Guide to Implementing Benefits For Your Company The Right Way

In today’s competitive market, employers understand that offering a comprehensive benefits package is extremely important for attracting and retaining high quality employees. In fact, studies show that a better benefits package is rated as more important for prospective employees than a higher salary. 

However, most employers are unaware of all the options they have available to them and wind up paying much more than they need to for a lesser plan. There are many different factors to consider when implementing health benefits for your company. For many business owners and human resources staff, this can be an overwhelming and daunting task. To make the process easier for you, we put together this guide which will breakdown everything you should consider. 

While there are many benefits that you can offer for your employees, such as medical, dental, vision, 401k, etc, we are going to focus on medical plans since those are the most expensive, most important to employees, and subject to the most regulations. 

When implementing benefits, you will want to first (1) know the options available to your company, second (2) know the rules and regulations, and third (3) know how to administer your plan efficiently. These three steps are covered below.

Knowing your options 

First, you will want to know what types of benefits plans are available to your employees. We see companies save hundreds of thousands and even millions of dollars per year when they implement benefits options that are more suited to their goals. Don’t miss out on the best plan for your business because you were not aware of all the options available. 

• Standard Market: This is what you usually think when you think of health insurance and is otherwise known as fully insured plans. These plans cover you for all benefits required through the Affordable Care Act (ACA). They do not ask any health questions, so anyone can enroll. All the rates for these plans are fixed by law, which are filed with the Department of Insurance every quarter and those are the rates at which the plans must be sold. You will typically see these plans named as either Bronze, Silver, Gold, or Platinum. This denotes the quality of the plan. The standard market is where most companies go to get their benefits plans. The problem is that most of the plans in the standard market have been seeing steep increases in premiums year over year. Plans in this market are not allowed to decline people with higher health risks, so now the risk pool is much riskier and so costs are going up for everyone.

• Self Funded: Self Funded plans are exactly as they sound; the employer takes on the risk of an insurer and provides the funds to pay for claims with the exception of their stop loss limit. The stop loss is the point at which the company has paid out so much in claims that they no longer pay out for future claims. This protects the business from catastrophic claims from their employees. The employer must find an insurer to be the stop loss carrier and a third party administrator must be contracted to administer the plan and process claims. While about 63% of employees are covered by fully or partially self funded plans, these types of plans used to be reserved only for large employers above at least a couple hundred employees. 

• Level Funded: Level Funded Plans, while very similar to self funded plans, have made it possible to offer self funded plans to much smaller companies as low as 10 employees (Note that in California and New York, because of the specific laws in those states, Level Funded plans do not become competitive until about 100 employees). Level funded plans can be a great option for smaller companies. They are just like self funded, except for the stop loss limit is much lower, protecting smaller companies from unforeseen claims. Some level funded plans will require health questionnaires be answered by the employees, some require an audit of the employees’ prescriptions to determine risk, and some don’t require health questions at all. It just depends on the carrier. A great aspect of self and level funded plans is that any leftover money in the claims fund at the end of the year will be returned to the business. 

• Health Reimbursement Accounts (HRA’s): This can be a great option for companies that want to offer a higher quality health plan but rates are too high on the standard market. Basically, what a group typically does is offer a Bronze level fully insured plan to its employees, but then the employer agrees to pay a portion of the copays and coinsurances for services for their employees, effectively making the Bronze plan function more like a Gold or Platinum plan or better. The business can end up saving money on the HRA versus a Platinum level plan because they are only paying for a Bronze level plan and the saved money from the difference between Bronze and Platinum premiums can go towards employee claims. With a Platinum plan on the fully insured market the premium payments go into the pocket of the insurance company. With an HRA, the business pays only for a Bronze plan and then makes additional payments if their employees have claims (with preset limits to avoid high costs). So with the HRA, lower claims means more money in the pocket of the business while still providing high level benefits for their employees. Whereas with a fully insured platinum plan, low claims will still result in all the money going to the insurance company. 

• Professional Employer Organizations (PEOs): This solution is a little more hands on, but it can be great for small to mid sized companies. A PEO essentially takes over your employees, handling their payroll, human resources, workers’ compensation, and employee benefits all in one package. The benefit of going this route is that the employees get pooled into a much larger group of employees giving them access to more competitive, large group insurance rates even through they work at a smaller company. Not all companies can qualify for a PEO. It depends on the industry and the health of the group. For companies that want everything handled all in one place, this is a fantastic solution. The technology that they have to administer benefits, payroll, and human resources tends to be pretty strong as well, which makes things easier for your employees. 

