PLANADVISER - May/June 2020 - 35

guidance on the potential implications to their organization
of the pandemic and/or the CARES Act.
Below, three advisers share strategies to help sponsors of
micro plans, 403(b) plans and defined benefit plans during
market downturns-especially during the current one.
Micros/Startups
JOHN K. PALLADINO, 401(k) & 403(b)
Fiduciary Advisers, San Mateo, California
In his book of business, John K. Palladino,
managing director and investment
adviser representative at 401(k) & 403(b) Fiduciary Advisers,
has approximately 30 micro/startup 401(k) plan clients
with less than $1 million in plan assets. When there is an
economic downturn, such as the Great Recession of 2008
and 2009, and especially now with the market and business
reverberations from effects of the COVID-19 pandemic, " their
biggest concern is staying afloat and doing anything they can
to save money, " Palladino says.
He says a common question he gets from these plan sponsors
is: " How do we turn off our match contributions? " He
says, for sponsors that offer a safe harbor 401(k), the procedure
entails, at least 30 days before the suspension, notifying
plan participants that the match will be suspended.
Sponsors must also prepare for nondiscrimination testing-
maybe for the first time. The smallest-plan sponsors may
already be overwhelmed with workforce, business and
retirement plan decisions, he notes.
" When going through a tough time like this, people
want communication. They want to know what's going on, "
Palladino says. In late March, his firm sent an email blast
to clients discussing the pandemic and market volatility.
Six attachments addressed topics such as staying calm
during bear markets. " These resources were one- or twopage
PDFs for clients to post on their intranets or forward
to participants, and on the bottom of each was my phone
number and email, " he says, adding that all PDF content
was run through compliance.
After receiving the email blast, many of the smaller
clients asked if Palladino could schedule a webinar to speak
to participants in more detail. " We've done webinars for
clients at no charge, using GoToMeeting for up to 100 participants, "
Palladino says. " We talked about the importance of
their 401(k). We went through the different topics covered in
the PDFs and answered questions. "
He observes that the webinars help plan sponsors fulfill
their fiduciary duties without getting into trouble. " We tell
them, 'One reason you have an adviser is you never want to
be accused of giving advice. " Providing the webinars and PDF
resources was not only good customer service, but they also
made participants feel a little better, he says.
Palladino has also been fielding calls from participants,
many of whom are nervous, as they have never experienced
a downturn or they forgot what happened to their account
during the Great Recession. Additionally, there have been
calls from terminated participants who have the idea that it
would be better to roll their assets out of their 401(k) into an
individual retirement account (IRA).
" It's all about offering touchpoints, " Palladino says. " But
it's also about having a specialist for retirement plans and
their
investments. Plan sponsors and participants
feel
comfortable working with someone who is knowledgeable
and specializes in retirement plans. "
He says some sponsors just have been wanting a " gut
check " that they are doing all they should for their plan. " We
stress that they can't control Congress or the stock market;
they should focus on what they can control, " Palladino says.
The things he can take off sponsors' worry list, he does. " They
have lots to worry about. "
403(b) Plans
DANIEL R. CASELLA, Strategic Retirement
Group, an affiliate of Resources Investment
Advisers, White Plains, New York
The entities that will sponsor a 403(b)
plan have unique challenges during economic downturns,
and they are especially being tested during the COVID-19
pandemic. Nonprofits are experiencing a greater demand to
take care of people's basic needs.
Daniel R. Casella, executive director of consulting with
Strategic Retirement Group, an affiliate of Resources Investment
Advisers, says, " Health care, higher education, nonprofit
institutions, and K - 12 schools are all in crisis mode to some
degree, with health care at the epicenter.
" Health care is unique right now in that, as a business,
they already had tight margins and a poor outlook for the
future, " he says. " I've sat in many board meetings before this
crisis where this was discussed. "
According to Casella, health-care institutions have never
faced margins this tight. " The things they make money from
they aren't able to do now. Demand has been pulled away so
dramatically, and compensation and benefit costs are a huge
spend, " he says.
Resources
Investment Advisers manages 280 403(b)
plans, of which Casella and his team handle 32. He considers
his degree in psychology a bonus for managing client anxiety.
He has learned that, often, just using facts can allay stress.
One source of anxiety his team works to manage is the
flow of information to plan sponsor clients. " During market
He says a common question
he gets from these plan
sponsors is: " How do we turn
off our match contributions? "
planadviser.com May-June 2020 | 35
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PLANADVISER - May/June 2020

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