CHRO & CFO: A DYNAMIC DUO, CREATING VIABILITY WITH DATA

Transcription

1 CHRO & CFO: A DYNAMIC DUO, CREATING VIABILITY WITH DATA OCTOBER, 2017

2 Important Disclosure Information MCF Institutional is a registered d/b/a of MCF Advisors, LLC ( MCF ). Registration of an investment adviser does not imply any level of skill or training. This material is for illustrative purposes only. It is not intended as an offer or solicitation with respect to the purchase or sale of any security. MCF does not guarantee the accuracy or completeness of information provided by third parties. The information is given as of the date indicated and believed to be reliable. MCF assumes no obligation to update this information, or to advise on further developments relating to it. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by MCF, or any noninvestment related content, made reference to directly or indirectly in this presentation will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. MCF is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice. Please remember that it remains your responsibility to advise MCF, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing / evaluating / revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. The scope of the services to be provided depends upon the needs of the client and the terms of the engagement. For more information about MCF, including the Form ADV Part 2A Brochure, please visit our website at MCF is not affiliated with Innovu, American Century Investments, Blackrock, or Prudential. All information presented is intended to be educational in nature.

3 Managing Business Risk Buckets Property & Facilities Financial Risk Innovation Human Capital Operational Risk Cyber- Security Environmental Risk

4 Three R s of Workforce Management Recruit Retain Retire Productivity Total Compensation Desired Retirement Projected Retirement Early Career Mid Career Retirement

5 Why Do We Sponsor Retirement Plans? To Recruit and Retain If employees cannot retire*: Mid-career talent leaves for opportunities elsewhere, and Productivity may go down Benefit and compensation costs increase Disability Paid Time Off Total Compensation Retirement To Retire *Your retirement program is the only program you have to influence this *Levanon, Gad, Ben Cheng, and Jeremy Goldman. "U.S. Workers Delaying Retirement: What Businesses Can Learn from the Trends of Who, Where, and Why." The Conference Board, ExecutiveAction Series 350 (2011): page, 8.

6 Real Compensation vs. Real Earnings

7 Typical Benefit Budget 14% 26% Retirement savings 30% Legally required Benefits Insurance 30% Retirement = Defined benefit and defined contribution Legally required = Social security, Medicare, worker s comp., UC, etc. Bureau of Labor Statistics: March 2016: Private Industry Insurance = Health, Rx, life, short-term disability, long-term disab Paid Leave = Vacation, holiday, sick and personal days

8 Breaking Down the 30% Breaking down the 30% $500/year for one average Rx $2,000 for ER visit $17,000 for single hospitalization $140,000 lifetime cost of catastrophic event 8% higher cost for those with eldercare responsibilities Rx side effects 5 th leading cost of death [VALUE] Medical errors 3 rd leading cause Bureau of Labor Statistics: March 2016: Private Industry

9 Financial Precarity Hurts Workers and Organizations Conditions High Financial Resources Working Memory High Expense Low Expense Low Financial Resources Meuris, J., Leana, C. (2015). The high cost of low wages: Economic scarcity effects in organizations. Research in Organizational Behavior, 35:

10 What Makes Someone Decide to Retire?

11 Source: Allianz Artificial Intelligence: Big Data

12 SMART Predicting retirement outcomes based on age and income SMARTER Predicting retirement outcomes based on more than 4 million data points Source: Pruco Securities and Prudential Investment Management Services, LLC. 12

13 MARGINAL COST OF DELAYED RETIREMENT Driver Average new hire Average retirement age Marginal difference Average age 38 Years 65 Years Wages $60,200 $84,480 $24,280 Healthcare $4,870 $11,219 $6,349 Worker's compensation $2,689 $6,121 $3,432 Other 3??? Total $67,759 $101,819 $34,061 Figures are for illustrative purposes only.

