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Exclusive Interview: NAPA President-Elect Jania Stout Explains How to Keep HSA From Cannibalizing Retirement Savings

Exclusive Interview: NAPA President-Elect Jania Stout Explains How to Keep HSA From Cannibalizing Retirement Savings
July 17
00:01 2018

When word came across the wires that the National Association of Plan Advisors (NAPA) had named Jania Stout its Incoming President, knew it just had to invite her to appear in its monthly Exclusive Interview series. Besides her creds (Managing Director and Co-Founder of the $3 billion Fiduciary Plan Advisors at HighTower, over 22 years of experience in ERISA plan consulting, and being named the 2016 Plan Adviser of the Year by Plan Sponsor Magazine), what impressed us most was how she started out – as a double major who earned two varsity letters in Division I sports.

In addition, and beyond her role at NAPA, Stout has be asked for her opinion on retirement industry matters by both the legislative and executive branches of the federal government. In the Spring of 2016, she met with the DOL to provide her thoughts and opinions about the pending (at the time) Fiduciary Regulation. The following year, she offered testimony before Congress to speak as a retirement expert. We hope you’ll find her story as interesting as we did.

FN: Jania, we always like to give our interview subjects a chance to introduce themselves, tell us a thing or two about their backstory, and maybe reveal what prompted them to end up where they are today. So, what was the road that lead a two-sport double major from Hofstra to the position of President-Elect of the National Association of Plan Advisors?
Stout: If you had asked me when I was graduating college what I would be doing with my life, I would have told you I would be coaching women’s lacrosse on the collegiate level. That was my passion and what I wanted to do. My “Plan B” was to go to law school. So I spent the first 3 years of my working life coaching at Hofstra University. It was wonderful, but I had to wait tables to make ends meet. I will skip why Plan B didn’t work out (which I am so thankful it went that way) and went right to Plan C. I fell into the 401k industry mainly because the 401k manager at ADP in the Baltimore office approached me and after my first year of selling payroll services for ADP and asked if I wanted to come work for him in the 401k division. I was a philosophy major in college, so 401k was somewhat foreign to me. However, he was a great guy and I wanted to go work for him. (His name is Tom Connolly and I am still close to him today. He is over at Empower doing great things.) So that is how my entree into the retirement industry happened. It was not planned in college, it just happened, and I followed my gut and dove right in.

FN: You’ve no doubt talked with a number of professionals who advise retirement plans. What is the top industry concern you hear from them? How do you think it can best be addressed?
Stout: Among the top industry concerns I am hearing about is the continued demands for fee compression. I think regardless if you are an adviser or a provider, fees are being reduced. At first blush that might seem like a great thing for a plan sponsor and their employees. However, the concerns I am hearing about is that how can a provider or an adviser continue to deliver the services needed at half the cost? Add to that the need for my resources for participant education which in many times means onsite education. That is a very labor intensive service, and if fees keep getting squeezed, the resources will eventually dry up. I believe that the good advisers out there truly care about helping working America and want to provide these services. Add in the back and forth with the Fiduciary regulation and now SEC standard, there is quite a lot of confusion for the plan sponsor clients and investors out there. We need clarity not confusion. Lastly, there is always the looming concern of what our Government might do with the tax code that affects our industry. Thankfully we have NAPA and we also have the opportunity as advisers to have our voice heard thru our involvement with NAPA.

FN: From the plan sponsor perspective, what do you feel is an issue that they keep coming back to? How can this be best addressed?
Stout: Employee engagement would be the number one issue. Over and over again I hear plan sponsors talk about how they can’t get their employees to focus or care enough about savings. Auto solutions are great but there are still the issues around basic financial literacy and the plan sponsors are seeing this with lower productivity.

FN: There’s been a growing trend to integrate HSAs into the retirement plan universe. Why is this important? How might a company accomplish this without cannibalizing existing retirement plans?
Stout: Anytime we can help a participant understand how to prioritize and spend their “next best dollar” we should jump on that opportunity. It makes sense that the HSA should be integrated with any retirement discussions. Most health brokers are not licensed to talk about investments and retirement savings, so it really should shift to our industry helping with this topic. Great question on cannibalizing, I have that fear as well and think that as long as the retirement industry leads the discussion and not the health broker, we should be in good shape. This just adds to the need of better communication and education. Which now points back to more resources are needed from adviser teams to provide this type of education.

