Small Firms Beef Up Retirement Services With Outside Help (WSJ)

Small Firms Beef Up Retirement Services With Outside Help

Consultants Offer
Workers Online Tools
And Advice for a Fee

By ROGER CHENG

Small businesses are helping employees become better managers -- of their own money.

When it comes to managing their retirement-savings accounts, small-business employees often are at a disadvantage compared with their counterparts at large companies. Corporations typically employ large in-house human-resources staff and offer analytical tools and money-management services that are cost prohibitive for small firms.

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Yet small companies are finding that they need to beef up their own offerings in order to retain and attract talented employees. It is no longer enough to simply give workers a vehicle by which to save. So some companies are turning to consulting firms that provide small businesses with services and tools to help workers better manage their investments -- for a fraction of the cost of doing it in-house.

"Small businesses are feeling the pressure to get these tools," says Ken Simons, senior vice president at Relius, a software developer in Jacksonville, Fla., that provides the technology many of the consulting firms use. "401(k) participants may see something available on the Internet or see them in large companies and they want the exact same tools in their retirement plans."

What You Get

The services and prices vary by company. Generally, though, features, which can be accessed by logging on to a Web site, include a daily update of a fund's value and calculators to help workers to determine if they are saving enough for a specific goal. One analytical tool can help employees calculate how much they need to stash away so they won't outlive their money. And workers can change the financial models as they get closer to retirement. In some cases, advisers from the consulting firms will meet with individual employees to map out a retirement-savings plan.

At Spectrum Pension Consulting Inc., of Tacoma, Wash., for instance, retirement advisers sit down with employees to discuss how they want to spend their retirement, and then develop targets to meet those goals. The fees depend on the amount of advice Spectrum gives, and what kind of services are offered. On average, fees are $15 to $19 per employee per month.

"People get statements but can't tell if they're on track," says Petros Koumantaros, chief executive of Spectrum. "We can provide immediate feedback to meet their individual needs."

Wilkinson Corp., a senior-citizen housing-management company based in Yakima, Wash., started using Spectrum's services last year, in response to calls from employees for more comprehensive access to their retirement accounts. The company went with Spectrum because it offered more guidance on setting up plans than other firms. Wilkinson pays a set fee per employee and an additional fee for consulting, but it wouldn't disclose the amount.

HIRED HELP

What's Happening: Small companies are turning to outside consultants to help employees better manage their retirement-savings accounts.

The Impetus: More firms are finding that they need to beef up their services in order to retain and recruit talented workers.

The Offerings: Employees get online analytical tools, calculators and daily price updates among other things. Some consulting firms also offer in-person advice.

Doug Federspiel, 46 years old, the company's general counsel, was among the employees who pushed for the changes because he wanted ready access to his fund. Now, Mr. Federspiel can check his fund's performance on a quarterly basis. He also enjoys using the retirement-planning tools to see how his fund is progressing.

"The retirement tools really are having an impact on how I feel about the seriousness of saving now," he says. "It drives home the responsibility that I have to take control of my retirement."

Another consulting firm offering services to small companies is Weiss Group Inc., of Des Plaines, Ill. Its features include allowing users to see account balances at the end of each trading day and moving money around between different mutual funds.

Spectrum and Weiss use software from Relius, a unit of SunGard Data Systems Inc., of Wayne, Pa. Relius licenses its technology to the consultants for an undisclosed fee.

Recruiting Tool

Some companies know they have to offer a complete package from the start.

Gayle Rose says she needed a comprehensive retirement-benefits package to attract high-level executive talent at Electronic Vaulting Services Corp., a Memphis, Tenn.-based data backup and recovery company. The company was founded in 2005, but in its first year of business it didn't offer a retirement plan.

So in 2007, Ms. Rose turned to Adams Keegan Inc., a Memphis firm that handles human-resources responsibilities such as payroll and retirement benefits for other businesses. The firm set up Electronic Vaulting's plan and also offered access to online tools like calculators and up-to-date performance reports.

"If we're trying to build a company, we have to attract the best of breed executives from our local and national companies," says Ms. Rose, Electronic Vaulting's owner and chief executive.

A few months after implementing the program, the company hired two senior executives. She says the retirement benefits added to a comprehensive package that lured the two away from larger companies.

Ms. Rose says she pays Adams Keegan a fee per employee but declines to say how much. She adds that offering features such as Web access on her own would have cost too much in time and money. She was impressed by how fast the services were set up.

"For a start-up enterprise," Ms. Rose says, "speed is everything."

In on the Action

Some bigger players like Charles Schwab Corp. also are offering financial tools for small-business employees. When a small company opens a retirement-savings plan through Schwab, workers get access to Schwab's Web site, which offers a retirement and college savings calculator, financial news, a list of mutual funds and stocks and other investment ideas.

There are no fees for small businesses to start to plan with the company. Schwab makes its money from commissions it collects from stock or bond trades, or from fees charged if an employee chooses a Schwab-run fund.

"There is a lot of support on how to pick the right plan, and how to structure the right plan to ensure diversification," says Rene Kim, vice president of product management for Schwab.