At the heart of Allianz Global Investors’ PlanSuccess tool are three numbers: 90-10-90. Those numbers form the basis of the firm’s goals for retirement plan advisors.
“The idea is to get 90% of employees participating in the plan,” Cathy Smith, co-director of Allianz Global Investors’ Center for Behavioral Finance, told AdvisorOne on Monday. “We want to get them saving at least 10%.” Then the goal is to get 90% of participants invested in appropriate vehicles, usually some kind of professionally managed fund, Smith said.
“PlanSuccess is a comprehensive system to improve the design of 401(k) plans and defined contribution plans in general from a behavioral perspective,” Smith (left) said.
One of the goals of the tool is to apply available research in a way that makes a difference to advisors, she said.
“When we founded the center, we didn’t want a think tank or research group,” Smith said. “It’s about taking all the research that’s out there and making it actionable and practical.” The center gets input from financial professionals and does some of its own research as well, she added.
The PlanSuccess tool provides a behavioral audit of defined contribution plans for clients and prospects, but to get access to the tool, advisors have to complete a training program, Smith said. Advisors are invited by the Center’s retirement consultants to go through the program. While there are no prerequisites, Smith said, the retirement consultants are looking for experienced advisors with successful defined contribution practices.
Once they are invited to complete the training program, advisors must read “Save More Tomorrow,” written by the Center’s chief behavioral economist, Shlomo Benartzi (right). Selected advisors then participate in two half-day sessions and pass an exam. Within 90 days, they must perform an audit. “We needed to make sure advisors were properly prepared to discuss the findings of an audit with their clients,” Smith said. Advisors who complete the training program earn the Certified Behavioral Finance Analyst certification.
The first of those training sessions took place in June, Smith said, with 31 advisors. A second session is expected to take place in October at the firm’s Newport Beach, Calif., office.
“Shlomo Benartzi is the chief visionary behind the tool,” Smith said. One of the reasons for its success, she suggested, is Benartzi’s high profile in the industry as well as his “understanding of advisors.”
The PlanSuccess tool creates a report based on the answers to 23 questions the advisor provides on behalf of the plan sponsor, Smith said. The report provides a rating for a plan’s participation rates, savings rates and overall plan health.
“Not only is PlanSuccess a tool that leads to plan improvement,” Smith said, “it allows advisors to access the impact of improvements at periodic intervals.”
“When we launched the tool, we wanted to do something that would have a positive impact on clients, their business and individuals,” Smith said. “We felt we could move the needle for everybody.”