Ohio plan bids farewell to retiring leader who never stopped learning

There was no farewell party when Keith Overly retired March 31 after nearly 17 years as executive director of the Ohio Public Employees Deferred Compensation Program, Columbus.

The program’s board of trustees wanted to hold an open house event at its mid-March meeting, but they had to hold the meeting by telephone as a concession to work restrictions caused by of the COVID-19 virus. Most of the headquarters staff was working from home, except for handful of who were working there on a rotating basis, including several who baked chocolate chip cookies — his favorite.

The absence of official recognition doesn’t obscure the role Mr, Overly played in building the plan as assets tripled, the number of participants rose by 41% and fees were cut by 65% as he capped a career while achieving an early personal goal.

“When I got out of college, I wanted to do something in public service,” he said. “I wanted something more than a paycheck.”

Between the time Mr. Overly started in October 2003 until his retirement, the 457 plan’s assets rose to $13.6 billion from $4.5 billion. The asset total was as high as $15.4 billion at year-end 2019.

Mr. Overly cut costs by adding collective investments trusts and separate accounts to augment and replace mutual funds. Now, more than half of the Ohio investment lineup is collective trusts and separate accounts. The average investment fee is now 27 basis points vs. 78 basis points due not only to the different investments but also to negotiations with investment managers for lower-fee share classes.

“Over the years, we put a greater focus on fee transparency,” he said. As plan assets rose, Mr. Overly used the greater scale to the participants’ advantage. During his tenure, the number of retirement accounts rose to 242,000 from 172,000.

Mr. Overly has been an eager student of behavioral finance, putting in practice some of the ideas developed by Richard Thaler, professor of behavioral science and economics at the University of Chicago Booth School of Business; Punam Keller, deputy dean and professor of management at Dartmouth College’s Tuck School of Business; and Shlomo Benartzi, professor of behavioral decision-making at the UCLA Anderson School of Management.

Attending a luncheon in 2006 at which Mr. Thaler discussed “smart auto escalation,” Mr. Overly recalled: “A lightbulb went off for me. This got me interested in behavioral finance.”

He subsequently met with Mr. Thaler and, in 2007, instituted an auto-escalation feature in the plan. At first, the plan used an opt-in strategy, but he changed it in 2015 to an opt-out strategy. The plan also provided an “easy enroll feature” — a simple form that takes one minute to fill out, directing enrollees to the qualified default investment alternative — a target-date series — but also offering suggestions so the participants can make their own investment choices.

Ms. Keller offered suggestions on how to improve the plan’s enrollment form via her strategy of enhanced active choice. Mr. Benartzi conducted a behavioral finance audit of the program.

Mr. Overly said he has benefited not only from academic experts but also from mentors in some of his early jobs, most notably two top finance executives from the former Upjohn Co. who restructured Kalamazoo’s public retirement system and led the investment management committee on a voluntary basis.

Mr. Overly also encountered what might be termed an anti-mentor. When he enrolled in Wittenberg University, Springfield, Ohio, as an undergraduate in 1970, students were assigned an adviser during orientation and Mr. Overly’s adviser was a member of the university business department.

“He said ‘I want you to be a business major,’” Mr. Overly recalled. “He didn’t ask me what I wanted.”

Mr. Overly left the meeting — “I never saw him again” — and became a political science major and, later, earned a masters in public administration from the University of Dayton in 1983.

Upon graduation from Wittenberg in 1974, Mr. Overly worked for a local home builder for several months, a skill, he said, that will come handy in one of his post-retirement goals of assisting Habitat for Humanity.

After graduating, he started as a trainee, then deputy auditor and then deputy finance director in Springfield, Ohio. He moved on to become finance director in Urbana, Ill., and, later, finance director in Springfield.

Mr. Overly then held several finance and management jobs in Kalamazoo, Mich. He was Kalamazoo’s deputy city manager when he returned to Ohio — he was born in the central Ohio city of Marysville — to take the 457 plan job.

As Mr. Overly took jobs with greater scope and responsibility, he became more interested in retirement issues especially during his work at Kalamazoo when he participated in negotiations with unions and held multiple meetings with retirees. “I got a better understanding of a fixed income,” he said. “I enjoyed the pension side and the personal side of things.”

In his final weeks on the job, the COVID-19 virus forced executives to take action to protect employee health while maintaining a continuity of service to participants.

Mr. Overly said the program had several disaster response policies in place, in part due to the global financial crisis of 2008-2009, but those policies focused on what would happen if a fire forced evacuation of the office. Employees have had the opportunity to work from home in the past, but “we didn’t anticipate all would work from home,” he said.

“The management team spent many hours working out the details and logistics to accommodate working from home,” he added. “All meetings last week were by Skype.”

Some of the Ohio 457 plan’s financial communication for the coronavirus outbreak is similar to that of the response in 2008-2009 — encouraging people to consider the long term for investing, sending articles via email on managing investments and on market volatility. Because the program had to close its service center several weeks ago, officials encouraged participants to make online transactions rather than through phone calls.

The service center is the place where participants could drop off forms or meet with a retirement planning specialist. Staff members also took calls from the service center. Eventually, “most of the service center staff was ordered to work from home where they could take calls and access participant accounts from a secure log-in,” Mr. Overly explained.

The biggest differences between the two crises, he said, was that most participants in 2008-2009 were asking about investments while most today are asking about making temporary withdrawals to cover expenses if they are furloughed or laid off. The 457 program covers all public employees including those at the state, cities, counties, universities, townships, villages, schools and special districts.

Mr. Overly had to work from home, too, returning to the office on March 31 to complete his retirement paperwork. “I hoped to have a chance to say goodbye to my staff and the service center staff in person, but I had to do so via email, with the exception of five or six staff members who were at the office,” he said. “Still, no hugs or handshakes.”

The Ohio program’s board of trustees still hasn’t chosen a permanent successor, although it may make the choice next week. Until then, Paul Miller, assistant director of finance, is the interim executive director.

With his post-retirement travel plans temporarily on hold, Mr. Overly said he will be glad to help the new director: “I’ll be here if they need me.”