• Rx Customization: Prescription drugs are the most complex yet most easily controlled cost associated with the health benefits plan. The removal of lifetime insurance caps under the Affordable Care Act has led to a massive surge in Rx costs in recent years. Additionally, Third party administrators and insurance carriers collect extraneous rebates, administrative fees, and dispensing fees. A prime example is when the insurance company charges a $20 copay for a drug, but only passes $18 to the pharmacy, pocketing the remaining $2 for themselves. With prescription customization, you can now conduct a financial analysis of existing prescription plans and employee prescription needs. Most businesses with under 1000 subscribers are losing 25-45% of their pharmacy plan savings every year. The benefit of the plan analysis is to show what dollars are still being left on the table which can improve the existing plan with no changes to benefits or networks. 

• Minimum Essential Coverage & Minimum Value Plans (MEC/ MV): These plans are meant for applicable large employers as defined by the ACA (above 50 employees) to protect the business from the tax penalties at the end of the year for not offering health insurance. These plans also protect employees from needing to pay the individual penalty for not having insurance. However, that’s about as far as these plans go. They do not offer significant coverage, but they are a cost effective way to protect from the ACA penalties for businesses and their employees.

Knowing the Rules and Regulations 

Employee benefits plans and health insurance plans in particular are subject to many governing laws. Fines for not abiding by these laws can be substantial so it is important to know how to keep your company in compliance and avoid unnecessary penalties. 

• Employee Classes: Some employers want to contribute a higher percentage or have a lower waiting period for managers versus normal employees. This is allowed by setting up employee classes, which can be distinguished by managers versus normal employees, seasonal versus permanent employees, and full versus part time employees. You just want to make sure that when you set up employee classes, you do two things. First, you make sure that these are legitimate employee classes and you are not just preferring one employee over another without justification. And second, that all eligible employees are offered the same benefits. So while certain classes can receive more contribution from the employer or lower waiting periods, all eligible employees still need to be offered the same plans. 

• Non-Discrimination Laws: Basically these laws mean that all employees that are full time, which is defined as working above 30 hours per week, must be offered the benefits plan through your company. You can offer certain employee classes, as we just discussed, different contributions and waiting periods, but if 2 employees have the same job you can’t offer one more contribution just because you like them more than the other. This would be a form of discrimination and would invite fines by the Department of Labor if they were to audit your company. 

• Applicable Large Employer (ALE): These are the companies that are required by the Affordable Care Act to offer ‘affordable’ health insurance for their employees. To be considered an ALE, an employer must have averaged at least 50 full time employees over the preceding calendar year. For a plan to be considered affordable, the lowest cost plan available to the employee must be below approximately 9.5% of their income (the affordability percentage changes slightly year to year). Fines for not offering coverage are substantial and can easily cost applicable large employers hundreds of thousands if not millions of dollars per year. It’s certainly better to get coverage in place than deal with these fines. 

• COBRA: This is the continuation of coverage for employees when they leave your company. When employees leave, they can continue their coverage, but you as the employer no longer have to pay for it and the ex-employee picks up the whole tab. When a company has less than 20 full time employees, the continuation of coverage is not through COBRA, but through State Continuation. State Continuation is administered by your insurance carrier and requires little to no administration on the part of your business. However, if your business is above 20 employees, then your company is subject to COBRA, which means either your company or a third party administrator must run your COBRA, sending out benefits notifications to ex-employees and handling the collection of their premiums. So if you’re above 20 employees at your company, you will most likely want to enlist a third party administrator to handle your COBRA. 

• Small Group Special Open Enrollment: This comes around once a year. During this time, all fully insured carriers on the standard market reduce their contribution requirements down to $0 (meaning the employer does not have to contribute anything), and participation requirements go down to 1 (whereas most carriers typically require anywhere from 50% - 70% of eligible employees enroll). This is for groups with less than 100 eligible employees, but it is highly beneficial for companies that are concerned about meeting participation or not sure if they can afford the higher contribution requirements set forth by the carriers. Please note that while the carriers relax contribution requirements here, the ACA still requires that plans be affordable, so Applicable Large Employers still need to make sure plans are affordable for employees to not be subject to fines. To take advantage of this open enrollment, applications must be submitted between November 15 and December 15 for a January 1 effective date.

