Retirement Specialist

One of the advantages of a firm the size of Rehmann is that the skills of a wide range of professionals are available in-house. For investment guidance Wernette relies on Rehmann’s 10-person investment research department. “In the retirement space they help screen the platforms that we look at, help us sift through the hundreds of options that may be available on a platform, and siphon that list down to a menu that we’re going to recommend to our client,” he explains.

In terms of retirement investing, one of the most heralded advancements in recent years was the development of target date funds. The big hits that virtually all mutual funds took in 2008 and early 2009, however, have caused many investors to question the original premise of the funds.

“I still think target date funds can be a great solution. The problem we’ve had is that on the surface the target date funds were very easy to understand. Underneath the surface, nobody knew what the heck was going on,” says Wernette. “Unless you sat down and started tearing them apart, nobody had a clue on what the underlying cost structure looked like.”

Without a common set of guidelines, potential investors could look at two funds with the same target date but each of which might be based on an entirely different set of assumptions. When the bottom dropped out of the equity market, he notes, “It caught a lot of people off guard.”

Although he still thinks that target date funds are in principle a good idea, Wernette stresses that the advisor has to be able to break it apart and explain to both the plan sponsor and participants how the fund works and if it meets the needs of the investors. “I think target date funds are here to stay, but they’re going to have to do something when it comes to creating some standard as to what the target dates can call themselves.” Moreover, Wernette belives that the organizations that provide the evaluation tools to monitor the plan’s investments are going to have to figure out how to monitor the target date fund with those evaluation tools.

The need to come up with investment solutions for retirement plans is only an issue for about 20% of Wernette’s clients. He says that about 800 of the plans that he works with are managed by another investment advisor. What Rehmann provides to them are those TPA services.

Making the Most of the Recovery

One of the biggest psychic casualties of the recent worldwide economic upheaval has been the confidence of Americans that they will be able to maintain their lifestyles in retirement, or possibly even retire at all. “Nobody’s been free from those kinds of feelings,” acknowledges Wernette. Like many advisors, during the months of uncertainty in 2008 and early 2009, Wernette and his team accelerated their efforts to keep open lines of communication with clients. “We’ve found our clients were looking for more guidance from a professional perspective. There’s been plenty of press out there regarding alternative investments and using ETFs and all those sorts of things that are a little foreign to the average investor (see the ETF Advisor on page 42 for more on the place of exchange traded funds in retirement plans). We’ve certainly been spending a lot more time taking a look at those options, looking at how we can incorporate those into what we’re doing for our clients in the retirement plan arena, and spending a tremendous amount of time just educating our clients,” he says.

The educational efforts of Wernette and his team are aimed both at plan sponsors and participants. At the sponsor level, Wernette says the big issues revolve around fiduciary responsibility while for individual participants the goal is “to provide participants with an environment where they can get the kind of guidance that they need to make good investment decisions and not be in a position where they’re constantly second-guessing themselves or allowing their emotions to take control and head them down a bad path. We’ve been working with managed options, advice tools, things that are going to position participants to make better investment decisions in the long haul. We find that’s becoming a bigger and bigger part of what we’re bringing to our customers, because either directly or indirectly that’s what they’re asking for.”

The crisis in the financial markets has taken its toll on many advisory firms, some of which have seen assets decline due to both market forces and loss of clients. Wernette acknowledges that Rehmann hasn’t been immune from those forces, but notes that the retirement plans that they’ve lost have come from those for whom the firm was not the advisor, but the third-party administrator.

At the same time, Rehmann has managed to draw in new business. “We picked up more new plans this past year than I’ve had in any other year that I’ve been tracking this stuff,” he says. He says that all the attention in the press on retirement has certainly kept the subject front of mind and that Web sites such as www.freeerisa.com [Editorial disclosure: freeerisa.com is a property of Summit Business Media, which also publishes Investment Advisor] and www.larkspurdata.com make it pretty easy for advisors to get information on employers’ plans.

“The whole issue of fees has certainly been resounding out there and it’s caused employers to take a hard look at how plans are structured and wanting to gain a better understanding of what the fees are and how they,” he says. “It’s not all about the investment options.”

While he spends his workdays immersed in ways to help other people stop working, Wernette remains steeped in enthusiasm. “What excites me most about the job is the fact that I have the ability to make a difference in people’s lives in a very deep, meaningful way,” he explains. “What’s really cool is they may never know that it was me, or my wisdom, or the help I provided. It’s also kind of scary when I put it in that context, too. It gives me excitement, but it also humbles me because of the responsibility that’s connected to that. I think the combination of those two really help to keep me focused.”