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Manage. Address. Pursue
Retirement
Readiness:
Evaluating plan health to
define success
Ed Gimenez, CFP ®, AIF®, Raffa Retirement1
Kerry Perl, TIAA-CREF
June 9, 2015
1 - Securities offered through LPL Financial, Member FINRA/SIPC. LPL Financial and TIAA-CREF are not affiliated.

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For Institutional Investor Use Only
Four steps to successful
plan management.

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Today’s presenter
Kerry Perl
Director
Kerry Perl is Director, Intermediary Distribution for TIAA-CREF Asset Management. He is
responsible for marketing the group’s investment management services and providing
client service to financial intermediaries in the southeast and mid-Atlantic regions of the
United States. Mr. Perl joined the TIAA-CREF organization in 2011. Mr. Perl has more
than 18 years of financial services experience. Prior to joining TIAA-CREF, he was
Southeastern Regional Vice President for the Registered Investment Advisor Division
marketing Real Estate Investment Trusts & Alternative Investments in the southeast at
American Realty Capital. Previously, Mr. Perl has held various sales positions at BNY
Mellon Wealth Management and Bank of America, including Columbia Management
Group and Nations Bank. In addition, he founded Renaissance Consulting , LLC,
providing the delivery of wealth management services and consultation to advisors. Mr.
Perl holds a B.A. in English and Psychology from Georgetown University. He also holds
the Chartered Mutual Funds Counselor (CMFC) designation.

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Agenda
 Tax-exempt market overview
 Top challenges for plan sponsors
 Four steps to successful plan management
 Key action steps

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Top plan sponsor concerns
Compliance is a top concern for plan sponsors.
Source: Cogent Research Retirement Planscape® April 2013
Ensuring plan is in compliance
Reducing plan costs
Enhancing participant education
Increasing enrollment/deferral rates
Adequately prepare participants for retirement
Re-evaluating investment menu
Re-evaluating plan recordkeeper
Changes to plan design
57%
46%
44%
43%
34%
33%
16%
11%

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Key differences between plans
Briefly, here are some key differences between types of plans.
401(k) 403(b) 457
What it is A qualified retirement plan A qualified retirement plan Non-qualified deferred compensation
plan (not subject to ERISA)
Provider
arrangement
Single provider May have multiple providers May have multiple providers
Who is eligible Typically available to private
sector employees
Employees of nonprofits such as
schools, hospitals and charitable
organizations
Typically state and local government
employees
May also be available to highly
compensated at private employers
Permitted
Investments
Generally, no restrictions with
regard to investments.
Mutual funds, fixed annuities,
variable annuities, life insurance
in annuity contracts only.
Generally, no restrictions with regard
to investments. However,
governments may be subject to state
law restrictions.
Distributions
while still
employed
Only on hardship if under age
59½
Only on hardship if under age
59½
Only for unforeseen emergencies
Tax penalty Withdrawals before age 59-1/2
subject to 10% federal tax
penalty
Withdrawals before age 59-1/2
subject to 10% federal tax
penalty
Withdrawals can be made without
penalty and regardless of age at
termination or retirement

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Four critical steps for successful plan management
1. Build a strong foundation with purposeful plan design.
2. Deliver outcomes-based education and advice.
3. Maximize value for fees.
4. Follow fiduciary and compliance best practices.

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Step 1:
Build a strong foundation with
purposeful plan design.
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Proven plan features.
 Automatic enrollment to expand
participation
- Participation can reach between 86 and 91%.1
 Automatic escalation increase to improve
savings levels
- Many plans use a low default of 2-3%, but
research shows employees are not likely to
opt out at a higher default rate of 5-6%.2
 These features may increase retirement
income savings between 2 to 9 times final
earnings.3
1 Save more Tomorrow, Practical Behavioral Finance Solutions to Improve 401(k) Plans, Shlomo Benartzi, 2012
2 Ibid
3 Automatic Retirement Savings – Paving the Path to Personal Financial Security, David John, The Heritage Foundation, 2010 and EBRI Issue Brief, The
impact of auto-enrollment and automatic contribution escalation on retirement income adequacy, VanDerhei, 2010

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Proven plan features. (continued)
 Employer match to maximize participation
- A match nearly triples the odds of participation.1
- “Stretch” the match as a no-cost way to optimize
contributions, i.e. match 50% of the first 6% of
pay versus 100% of the first 3% of pay.
- A combination of employer and employee
contributions in the 10-14% range may improve
chances of a 70% income replacement ratio.2
 Implement guardrails to prevent asset
depletion
- Limiting or eliminating loans reinforces
commitment to long-term planning.
- Multivendor relationships can make this
challenging.
1 The Plan Participation Puzzle: Comparison of Not-for-Profit Employees and For-Profit Employees, LIMRA, December 2010.
2 Redesigning Retirement Plans with R21 Principles, TIAA-CREF Institute, November 2011.

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 Carefully built, organized menu
- Basic building blocks with simplicity and
variety
- Tiered menu with core and additional options
 Avoid investment option overload
- Complexity leads to participant inertia and
indecision and requires greater fiduciary
rigor.
- For every 10 new options offered, enrollment
drops by between 1.5% and 2%.1
1 How Much Choice is Too Much: Contributions to 401(k) Retirement Plans, Pension Research Council Working Paper, Iyengar, Jian, Huberman, 2004.
Prudent investment menu design.