Knowing how to administer your plan efficiently 

You know the old adage that time is money. Well this couldn’t be more true with your benefits plan. The more efficiently you can administer your company’s benefits plan, the less it is going to cost your company in finite resources and man-hours. Administering your plan efficiently will result in significant savings for your company. 

• Technology: This day in age, there are plenty of technology platforms available to administer your benefits and they all have their own pros and cons. The main basics you will want to make sure that your platform has is paperless or online enrollment, employee logins, and administrator logins. Employees should be able to see all their plans and pricing on the same portal and enroll themselves and their dependents right there.

• Payroll & Human Resources Integration: Top benefits platforms will also integrate with payroll and human resources functionality. This means that payroll deductions will automatically be pulled from an employee’s paycheck once they enroll through your benefits platform. Human resources management will allow you to onboard new hires, track vacation and PTO, and provide companywide update notifications. 

• Educated Staff: To make processes as efficient as possible, your human resources department should be educated on when and how to best notify new hires that they can enroll in benefits. You HR managers should know what to do to notify the termination of an employee from a benefits plan. And they should know how employees can go about making changes. 

• Broker or Trusted Advisor as Back Office Staff: Your broker or trusted advisor will typically provide a back office staff for you that will handle the vast majority of the plan administration. This way, all your employees really need to do is notify this back office that a change needs to be implemented, and then the back office will take it from there. This back office should also provide enrollment meetings each year during your open enrollment and educate your employees on the benefits and plans being offered to them.

For best results, work with an expert 

From all of the information given above, you now have a strong grasp of how to implement a great, affordable benefits plan for your company. However, there is no substitute for enlisting the help of an expert. If you want to make sure that you fully explore your options, set up your plan within compliance of the law, and implement efficient administration, you should work with someone who does this professionally. 

With the knowledge you gained from this guide, you can now properly vet independent brokers to find the one that will best be able to help your company. 

Benefits brokers often do not cost your company anything. They are paid by the insurance companies to bring them business, but the cost is typically not passed along to you as the client. Because all insurance companies pay brokers about the same commissions, they have no incentive to provide you with a worse plan just because it pays more commission. Good brokers understand that they should always act in the best interest of their clients because that is how long lasting relationships are formed which is much more valuable than a short term gain by providing something that the client doesn’t need. 

Once you find the right trusted advisor or broker, they can educate you on what you need to do to implement a great benefits package for your company.

- Doug Myrick

Boat Camping: 5 Steps For Safe, Exciting Overnight Boat Trips

It’s camping time!

But not just any camping, today we’re talking about boat camping!

That’s right, sleeping under the stars, breathing fresh ocean air, letting the waves gently rock you to sleep.

That’s living the life right there, right?

A night, or even a few nights out on the water sounds like a dream, but if you’re not careful, it could quickly turn into a nightmare, so be sure to take note of these safety tips below!

5 Steps For Safe, Exciting Overnight Boat Trips

What could be better than spending a day on a boat, soaking in the sun, riding the waves, lazing around on a lake or fishing to your heart’s content?

Spending the whole night aboard as well!

Boat camping, commonly referred to as “hanging on the hook”, is an experience anyone with a boat and sense of adventure should look into.

While it may seem easier than traditional camping on land to just throw down the anchor and fall asleep under the stars, there is quite a bit of planning required before diving into a night of boat camping.

Depending on the size and included amenities of your boat there could be more to the planning required.

From bathroom breaks to drinking water to safety, there is more that goes into a boat camping adventure than you might first think.

These five tips will ensure that your trip goes smoothly.

1: Planning Your Route

The most important step to any boat camping trip is research.

This research includes where you plan to boat, where you might make stops, and what is allowed in these places.

Many locations will have rules and regulations on where you can moor your boat overnight.

You may need to plan on docking at a boat-in campsite or ensure you have the proper space and permission to drop anchor.

If your boat does not have bathroom amenities you may want to look into places nearby you can dock for restroom breaks.

If you are planning on docking at a boat-in campsite for the night you can use the restrooms there, but if not then find out the policies of using nearby state parks or beaches restrooms at night.

2: Safety Precautions

Once you have the plans of where to go, figure out if there are specific safety regulations you must follow for these places.

Most boats will require anchor lights when mooring overnight and boats must be 200 feet from shore.

Life vests and other safety equipment should be in line with the laws in whichever state you wish to camp.

Be sure to check for cell service in case you need to bring other forms of communication along.

