Quick Takes: AskTRAK by Trust Builders, Inc

This article is the first in what I hope will be a frequent column that supplies readers with a quick overview of a product or service of interest. It is not designed to be a comprehensive review, but rather an informational piece that draws reader’s attention to something that I’ve recently taken a look at that interested me enough to share it with you.

AskTRAK by Trust Builders, Inc.

Trust Builders, Inc. has been in business for thirty years, yet it is relatively unknown in the independent advisory space. Perhaps that is because for much of their existence, the firm specialized in the 403(b) market. More recently, however, Trust Builders has extended into other markets including financial planning software, retirement software, Social Security software, and financial calculators. Perhaps their most interesting offering, however, is the one for the 401(k) space.

AskTRAK is a retirement analysis kit designed specifically for the 401(k) market. According to Trust Builders, Inc. President Edward Dressel, the greatest challenge when dealing with 401(k) plan participants is engagement. If an advisor can engage a participant, it is then possible to educate the participant, thereby improving outcomes. Dressel says there are two keys to engaging participants: (1) make it simple and (2) make it personal. AskTRAK does just that. The software allows advisors to present each enrolled participant with an easy-to-understand, one-page report that includes a retirement needs analysis, a contribution analysis and more.

In its simplest form, the analysis looks at a participant’s current income, their current plan balance, projected future contributions and interest. It then assumes an income replacement ratio (e. g. 80%), which is advisor configurable, less the calculated estimated SS payout (which can be adjusted at the advisor’s discretion). It then reports to the client the years of retirement coverage that they are projected to have if they remain on their current course.

PARTICIPANT ENGAGEMENT

Let’s say that you have an employee age 36, contributing 4.19 % of salary, and the analysis shows that they will only have 15 years and one month of retirement income coverage. Hopefully, this easily understandable fact spurs the participant to action. The report then displays the additional funds needed to close the funding gap, both as a percentage (in this example 7.51%) or in take home pay. In the sample case, the employee would have to pay an additional $118 each paycheck in order to fund the deficit. The additional dollars coming out of a paycheck is an amount that everyone can understand. The report also indicates a tax savings of $33 per paycheck. In addition, the report indicates any additional “free money” that helps fund the gap, due to an increased employer match, if available.

If the participant is hesitant to commit, the report lays out alternatives. One is to delay increasing contributions for one year. In the case of a young employee, the decrease in take home pay from delaying one year is likely to be small, but for someone a bit older, just showing the cost of waiting a year may be enough to spur additional deferrals. Other alternatives include retire a year later, contribute a lump sum today, or contribute a lump sum at retirement. Finally, the report shows all assumptions that were used in the calculations.

ADVISOR CONTROLS DATA AND PROCESS

If the participant cannot commit to the required contribution increase, the advisor can run a full contribution analysis report. This report shows the impact on the plan of different contribution percentages at various rates of return. The hope here is to show that even if a participant cannot commit to the full funding increase required today, they can make progress with a partial increase, or if they feel they can increase the contributions further, perhaps they can retire earlier or with a larger nest egg.

For those advisors providing one-on-one analysis to clients, it is possible to integrate outside assets. The software includes data on over 600 public pension plans, relieving advisors of the need to key in data on those plans.

The nice thing about AskTRAK, as opposed to some of the portals that employers provide, is that with AskTRAK, the advisor controls the data and the process. The advisor is not dependent on a portal, a third-party company controlled by the employer, etc.

For advisors who work with 401(k) plans, AskTRAK appears to be a tool that can help educate clients and increase contributions to the plan. It is definitely worth looking into. The company’s website is www.AskTRAK.com.

Joel Bruckenstein
Joel Bruckenstein
Joel P. Bruckenstein, CFP®, is Publisher of the T3 Tech Hub (formerly the T3 newsletter) and the producer of the Technology Tools for Today (T3) Advisor Conference, the only annual technology conference for independent advisors, as well as the Technology Tools for Today (T3) Enterprise Conference. Bruckenstein is an internationally acclaimed expert on applied technology as it relates to the financial service industry. He is the co-author of three books: Virtual Office Tools for a High Margin Practice, Tools and Techniques of Practice Management, and Technology Tools for Today’s High Margin Practice. Joel’s monthly technology columns appear in Financial Advisor magazine and Financial Planning magazine. In addition, he compiles the annual technology survey for Financial Planning magazine. Bruckenstein has for more than twenty years advised financial service firms of all sizes on improving their technologies, processes and workflows. For more information about Joel Bruckenstein and the services his firm offers, please visit www.JoelBruckenstein.com

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