of Adventist Healthcare Retirement Plans, ties the success of Adventist’s revamped multiple employer plan to one single factor: the organization’s small band of in-house financial advisers.
“That’s the secret sauce,” said the winner of an Excellence & Innovation Award.
The staff of 10 advisers — all either certified financial planners or in the process of becoming CFPs — played a key role in educating participants about significant plan changes that started in 2017 with the streamlining of investment options and concluded in May with the implementation of a target-date fund with an embedded annuity — the BlackRock LifePath Paycheck fund — as the plan’s qualified default investment option.
“They’re out there meeting with participants face-to-face, doing new employee orientations and helping people,” Jimenez said of the financial advisers employed by AHRP.
Jimenez explained that the advisers — whom he refers to as financial educators — are paid a salary and don’t make commissions, and are themselves participants in the $11 billion plan.
“The participant can feel that there’s no underlying motive for a financial educator to be talking to them about what they should be doing, what they should be considering and what might be best for them,” Jimenez said. “They can feel comfortable knowing that this person is going to give them great advice.”
The advisers were critical in helping Adventist's 170,000 participants understand the BlackRock LifePath Paycheck fund, which AHRP made available after an exhaustive evaluation process.
AHRP had previously offered a “super complex” in-plan variable annuity that few participants used, Jimenez said.
The BlackRock product was relatively easy to understand and provided the guaranteed lifetime income that AHRP was seeking for its female-dominated workforce.
The BlackRock LifePath Paycheck target-date series acts like an ordinary target-date fund until participants hit age 55, at which point the fund allocates 10% of the balance to a new asset class called “lifetime income.” The allocation to lifetime income grows gradually to 30% by the time participants reach 65.
When participants are between the ages of 59½ and 71, they have the option to use the money set aside for lifetime income to purchase an annuity from insurers selected by BlackRock.
The new target-date fund with a built-in annuity would help “those concerned with outliving their savings,” Jimenez said, adding that the product would help participants “spend better” in retirement.
Jimenez explained that some people are so afraid of outliving their savings that they don’t spend as much as they should to live comfortably in retirement.
Some, he said, don’t tap their 401(k) plans, living instead on Social Security and any income they receive from pension plans.
In his experience working with other plans, Jimenez said many participants aren’t taking regular income streams from their 401(k) plans until they’re forced to through required minimum distributions.
“Guaranteed income changes a participant’s mindset and brings them some relief,” Jimenez said.
