Family Wealth & Legacy - Family Business Succession Planning

Blog

Or, Outsource the 401K RFP Process to a 401K Specialist

Family, Wealth & Legacy has a long history of making it easy for business owners to outsource the RFP process because we have a written RFP process, a 401K program and we do this many times a year, not just every 3 to 5 years. We can take you step by step through the entire process to ensure you’re choosing the appropriate vendor and investment options for your company. We are independent and have access to many non-proprietary 401k vendors – means, you can deal with just ou
View More >>

Scaling Up Strategy

Among other necessities, strategy requires a handful of executives to meet at least once a week, not once a quarter. You must spend time working on the business, not just in it. Core Values Harnish sees these as the rules and boundaries that make up the company’s character. In times of confusion they can be a final should/ shouldn’t for employees to rely on to avoid operational issues or resolve them much quicker. The Harvard Business Review article “Building
View More >>

Step Six: Conduct an Effective Annual 401K Review

Your 401K should be reviewed at least annually; most plans should be reviewed semi-annually. The plan review should consist of the following: Previous Year Review Plan Activity for the yearLoans/HardshipsInternet/Phone Activity (any dramatic increase?)Overall Performance – Performance compared to PeersOptions to satisfy all risk tolerances (prudent approach) Review the Investment Fund Line Up 22 Point Fund AnalysisReview and Update Investment Policy StatementUpdate Funds ....
View More >>

Step Five: Interview and Choose your Vendor

Once you have narrowed your search to three to five vendors the interview process may begin. It can be helpful to create an agenda so you control the meeting and walk away with as much information as possible. Also, now is the time to ask the representative any challenging questions that weren’t included in the RFP. Remember you’re dealing with trained sales people that are very good at their job. They like to control the flow of the meeting so arming yourself with some of...
View More >>

Step Four: Review and Score the RFP Responses

Once the vendors have responded to the RFP, you and your committee must now review and score the responses. One way to “thin the herd” is by generating a list of minimum qualifications that will disqualify a vendor if they cannot comply. After that is done, you and your team need to develop a way to score the left over vendors. A scoring system that we have found helpful is using your list of questions/exepectations to award the vendor point each time they say they can..
View More >>

Step Three: Create the Request For Proposal

This part is easy now that we have gone through the process of identifying our objectives and questions. In the RFP it is important to include: Title Name of companyCompany addressContact InformationDeadline for completion Company and Current Plan Overview – provide a background about your company and about the plan itself. Be certain to include: The number of employees eligible vs. participating in the planThe eligibility requirementsCompany match and the vesting schedu
View More >>

The Fee Questions

There should be some flexibility when discussing fees. A fee is not always a bad thing as long as you’re getting something more valuable in return than the money you are investing.Here are a few questions to focus on: What are the fees for setup?Are there platform fees?How much is being paid to the TPA? The financial advisor?What, if anything, happens to the 12b-1 fees?Conversion fees are how much?What are the charges for plan administration?Is there a fee for moving assets?What ar
View More >>

The Cybersecurity Questions

Cybersecurity is sometimes overlooked, but we all know that, today especially, it is very important. As a firm it is crucial that your information and your employee’s information is secure. Ask the vendor who is the security provider?Has there been a security breach in the past?Where is my information stored and how can you assure me that all information will be safe?
View More >>

The Participant Account Access Questions

All participant information should be available to employees online or via phone. The online data and information via the phone should be easily accessible. Most vendors will offer internet access through smart phones, computers, and iPad/tablet. A helpful question could be: How often is the website updated?When and how do I access this online information?How much information is easily found on the initial page?How many steps does it take for a participant to reallocate or exchange...
View More >>

The Service Questions

It is important that whatever vendor you choose provides great service. This is a factor that will really differentiate the vendors. When looking for a vendor it is crucial that the vendor is reputable, easily accessible, and helpful. You are going to be paying them so it is important that they commit to earning it through good customer service. The other thing to consider here is to understand who is responsible for what. You will want to be very clear as to the duties and responsibilit
View More >>

The Investment Questions

It may be helpful to consult an investment or financial advisor when exploring investment options.The vendor you pick should have solid performing investment options. The options should be diverse and low cost. The following factors should be discussed prior to choosing your fund line up: turnover, yield, expenses, style, risk, return, manager tenure and history, alpha, and performance versus peer group. It may be helpful to ask: What information will be received about the investments?
View More >>

The General Questions

How long have they been in business?How many 401k plans do they administer?How many clients left them last year and why?Are there any pending litigations against the firm? It is also important for you to ask about the trust/custody or recordkeeping system. This is a huge part of a 401k plan that sometimes gets looked past. It may be helpful to ask the vendor what kind of options they offer for 401k (some options include: Traditional, Roth, Safe Harbor, New Comparability).
View More >>

Step Two: Formulate your Goals and Objectives

Have the committee create a list of objectives. These objectives should be very specific, be certain to include both the quantitative and the qualitative. The committee then consolidates and prioritizes these objectives so they can be presented as part of the RFP. Consider the whole business when thinking of these goals and make sure that all employees are being taken into account. The key to creating a good RFP is asking the right questions Turning your goals and objectives into qu
View More >>