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Review of service model.
A sole recordkeeping model helps simplify plan administration, better manage
fiduciary obligations and control cost.

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Step 2:
Deliver outcomes-based education
and advice.
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Plan sponsor’s engagement approach.
 How plan sponsors engage (or don’t engage)
their employees has a major effect on their plan
outcomes.
 Programs should support both accumulation
and distribution strategies.
 Plan sponsors should consider providers that
offer advice and the strength of the advice
offering.
1 403(b) benchmarking: 3 essential steps to hit the deadline, BenefitsPro, June 27, 2012
2 National Consumer Survey on Financial Advice and Education, KRC Research, August 2012

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Plan sponsor’s engagement approach. (cont.)
 Recommend best practices such as:
- Targeted communication by audience
- Easy to understand and access, brief, relevant
- Personalized projections
- Multimedia approach for greatest penetration
- Embracing technology such as express enrollment,
mobile apps and robust calculation tools
 Ask providers for measures of effectiveness beyond
participation, deferral and asset allocation.
- Plan sponsors should ask for income replacement
calculations.
1 What Will My Account Really Be Worth? Experimental Evidence on How Retirement Income Projections Affect Saving,
TIAA-CREF Institute, August 2013

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Step 3:
Maximize value for fees. Picture
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Plan sponsors should take a comprehensive view of fees.
 The desire to pay a fair and competitive price should always be a guide, yet
the urgency to improve retirement outcomes requires a more nuanced view.
 A focus solely on efficiency or lowest cost may sacrifice important employee
outcomes or overlook sources of value.
Fees for plan sponsors.
Balancing Fees and Value

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The ultimate test of the plan is employees’ ability to retire with security.
 Logical for a significant portion of the total fee to pay for services that
support retirement readiness.
 Encourage an evaluation of fees against outcomes — providers should
demonstrate that services and strategies actually promote positive
participant outcomes.
Fees. (continued)
Source: Deloitte/ICI 2011 Defined Contribution/401(k) Fee Study

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Advisors can suggest areas where operational efficiencies may help
control costs.
 Recommend that plan sponsors interact with their providers
electronically whenever possible.
 Propose placing limits on transactions that are expensive or may not
be in the best interest of the plan or participant goals.
 Suggest that plan sponsors provide census data to providers to speed
transactions.
 Recommend they eliminate paper wherever possible.
Achieving cost control through efficiencies

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Step 4:
Follow fiduciary and compliance best practices. Picture
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Even non-ERISA plan may want to satisfy ERISA fiduciary requirements as
a best practice.
 A fiduciary of an ERISA must meet standards in five key areas:
1. “Exclusive Benefit” rule - Fiduciary obligations must be performed solely in the
interests of plan participants and beneficiaries with the exclusive purpose of
providing benefits.
2. Compliance with terms of the plan documents - Fiduciaries must act in
accordance with the terms of the plan document at all times.
3. Diversification of plan investments - ERISA generally requires the fiduciary to
diversify investments to help minimize the risk of large investment losses.
4. Selection of service providers – Fiduciaries must exercise prudence in
selecting and monitoring service providers for the plan.
5. “Prudent Person” standard – Fiduciaries must act with the care, skill, prudence
and diligence that a prudent person in a similar capacity would use under like
circumstances.
Compliance issues are a top concern of plan sponsors.
Source: In pursuit of retirement readiness: assessing value, driving outcomes, TIAA-CREF, 2013

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Disciplined fiduciary process.
Governance best practices checklist for plan sponsors

Establish a plan governance process with written policies defining all roles and
procedures—including investment selection and review—and a clear understanding
of responsibilities of all individuals designated as plan fiduciaries.
 Establish a disciplined process for creating, maintaining and updating the written plan
document required by ERISA and the IRS.

Create a well thought-out investment policy statement with strategic direction for a
menu of carefully screened and suitable investment choices and defines guidelines
for selecting and monitoring plan menu options and service providers.
 Conduct frequent investment reviews to track the performance of investment options
in the plan against the investment policy—at least twice a year or more.
 When documenting plan meetings, have members both review and sign meeting
minutes to reflect accuracy and shared consensus on decisions.
Source: TIAA-CREF

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Four steps to successful plan management
1. Build a strong foundation
with purposeful plan design.
 Proven plan features and guardrails
 Carefully built, simplified investment menu with income options
 Sole recordkeeper model for lowest cost and highest value
2. Deliver outcomes-based
education and advice.
 Targeted, action-oriented communications to optimize
engagement
 Advice programs focused on accumulation and income
generation
 Technology to enhance employee experience and participation
3. Maximize value for fees paid.  Assess reasonableness of plan fees relative to the value,
services that focus positive plan outcomes
 Help plan sponsors benchmark an “all-in” plan fee for more
informed comparison
 Better cost control through improved operational efficiencies
4. Follow fiduciary and
compliance best practices.
 Recommend a best-practices approach to help reduce plan
sponsor liability and risk and increase likelihood of desired
outcomes

24. tiaa-cref.org
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