Mastering Fiduciary Responsibility and Innovative Retirement Planning

In my latest podcast guest appearance, I chatted with Dr. Christopher H. Loo, host of the Financial Freedom podcast, where he talks about how physicians can achieve financial, emotional, time, and location freedom. While his podcast is aimed at doctors, pretty much any business owner can benefit from our conversation - we talked about fiduciary responsibility, innovations in retirement plans, and how to increase employee participation (especially in younger generations). You can watch our discussion on YouTube, listen on Apple or Spotify, or read the transcript below. Enjoy!

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Dr. Christopher H. Loo (01:00):

Hey guys, welcome to the podcast, and I've got Courtenay Shipley today coming out of DC, and she's founder of Retirement Planology. We'll hear more about what she does, but she teaches clients how to use their retirement plan to strategically grow their company and attract the best, take care of their people, take care of the plan, and they navigate the regulations, the fiduciary and advocate. And it'll be really interesting to hear how her company can help the audience, and I'm really excited to dive into the conversation. So Courtenay, welcome.

Courtenay Shipley (01:38):

Thank you. I'm really excited to be here.

Dr. Christopher H. Loo (01:40):

Appreciate it. Yeah, so start off by talking about you, your background, how you got started, and we'll dive right into the questions.

Courtenay Shipley (01:49):

Sure. I came out of college and I needed a job because I was a music performance major, and I fell into the retirement plan world and fell in love with it…the investing side of things and helping people make sense of something that's very abstract…the concept of retiring someday and being able to understand more about investing and what that means for them and eventually helping companies construct the right type of plan for their employees so that they can help them have a better life in the future.

Dr. Christopher H. Loo (02:22):

Interesting…diving into it. So one thing I was talking about is this, we talked…we introduced fiduciary responsibility and navigating it. And what does fiduciary responsibility mean for business when it comes to retirement plans, and how do you help clients manage this?

Courtenay Shipley (02:40):

Yeah, so retirement plans, if they are a 401k or a 403b for a nonprofit, they're all governed under this huge law called the Employee Retirement Income Security Act. And one of the things that it says is that the people who are responsible for managing the plan, they serve in a fiduciary capacity. So they're putting their interests in the backseat, they're putting the interests of the people that they're serving ahead of their own in order to make sure that it's the highest standard of law and to keep assets safe. And so when it comes to fiduciary responsibility, it's really important to understand the laws that go around these types of retirement plans, what your responsibilities are, what your task list needs to look like, how to invest the assets or offer the different investment options to your employees and just generally stay out of trouble with the Department of Labor and IRS. It's just mired with rules and responsibilities, so we help with the heavy lifting on that.

Dr. Christopher H. Loo (03:40):

The one thing you never mess with is Uncle Sam. What's interesting is…with retirement plan innovations and with your background in institutional investment consulting, how have you seen retirement plans evolve and what innovations are you excited about that will benefit employees and businesses?

Courtenay Shipley (03:58):

I think starting out, the retirement plan, the concept of a 401k plan or other small business or any type of business retirement plan, for that matter, was an afterthought. And I think it's become more important as time has gone on and it's something that employees are regularly asking for. It's something that the states are now mandating in many cases; I think we're up to 13, maybe more than that at this point, states that are going to require small businesses to have or to sponsor a retirement plan for their employees. So that's one innovation that I think is pretty great from a legislative standpoint because it helps get more Americans saving for their future, to be able to have the luxury of deciding how they spend their time later in life, and they don't have to work until they die. But it's also a really interesting thing for owners as well, for business owners, because they get the tax benefits that go along with providing this benefit to their employees and they also get to benefit themselves in the process.

As we all know, most of us invest all of our money early on into our business and forget about retirement until later. We realize, oh, I should be saving for that, too. So being able to offer something that helps yourself but also helps your employees, your recruiting, your retention, getting the good talent and keeping it in the door is really important. And so along those lines, I think that companies are taking a more robust stand on thinking about their employees and what really serves them. That comes from people who may have a different background from the diversity, equity, inclusion, belonging movement and how they perceive retirement and retirement savings and investing and just making sure that everybody's included. And I think that's a really nice innovation that we're seeing going forward.

