Plan Design

Your organization is unique. Your retirement plan should be, too. There’s no universal solution or one-size-fits-all strategy when it comes to business and not-for-profit retirement plans.

Rather, the plan has to be designed specific to the organization’s unique needs and objectives. For some organizations, the priority may be cost control. Others may want a rich benefits package to attract talent. Still others may want to maximize flexibility and limit future obligations.

There are any number of factors that could influence the design of your plan. The most important thing is that you work with a partner who will tailor their strategy to meet your needs and objectives.

At Johnston Investment Counsel, we start the design process by learning all we can about your business, your goals, and your concerns. We present a variety of plan design alternatives, and discuss the advantages and disadvantages of each so you can make an informed decision.

We are not committed to any one plan type or provider. Our open architecture system allows us to help you find the right plan for your specific situation.
Our plan design process often includes the following steps:

• Frequency, magnitude and flexibility of contributions
• Requirement of ongoing employer contributions
• Desire to favor certain employees in a non-discriminatory manner
• Vesting requirements
• Ongoing cost
• Investment structure

Recordkeeper and/or Third Party Administrator Vendor Selection

While an employer-sponsored retirement plan can bring numerous benefits to employees and the company itself, such plans can also generate a broad range of challenges and complexities. From compliance to regulation to recordkeeping and more, your plan will likely need to meet many high standards and expectations.

One of the best ways to meet these challenges is to partner with qualified, experienced, and knowledgeable third party administrator or recordkeeper. At Johnson Investment Counsel, we help you analyze potential partners and choose the right vendor for your specific plan needs and objectives.

Investment Policy

An investment policy is the foundation to any retirement plan’s success. The investment policy documents the plan’s operational and performance objectives. It also serves as a communication tool to ensure continuity as committee members change.

Every investment policy must be created custom to meet the unique needs and objectives of each plan. However, there are some elements that are nearly universal for all investment policies. Below are some of the headings and content Johnston Investment Counsel often uses in our investment policy statements:

Operational Areas

• Purpose and background
• Goals and objectives
• Delegation of responsibilities
• Review procedures

Investment Areas

• Define overall portfolio philosophy, strategy, and appropriate risk level
• Define the asset allocation ranges and rebalancing strategy
• Selection criteria for investment managers
• Investment objectives, guidelines, and restrictions
• Performance and risk benchmarks

Investment Option Selection

Give your participants the freedom of choice. There was a time when retirement plans were bundled with specific families of investment choices. While that arrangement still exists today among some providers, there is no reason why you should have a plan that is limited to a finite selection of investment options.

At Johnston Investment Counsel, we believe that organizations and their participants are best served when they have the opportunity to choose. We have no revenue sharing agreements in place with any fund families or other investment institutions. Our research is independent, and is guided by performance and results, not commissions or revenue deals.

Because of our independence, we are often able to provide plan participants with institutional and/or index funds that are better-performing and more cost-effective than those found in bundled retirement plans.

Additionally, our independence gives you the fiduciary protection you need and deserve. Your committee can operate without their hand tied, and can choose the investment options that are truly best for your participants. That keeps within best practices and relevant regulations.

In the investment selection process, Johnston Investment Counsel often uses the following methods:

• Select a diversified menu of high quality / lower-cost investment options. This approach appeals to participants who like to “do it themselves”.
• Create several pre-diversified, “one-stop” portfolios that offer different risk/return characteristics. In one transaction, participants have a high quality, low-cost, diversified investment portfolio. This is the  “do it for me approach” that many participants prefer.
• A combination approach in that risk-based portfolios are combined with a diversified menu.
• Johnston Investment Counsel can also serve as investment manager to the account and manage the pre-diversified portfolios using our style rotation approach.

Participant Education

Even the best retirement plan isn’t effective if it doesn’t have strong participation. At Johnston Investment Counsel, we take participant education seriously. We want you and your participants to have successful outcomes, so we make it a priority to give them the knowledge they need to make informed decisions.

We also know that you don’t have time to handle education yourself. You have a business to run. That’s why we handle it for you. With Johnston Investment Counsel, you can be confident that your employees are receiving the information and updates they need to plan their future.

Common educational topics include:

• Plan description and benefits of participating
• Estimates of account balances at retirement
• The advantages/disadvantages of using the pre-diversified portfolios
• Developing an appropriate asset allocation
• Equity and bond diversification
• Investment option description

Performance Review

You have a fiduciary duty to your participants and you have significant regulatory obligations. To meet those responsibilities, you need all the necessary information to make sound decisions.

At Johnston Investment Counsel, we believe transparency is a cornerstone in a sound retirement plan. We offer regular performance reviews to give you and your participants critical information.

Each quarter, Johnston Investment Counsel provides employees:

• Performance analysis of all investment options including comparisons to indices
• Overview of capital market returns
• JIC’s newsletter
• Periodic special reports

Annually, we review key demographic information including:

• Overall participation rates and participation by age bands
• Deferral amount by age bands
• Account balance by age bands
• Investment election & diversification by age bands
• Distribution and loan information
• Fees

Fee Analysis

As a fiduciary, you’re responsible for ensuring that all plan fees are reasonable and appropriate. This specifically includes the fees and expenses paid by plan participants. However, it’s not always easy to find out what those fees may be. Your plan could have investment management fees, administrative expenses, and even distribution fees for financial professionals institutions tied to the plan.

We provide clarity and transparency to your plan’s fee structure with our fee analysis service. In one, easy-to-follow document, we describe the various fees paid by a plan sponsor and those paid by participants as well as provide benchmark information for comparative purposes. Lastly, we provide an overall assessment (in combination with a performance and diversification review).

You meet your fiduciary obligation to your participants by communicating the plan’s fee structure, and your participants get the information they need to make smart financial decisions

Fiduciary Advisor

Many participants prefer to self-direct their plan assets rather than use pre-selected investment options. However, multiple studies have shown that individual investors tend to underperform the markets when self-directing their assets. They may take too little or too much risk, or they may act impulsively on short-term decisions rather than on long-term strategy.

The Pension Protection Act allows plan sponsors to provide assistance to participants by offering fiduciary advisors. A fiduciary advisor is a professional who provides advice and guidance to plan participants. Because the advisor is a fiduciary, the plan sponsor is protected from the advice-giving process and isn’t responsible for the outcome of the advice.

Plan sponsors and fiduciary advisors must meet several regulatory criteria to offer this service. Johnson Investment Counsel meets all requirements to serve as a fiduciary advisor for your plan participants. We work with your participants to monitor their plan performance, review their goals and needs, and implement strategies to help them reach their objectives.

Your retirement plan is more than a simple employee benefit. A strong retirement plan can help you attract and retain quality talent. It can foster goodwill, employee satisfaction, and loyalty.

Contact us today to learn how Johnson Investment Counsel can help you offer a strong retirement plan to your employees. We welcome the opportunity to learn more about your goals and needs. Let’s connect soon and start the conversation.