14 PROJECTED ANNUAL INDIVIDUAL COST OF DELAYED RETIREMENT Retirement age Wage Healthcare Worker's compensation Total Value in age 65 dollars 62 $72,869 $19,911 $10,361 $103,141 $105, $48,579 $13,274 $6,907 $68,761 $69, $24,290 $6,637 $3,454 $34,380 $34, $24,290 $6,637 $3,454 $34,380 $34, $48,579 $13,274 $6,907 $68,761 $67, $72,869 $19,911 $10,361 $103,141 $100, $97,158 $26,548 $13,815 $137,521 $132, $121,448 $33,185 $17,268 $171,901 $164,187 Figures are for illustrative purposes only.

15 EMPLOYER FIRST YEAR DELAYED RETIREMENT COSTS Age Beginning head count Expected retirements Delayed retirement Early retirement savings Delayed retirement costs Total retirement savings Total retirement costs Potential liability $100,791 $151,187 ($151,187) $67,971 $95,159 ($95,159) $34,380 $34,380 $68,760 $309,420 $240, $34,380 $247,536 $247, $34,380 $364,428 $364, $34,380 $319,734 $319, $34,380 $226,908 $226, $34,380 $206,280 $206, $- $- $ Net Potential Liability $1,359,200 Figures are for illustrative purposes only.

16 Equity Exposure Participant Allocation to Growth Assets by Age Participant Equity Exposure by Age 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ACI Target Date Glide Path Participant Equity Exposure Participant Age Source: American Century Investments

17 Participant Deferral Allocation by Age % % % 10.00% % 8.37% 7.50% 8.00% % 6.41% 6.00% % % 3.50% 4.10% 4.00% 2.00% % 1-5% 6-10% 11-15% 16-20% Avg Def% 0.00% Figures are for illustrative purposes only

18 Source: Blackrock s Future in Focus TM App. MPORTANT: The projections or other information generated by the Future in Focus app regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Actual participant outcomes may vary with each use and over time. Design a Contribution Structure Based on Viability PROJECTED IMPACT ON PARTICIPANT BALANCE AT RETIREMENT Your What If? scenarios are changed the projected participant balance at retirement by 487% $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $-

19 Analytics Big Data Medical Pharmacy Wellness Absence Management Ancillary EmployerVault EmployerLens Employer Vault Automatic collection & consolidation of vendor data Engagement services Data Retention Strategy Vendor data management Employer Lens Integrated data Collaboration Automated analytics Dashboards, reports and alerts Data exploration Workers Comp Engagement services o Measurement Strategy o Quarterly Engagement o Ads Hoc Analysis Figures are for illustrative purposes only

20 Analytics Big Data Sample Cost Savings Medical Pharmacy Wellness Ancillary Absence Management Workers Comp EmployerVault EmployerLens Medical Plans Control core costs Manage trend costs Reduce errors & fraud Optimize utilization 10 to 20% savings Rx Plans Benchmark Rx spend Remove spread pricing Complete transparency Improve clinical/therapeutic outcome Reduce errors 20 to 30% savings Figures are for illustrative purposes only

21 DESIGNING A DC PLAN BASED ON REALIZED IMPACT ON AN EMPLOYER VIABILITY Sample Firm 3,500 Employees $42M RX Plans AI Disease Management Cost IWS BAMS $17M Age Figures are for illustrative purposes only and actual results may vary.

22 Important Disclosure Information MCF Institutional is a registered d/b/a of MCF Advisors, LLC ( MCF ). Registration of an investment adviser does not imply any level of skill or training. This material is for illustrative purposes only. It is not intended as an offer or solicitation with respect to the purchase or sale of any security. MCF does not guarantee the accuracy or completeness of information provided by third parties. The information is given as of the date indicated and believed to be reliable. MCF assumes no obligation to update this information, or to advise on further developments relating to it. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by MCF, or any noninvestment related content, made reference to directly or indirectly in this presentation will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. MCF is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice. Please remember that it remains your responsibility to advise MCF, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing / evaluating / revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. The scope of the services to be provided depends upon the needs of the client and the terms of the engagement. For more information about MCF, including the Form ADV Part 2A Brochure, please visit our website at MCF is not affiliated with Innovu, American Century Investments, Blackrock, or Prudential. All information presented is intended to be educational in nature.