FN: Why do you think the DOL’s Fiduciary Rule failed? What could the DOL have done to have made it sustainable?
Stout: If the DOL would have only focused on corporate retirement plans, the rule would most likely not failed. The minute they included IRAs, they opened up a bigger universe of industries affected that they just couldn’t sustain the fight. I think if they would have focused on disclosure and clarity more than the complex, all-encompassing rule that came out, it might still be in existence today.

FN: Despite the failure of the actual Rule, in what ways has the Rule been a success? Do you think, even without a Rule, these advances are here to stay?
Stout: The failed rule made a huge impact on our industry. I am certain that plan sponsors are more educated today about who is a fiduciary because of the rule. If you polled my clients, they would be able to give you details about it because it was a topic at our committee meetings. They actually got tired of hearing about it. Even with the rule failing, I believe that it helped the industry with being more transparent and brought everyone up a level. We hope now that we have a more educated plan sponsor base, everyone wants to know that who they are working with are good people and doing what is in their best interest. For the brokers out there, they will have to do more explaining and be extra careful because the Plan Sponsors will be more aware. I do believe there are great brokers out there and even if they can’t be a fiduciary there are still many that do the right thing for their clients.

FN: The SEC seems poised to make a statement on the use of investment titles as it pertains to investment advice providers. How will restricting the use of terms like “advisor” (similar to the way the term “adviser” is restricted today) help clarify some of the confusion clients appears to be experiencing? What else do you think the SEC can do to help reduce this confusion?
Stout: I really like their position on who can use what titles. I think that will help quite a bit. I also believe that clarity needs to be made around the difference between advice and guidance and disclosing that to anyone on the receiving end. So many times I have heard plan sponsors think they were getting advice and it was merely just guidance. The SEC should continue to focus on that and lastly, anytime we are talking about disclosures, don’t make them like the lovely 404a notices. Make them simple and easy to understand. Otherwise you lose the whole point of the disclosure.

FN: You’ve been involved in regulatory and legislative activities. How would you characterize the difference between the Obama administration and the Trump administration?
Stout: Unfortunately, I feel mostly what I have witnessed was just the Trump administration trying to unravel what the Obama administration had done. So I can’t say what are the key differences but hoping we see some positive outcomes in the future. Fingers crossed!

FN: In terms of legislative acts, what’s been holding up approval of an Open MEP Law and why is it important Congress such a law?
Stout: From what I have heard, there is support for the Open MEP law and this was a topic I covered when I testified last year in front of Congress House Ways and Means. The holdup seems to be a timing issue and a priority issue. We are still hopeful this has legs and will continue down the path. I know I would love to see this pass because it would make a tremendous positive impact for the small employers.

FN: In lieu of federal action, some states are trying to take the initiative on MEPs and other forced retirement savings programs. In what ways is this helpful? In what ways might this do more harm than good?
Stout: We all know there is a coverage issue and anything we can do to help that coverage issue is a good thing. However, we have to stay close to what the states are doing to make sure we can speak into their design. We have been tackling coverage as an industry for decades and I think we can help develop these state plans or at least give our thoughts on best design. We can either be part of helping with this or ignore it. If we ignore or fight it, it could end up being a much bigger problem for us all down the road.

FN: Finally, what do you see as the primary advantages of having children save through an IRA and what do you think can be done to encourage more parents to help their children establish a Child IRA? [Ed. Note: You can read more about it here: – just scroll down below the sliding picture and click the links to the relevant articles.]
Stout: I like this idea and most that know me know I am a huge optimist. I think the younger we can help people start saving, the better our industry and their financial success will be. The bigger issue is that people are struggling with their finances today. The more we force them to save (like in auto enrollment plans), the more they may rack up credit card debt. So we have to continue to focus on basic financial literacy because that is the foundation of helping everyone become better saves. If the parents know basic budgeting they will pass this down to their child. This coupled with a Child IRA would be a recipe for success later on in that child’s years.

FN: Do you have any final words for our readers?
Stout: I love the industry I work in and think that the Plan Advisory space is great opportunity to help people. The financial industry or “Wall Street” gets so much negative press and I think our Plan Advisory industry needs to do a better job of sharing our success stories. I know I have seen people’s lives change because of the work my team and my peers are doing. We need to be loud and proud about those efforts and more importantly the successes we have experienced.

FN: Jania, thank you so much for taking the time to share your thoughts with our readers. It’s clear you have a passion for what the industry hopes to achieve – a passion no doubt shared by many fans. This enthusiasm will certainly help the industry accomplish much, and that will accrue to the benefit of all retirement savers.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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