Step One: Form a Committee

Before writing your RFP, decide who will be in charge of the process. We suggest forming a diverse committee of employees to manage the RFP process for your qualified retirement plan (401k). This step goes a long way towards balancing the needs of all of the employees from the hourly employees to the executives and the owners. The committee should create a timeline for this project to help keep the project on track. A good committee could be the owner, the person who signs the form 5500
View More >>

Understanding Standards of Service

A financial advisor, an insurance agent and an investment manager are sitting in a bar…The bartender says, “I have a phone call for a financial planner.”All three answer, “That’s me.”In our last segment we talked about the issue of designations and titles and how it can be very confusing to the typical consumer. In this segment we’d like to share with you the issue of industry standards of service. In many respects this is an even bigger issue than desi
View More >>

The Solution to Hiring a Financial Planner

If you Google “How to Hire a Financial Advisor,” you’ll find thousands of articles, tons of advice and a plethora of opinions. The main theme of all of the articles seems to guide consumers to hire a CFP and they should be fee-only. You already know we feel about both of those thoughts; it may be a great fit or it might not be…it depends on the advisor.The other piece of advice almost every article provides is a list of the questions they feel you should ask while...
View More >>

Understanding Financial Professional Designations and Titles

Today almost anyone may call themselves a financial planner. It doesn’t require anything…no extensive training, experience or good intentions for that matter. Most articles, professionals, and industry associations will tell you that it is necessary to search for a financial planner who is certified. In our opinion this is a good start but it isn’t necessarily the most reliable means of hiring an advisor. Here is a short list of some of the certifications and designat...
View More >>

Two Big Challenges to Hiring a Financial Planner

Understanding Financial Professional Designations and Titles Go behind the scenes of the financial services world and watch as we compare it to other professions. This will begin to illuminate why it’s so hard to know which financial advisor is right for you. Understanding Standards of Service Once we have opened up the issues we want to shine a big, bright light on the issue that causes more confusion than anything else. If you were to ask industry insiders this ques
View More >>

Scaling Up Contact

My team and I used Scaling Up to grow our business and we were extremely happy with the results. Even more importantly, clients noticed the changes and were happy with the services we were providing them. One of our clients asked us to work with them as an accountability coach and help them through the Scaling Up process. We have since added the Scaling Up process to our business transition process. We realized that regardless of whether or not the business will be transferred to family or sold
View More >>

Scaling Up Cash

As Harnish says, “growth sucks cash” and many businesses either fail or face significant losses due to not keeping an eye on their cash flow. It can be easy to overlook cash flow and focus on other business processes, but cash flow is much more important than some think, even more so for scaling up a business. Cash Conversion Cycle As Harnish says, this term is simply how long it takes for money that has been spent to find its way back through the business and into your pocket...
View More >>

Scaling Up Execution

Of all of the execution tips and ideas within Verne Harnish’s book, the Rockefeller Habits Checklist is quite possibly the most important set of information. The list is comprised of 10 must-know habits that enable the successful execution of your strategy. It greatly increases profitability and reduces the time it takes to manage the business. But take note, these are not habits to enact all at once. This is a process of focusing on one to two habits a quarter and then refreshing
View More >>

Scaling Up People

Verne Harnish suggests that the first step to ensuring that you are scaling up your business properly is drawing in the right candidates, hiring them and retaining them. Topgrading is a method of hiring “A” Players and was co-created by Brad and Geoff Smart. “A” players are the specific individuals that make up the top 10% of the available talent interested in the position that you are offering.For starters, your interview process is going to have multiple levels,
View More >>

Maximizing Business Value

Jack Stack, best-selling author of The Great Game of Business, said it best in his testimonial, “Imagine walking into a library and finding one book that captures the ideas of all the books in the library. Scaling Up is that business book. You will not have to go any farther.” Which is exactly why we felt it was worthy of its own space on our website. We recommend that every one of our family owned businesses not only read this book but put it into practice.
View More >>

401K Fiduciary Frequently Asked Questions

A Fiduciary is a person who exercises any discretionary authority or control over the management of the plan or its assets. A plan must have at least one fiduciary. Many of the actions needed to operate a 401(k) plan involve fiduciary decisions. As the owner of a company this is true whether or not you hire someone to manage the plan for you or do all of the plan management yourself. The simple act of having someone else sign the Form 5500 also does not limit the owner’s fiduciary
View More >>

How to Run a Request for Proposal (RFP) for Your 401K

Properly maintaining the company 401K can be a monumental task for the plan sponsor. Following these simple steps should make your job much easier. To begin with, a Request for Proposal (RFP) should be done every three years in order to ensure that your current plan is both competitive and the platform is up to date given the current 401K landscape. The RFP process should describe the company’s objectives; help answer any questions and set expectations for the candidate vendors. This proce
View More >>

How to Hire a Financial Planner, Financial Advisor or Wealth Advisor

Hiring a wealth advisor, financial planner or financial advisor can have a tremendously positive impact on your family, especially if your family’s net worth is $500,000 or higher. We want to share with you why it is so important to hire an advisor who is comprehensive in their approach to financial planning. You’ll learn that great financial advisors are well versed in not only investments but estate planning, retirement and cash flow modeling, personal risk management, the impact of taxes,
View More >>