15 Feb

Are You Managing Risk Properly? The Importance of Fiduciary Risk and Liability Review

Marko Ungashick LIby Marko Ungashick, co-founder and CEO of Two West Companies

As many of you have heard by now, the Department of Labor has recently passed down new rulings surrounding fiduciary standards that will affect most employers and their retirement plan providers. For the most part, this ruling ensures those in charge of a retirement plan have to act solely in the interest of plan participants and their beneficiaries.

While this is no big change for us (because we’ve held ourselves to a fiduciary standard from the beginning), the new rulings may increase the risk and liability you as employers hold over the decisions you make surrounding your retirement plan. These new rulings are largely increasing the standards our industry is held to (a good thing), but it can mean some extra paperwork (and extra headaches) for those who oversee company retirement plans.

Risky Business

For many of you who oversee your company’s retirement plan, liability and risk are not new ideas to you. As a retirement plan fiduciary yourself, you’re tasked with ensuring your company delivers a high-quality plan at a reasonable cost. You also have a responsibility to conduct and oversee regular reviews of your plan’s features, design, services and expenses. With these new regulations, the standards for fiduciaries have increased, and along with it comes additional risk and liability.

We’ve always believed continuing education and learning are important ideals for our business, so here are some things to keep in mind in the wake of the new rulings:

  • The Department of Labor strongly encourages a review at least every three years, so if you haven’t reviewed your plan recently, it’s especially important to do so now.
  • Educate your committee and/or board about its fiduciary roles, responsibilities and industry best practices.
  • Identify and mitigate any plan risks and liability.
  • Begin to think about how your company can provide transparency into plan expenses, ensuring all services and plan features are market-competitive. Begin implementing processes and documentation to make these expenses more transparent.
  • Ensure all company dollars going into your plan are being maximized through effective plan design.
  • Make sure your plan’s pricing is aligned with the current market.
  • Do some research into lower-cost investment options that perform as well or better than current options, which can help discover potential cost savings to your firm and/or employees.
  • Document due diligence findings that are audit-friendly and suitable for the plan files.

All this adds up to a decent amount of work for most already-busy business leaders, which is why we offer our own independent Fiduciary Risk Review.

Covering All the Bases

In addition to the above steps, our Fiduciary Risk Review allows us to conduct a live industry benchmarking of your plan. We break apart plan fees to analyze each component and conduct current market pricing in a blind manner, so your plan remains anonymous. More often than not, we’re able to uncover a large chunk of savings for plans and their participants.

Further, these reviews deliver an audit-friendly packet of your benchmarking, findings and analysis. Regardless of the risk review results, this document is an important part of your due diligence files. Finally, we’re able to leverage other resources to identify, isolate and ultimately minimize the fiduciary risk and liability exposure associated with their retirement plan.

In other words, our Fiduciary Risk Review makes sure you and your employees are all well-covered and well-prepared when it comes to the road to retirement.

Fiduciary Means Doing the Right Thing

Overall, we’re happy to see fiduciary rules continue to become the norm in the retirement sector. Financial professionals who haven’t acted in their clients’ best interests have cost people a serious chunk of change, so it’s good to see our industry moving in an overall more transparent direction. Though there may be some increased work on the part of plan providers and financial advisors, we’re here to make sure everyone is up-to-date on all the latest changes and updates in our field. Never hesitate to reach out if you need help!

Marko Ungashick is co-founder and CEO of Two West Companies and is a big believer in working hard, relaxing hard, and simplifying the complex for his clients. 

10 Feb

How to Avoid Wasteful Care and Beat the System

Adam KroegerBy Adam Kroeger, Truss
Client Executive, Benefits

“Hospitals look at primary care as loss leaders to act as feeders. They are more interested in sick patients filling hospitals than well ones being well managed by primary care.” –Jordan L. Shlain, M.D.
San Francisco

I recently visited Valvoline with my “$15 Oil Change” coupon in hand, feeling pretty great about myself.  My wife always gives me a hard time about not using coupons when I go shopping, and this was finally my chance to show her how financially responsible I’ve become. Common sense probably should have told me that four quarts of oil and a filter would cost around $25, but I was anxious to pay my $15, and go home. Sipping on lukewarm coffee and watching “The Price is Right” in the waiting room, I stood up as the mechanic called my name. Imagine my surprise when he pulled out a clipboard and said:

“Mr. Kroeger, did you know your windshield wipers need to be replaced?” My heart sank.
“… and you need a new serpentine belt,”
“… and your coolant needs to be flushed.”
And you get the picture. Before I knew it I was $225 in the hole!

Wasteful Care

Does this story sound familiar? You buy cheap products all the time that lead you into opportunities to buy more expensive products. We call these cheap services, loss leaders.

Unfortunately, we have loss leaders in healthcare as well: Primary Care Doctors. Primary Care Doctors are the “$15 Oil Change” of the medical industry. Especially those that work for major hospital systems.  As profit margins have shrunk over the years, doctors have been forced to rely on their ability to recommend more expensive services to bring in income.

This type of incentive system causes an incredible amount of wasteful, unnecessary care. It’s estimated that as few as 44 percent* of all knee replacements are considered “appropriate”.  Patients who receive physical therapy have better outcomes and higher satisfaction than those who go under the scalpel.

There is a solution

There are several simple ways around this expensive and wasteful issue.  Here are just a few:

  • Always require a second opinion from an independent outside physician. Independent physicians have no incentive to recommend unnecessary, expensive services. This is because they are an unbiased third party and they do not work for a hospital system. Independent physicians will use clinically proven recommendations to get the greatest results for the patient.
  • Add an on-site or near-site health clinic. Having an independent clinic that employees have access to is a fantastic way to influence employees to receive inexpensive primary care without the incentive of a large hospital system.
  • Use a Direct Primary Care provider. Direct Primary Care providers are an alternative to the typical “fee for service” models where doctors are forced to rush from patient to patient. Patients typically pay a monthly, or annual fee, and all primary care services are on retainer.

At Truss, our proven money-saving strategies can be seamlessly inserted into a healthcare plan with little to no employee disruption. For more information, please contact Adam Kroeger at 913-312-5955 or akroeger@trussadvantage.com.