August 2017

Inside this issue:


Recruit, Retain, Retire: A Fresh Take on Employee Benefits

The old mantra of offering a competitive benefits package to “recruit, retain, and reward” may need some updating. With an emerging emphasis on retirement savings and financial wellness, the “three Rs” may be evolving to “recruit, retain, and retire.”

An effective financial wellness program can increase an organization’s ability to help their workforce to retire on time. Financial wellness programs, for the most part, are focused on more holistic financial education, such as debt management, budgeting, and saving and spending strategies.

Retirement Success Requires Fiscal Fitness

Over the years, advisors and employers have improved overall retirement plan participation rates and perhaps deferral rates through automatic services; however, overall retirement readiness may not be improving. Why? It may be counterproductive to tell employees to save more, maximize the match, and take advantage of compounding if there are larger financial issues preventing them from doing so.

And even if employees are participating and saving at an adequate rate, that doesn’t necessarily mean they have the financial flexibility to cover a financial emergency. Often, retirement savings is the first to suffer when a financial crisis hits.

Unlike implementing services like reenrollment, where sponsors can see the immediate effects in the form of increased participation, the benefits reaped from implementing a financial wellness program will be realized over an extended period of time. Depending on the level of debt employees may carry, it may take a few years to make a significant impact on increased retirement savings.

It is also important to understand that financial wellness programs are not a participant-sold idea or service. They can be a very effective value add for the employer in the forms of increased retention, higher morale, longer tenure, and potential cost mitigation—that also can have an extremely positive impact on the financial and emotional state of the workforce.

This is a modified excerpt of T. Rowe Price’s article, “Recruit, Retain, Retire.”

1T. Rowe Price/Brightworks Partners, LLC, Plan Sponsor Pulse Survey, April 2016. Survey of 155 401(k) plan sponsors with assets of $100 million or more conducted online, March 22-April 1, 2016.


Because benchmarks are an important part of investment due diligence, a plan fiduciary should carefully consider their selection. Two of the most common are FTSE Russell1 and Standard & Poor’s2. The RPAG Scorecard3 used by Montgomery Retirement Plan Advisors to monitor plan investments utilizes Russell and here’s why:

  • Russell ranks each company in the investable universe according to its total market capitalization. The market cap is the primary tool to determine where a company belongs in the Russell Index. S&P uses a committee to make these decisions.
  • Russell indices adjust each company’s capitalization ranking to eliminate closely held shares that aren’t likely to be traded. Using this float adjustment methodology, Russell creates benchmarks that aims to accurately reflect the market.
  • Russell updates their indices’ holdings on a regular basis. Russell reconstitutes its indices annually, which assist in a truer representation of the market.
  • Russell indices objectively allow the market to determine the index composition according to clear and published rules. The market determines which companies are included, not the subjective vote of a selection committee.
1 Russell U.S. Indexes are the leading U.S. equity benchmarks for institutional investors. This broad range of U.S. indexes allow investors to track current and historical market performance by specific size, investment style and other market characteristics.
2Standard & Poor’s (S&P) is the world's leading index provider and the foremost source of independent credit ratings. Standard & Poor's has been providing financial market intelligence to decision makers for more than 150 years. S&P Global divisions include S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices and S&P Global Platts.
3The RPAG Scorecard System is a ranking of funds in approximately 30 asset classes to identify skillful managers utilizing quantitative and qualitative factors. Scores range from 1 to 10.


A partial plan termination occurs when 20 percent or more of a company’s employees are laid off in one year. Routine turnover during the year is generally not considered a partial plan termination.

To determine whether your turnover rate is routine, consider the following factors:

  • What was your turnover rate during other periods and what was the extent to which terminated employees were actually replaced?
  • Do the new employees perform the same functions as the previous employees? Do they have the same job classification or title? Do they have comparable compensation?

There is no requirement to notify the IRS of a partial plan termination, but all affected employees must be 100 percent vested in their account balance as of the date of the plan termination. If this hasn’t happened, a Voluntary Correction Program would be appropriate.

For more information on partial plan terminations, please contact your plan advisor.

No strategy assures a profit or protect against loss.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

For Plan Sponsor use only – Not for use with Participants or the General Public. This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. 

Montgomery Retirement Plan Advisors does not warrant and is not responsible for errors or omissions in the content of this newsletter.

Montgomery Retirement Plan Advisors offers investment advisory services through Independent Financial Partners, a Registered Investment Advisor. Independent Financial Partners and Montgomery Retirement Plan Advisors are separate entities.

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©2017 Montgomery Retirement Plan Advisors, All Rights Reserved.

Montgomery Retirement Plan Advisors offers investment advisory services through Independent Financial Partners, a Registered Investment Advisor. Independent Financial Partners and Montgomery Retirement Plan Advisors are separate entities.