Dr. Christopher H. Loo (05:47):

Yeah, it was really interesting because a lot of the financial innovation…it was slow, inefficient and boxed out a lot of people. So you mentioned retaining top talent. So how can…strategically use these plans to retain top talent while ensuring the financial wellness of their employees?

Courtenay Shipley (06:10):

So the retirement plan can be structured in a way that can reward top talent without going into the weeds on how this works with all the rules and regulations that go with it. Basically, if you're trying to funnel profits into your employee's pockets, one very tax-efficient way to do it is through the retirement plan. Now that may not feel as good to the employees. They may say, oh, I've got this money, but I can't use it right now - it's for the future. However, that's an important part of a compensation package. And so when you're thinking about, how do I retain those really important employees, that should be part of it. That should be something that you're thinking about as well as the health insurance and all the other benefits that you offer, with the retirement plan in particular, because it is a very tax-efficient way to do it. There's some different plan designs that you can target certain groups of people or certain age groups in order to try to get some more benefits to them in order to make them a little bit stickier in the long run. So that would be the main way, is really getting creative with that plan design, and that is a much longer podcast than what we have time for today.

Dr. Christopher H. Loo (07:19):

Yeah, yeah. We're just whetting the audience's appetite. How do you, especially with changing workplace demographics, and a lot of people are work from home and a lot of people are solopreneurs, a lot of people that are independent contractors…this concept of retirement plan does not resonate with them. And why would they lock up their money for 60 years? So how do you address this portion through your service or is it only through companies? Describe that.

Courtenay Shipley (07:51):

Yeah, we mainly work with small to medium-sized businesses, so think 10 employees or more. But just to address your question because I know your audience is very wide, the first place to start when thinking about what your financial plan looks like really ought to be your financial advisor. And so if you are a solopreneur or you're somebody who has a really small company, just talking to your financial planner and saying, what makes sense for me, that's a really good place to start because when you think about how you as a business owner will plan for the day that you don't want to have to show up anymore, you have your business, which is an asset. Maybe you can sell it, maybe somebody will pay for it, that would be good. You have some savings that you're going to probably engage in on your own so you can save yourself into retirement and otherwise, what's your other option?

So are you going to have an asset that continues to give you money in the long run? Thinking about how all these things line up, what this looks like in the future, just so you don't have to work, just…it's for options. We just want options. But that's a great place to start. And also your accountant can be a good one, too, to say, hey, you've got a profits problem or you can restructure this better. That's a great place to start. And really that works for any size business…what are we trying to do here? What is the owner trying to accomplish? And then how do we also build this out to be something that makes sense for the employees on a benefits level?

Dr. Christopher H. Loo (09:11):

Interesting. There are so many questions because the concept of retirement and retirement plans, 401ks...what's interesting is some companies, they offer these retirement plans, but some participants, they don't participate in it. What are some reasons that they don't participate in it? And how can you encourage employees to participate based on informed and empowered smart financial decisions?

Courtenay Shipley (09:37):

So that is always going to be a problem. There will always be somebody who is not participating. Now the question is why, and I would say the most common reason that I hear is “I can't afford it.” And usually that's because you're asking a person to make a decision to part with money and it's not going to be spent in a way that seems fun right now. What helps with that is automatic enrollment. So when a person signs on and becomes an employee, you automatically default them into the plan unless they decide to opt out. And it's amazing that flipping the inertia on its head, instead of, oh yeah, I forgot to fill out my form, or I wasn't sure if I could afford that, so I just never went back and revisited it. All of these barriers in the way. But if you flip that around on its head and you say you're automatically enrolled in the plan, you can opt out if you want to, but here are the action steps you have to take in order to opt out, that really helps people get the nudge they need most of the time. And for the younger generations who appreciate being nudged in the right direction, what is everyone else doing? What am I supposed to do? They are the ones who embrace this the most.

Dr. Christopher H. Loo (10:42):

Another tangential question is how do you see Gen Z approaching this concept of retirement planning? Because a lot of Gen Z, again, again, they don't participate or they feel like it's too slow. So how can companies prepare for these shifts for the Gen Z and Gen Alpha generations?

Courtenay Shipley (11:02):

That's a great question. I don't think we know the full answer to that yet, but I will say that giving folks the resource to be able to speak with a person about what all this stuff means just to sort out, what is this retirement plan, what might I use it for? What's my situation? Should I do Roth? Should I do pre-tax? All that kind of information. They really appreciate that more than other generations is what we're finding. So having that human touch that's also aided by some technology that can help them pull in all of their other accounts and take a look at how much they have in other places and think about their goals in terms of short-term and long-term. They are heavily reliant on the technology, as well. So when the technology runs out, that's when you need the person. So I think that companies would be smart to just be thinking about the way that these types of employees engage with information. Does that make sense?

Dr. Christopher H. Loo (11:55):

Yeah. And along those lines, when you talk about information and engagement, you've conducted thousands of meetings for employee education. What are key factors in effectively educating employees about retirement options? What trends have you noticed in engagement?

Courtenay Shipley (12:11):

Having a group meeting used to be the way that we would do things, right? You would show up and you would spew all this information over people for half an hour, or maybe it was even worse than that. HR has set it up to last so that you have one person after another, one benefits provider after the other. So you're hearing all about your benefits in a four hour meeting or something terrible - that doesn't work, so don't do that. That's number one. Bite-sized information is number two, and having it readily accessible for when it's relevant. So if a person is encountering a change in their life, they're getting married, they're getting divorced, they had a kid, they left their job, started a new job, any of those types of big life changes or just, hey, here's what people ages 20 to 30 are usually thinking about.

Being able to make the messaging very relevant to where they are at that point in time and then take them to the next step. Don't try to solve all the problems in one day, it's just, hey, this is what your 401k is, here's how you enroll. Next might be, here's how you can get the most out of the investments. The next might be, did you set up your beneficiary? We really need that. So just those bite-size interactions, either through video or through email or any of those types of services. Whatever's going to get the most eyeballs, I would say, is the place to put those types of messages.

Dr. Christopher H. Loo (13:27):

Yeah, it's all about…I've noticed that the most innovative companies these days, they actually just, they can go to Twitter or they can have a blog post or a webinar podcast, and that's the easiest way to disseminate. And just consistent education breeds credibility and trust. What's interesting about your firm is that your firm shares fiduciary liability with clients. And what does that mean and look like and how does it provide peace of mind for businesses?

Courtenay Shipley (14:01):

So we are what's called the investment fiduciary on the plan. So we're going to be responsible for selecting and monitoring the investments that go into the plan. Why are they allowed to be there? Why are they allowed to stay there? So we take that off of the plate of the person who is in charge of the plan because somebody has to do it and that person's going to have fiduciary liability for it. So it's important that companies are thoughtful. Do they make it a committee? Do they make it just the president or something like that? But we're right there on the same side of the table as them in the courtroom. If anything goes sideways about the investments in the plan, that would be the biggest way that we serve. The other is just being a subject matter expert…I listed off a bunch of stuff earlier about staying out of trouble with DOL and IRS and not running afoul of all the rules that are out there. And so we're just here to provide some extra support in making sure they understand what their responsibilities are with the plan and just making sure they're carrying out what they're supposed to be doing.

Dr. Christopher H. Loo (14:57):

How can people find you and find out more about you? Seems like a really interesting business and business model.

Courtenay Shipley (15:02):

Yeah, we're at retirementplanology.com and that's where you can book a call to bounce ideas around or just shoot us a question, learn more information about who we are, what we do, and the types of clients that we help. So there, or you can find me on LinkedIn.

Dr. Christopher H. Loo (15:18):

Yeah, I love that. A really engaging and insightful educational podcast and audience. Got tons of value out of it, and thanks so much for coming on.

Courtenay Shipley (15:28):

Yeah, thanks again for having me. I do appreciate it.