Depending on the length of your stay you may need to inform someone of where you will be going and when you will be back if no communication is available once out on the water.

You may also need to continuously check the weather report to stay away from thunderstorms or other dangerous areas.

Be aware of the place you are sleeping and keep in mind the places that have strong currents or anything that might damage your boat when out at night.

3: Packing

When out on the water there are likely no shops to stop at if you forget your toothbrush.

Ensure that you have everything you need, and most importantly that you have food and water.

Sort out where you can store stuff on your boat and where you might have extra storage.

You may want to bring a cooler or large sleeping bag or bed.

Keep in mind what space you have and what space will be taken when sleeping.

Pack more than enough water or invest in a device that will allow you to drink the saltwater.

Food can take up a lot of space so its best to think like a backpacker.

Dried foods and cans you can heat up with a portable stove are ideal on a smaller boat.

Snacks and bigger meals can be packed as well if you plan on a short trip or have extra space in your boat.

If docking at a boat-in campsite make sure you can have a fire if you wish to cook anything by campfire.

You may also want to bring beach chairs to sit on at the campsite or other site-specific gear.

Do not forget about:

• flashlights
• first aid kits
• sunscreen
• or any other safety equipment for your specific trip

Many places have bathrooms, but if they are not provided you may need to bring your own supplies for restroom trips in the woods.

Keep in mind that many places require you to bring plastic bags in order to not leave waste.

If no running toilets are a concern, you can purchase a portable toilet to bring with you as well.

When packing clothes keep in mind that it may get cold once the sun goes down.

Bring hats to protect you from the sun during the day, and warm clothes to keep you nice and cozy at night.

A rain jacket and protection from the elements is also something to keep in mind.

4: Setting Sail!

And finally the fun part – setting sail.

Where and how you will sleep might be the most important component of any boat camping trip.

If you have never slept on the water before, consider spending the first night docked so you can get a feel for it.

If you are wanting to sleep on your boat you will also need some form of bed.

Bedding could be anything from boat cushions to sleeping bags to an inflatable mattress.

The form of bed you take will depend on the amount of space you have on your boat.

If you want the comfort of a bed you can even get custom boat mattresses and covers.

An inflatable mattress paired with a warm sleeping bag can make a great bed under the stars if your deck accommodates it.

If you want more protection from the outdoors, a small backpacking tent may even fit on your vessel.

Whatever you decide, sleeping on the rocking waters and under the night sky with no light pollution to muddy the stars is an amazing experience.

5: Privacy Check!

If you are planning on going with multiple people make sure to look into privacy measures.

Pop up privacy changing rooms can serve as a place to get ready or use a portable toilet and don’t take up too much space.

With all the planning and packing done you can enjoy the waters and nature as much as you wish.

Final Thoughts On Boat Camping

Boat camping is an amazing experience.

Whether you dock at a campsite or in the open waters, it will be an adventure you will never forget.

Being prepared ensures that you will have the best time you can and won’t ruin your trip with having to leave early to get more supplies (or worse).

If you are planning your first boat camping trip or have been hanging on the hook before, these tips are an essential part of the process.

The best tip to remember, however, is to have fun.

- Doug Myrick

True Cost Of A 401K Plan – A Quick Guide!

Dear friends, We all know the importance of saving for retirement. And for most people, a 401K plan, sponsored by the company they work for, would seem to be the easiest and best option. But, when you give a 401K plan a good, hard look, it isn’t near as good as it would appear. (Even if you do get any company match) 

The high cost of 401K Plan administrative fees!

Surprisingly, minor administrative fees in 401K plan can make a substantial difference. A Government Accountability Office study compared the difference between paying 1.5% annually in fees versus 0.5%. It started with an individual’s 401K balance of $20,000 and assumed it grew by 7% each year. Paying 0.5% in fees would leave the person with $70,500 in 20 years. But, instead of shelling out 1.5% in fees slashed the balance to $58,400 during the same period. That’s a 17% haircut to your retirement nest egg. 

However, the real concern is that most people are not even aware there are administrative fees for a 401K plan. A recent LIMRA study shows that 90% of 401K plan participants either didn’t think they paid any fees, or didn’t know the fees they paid for their plans. The truth is everyone pays a fee to have a 401K… and workers — not employers — pay for most of the plan fees. The average 401K plan administrative fee is about 0.78% per year. Which means you pay $780 annually for every $100,000 you have in your 401K.

Then There Are The Annual Investment and Management Fees!

In addition to the 401K plan administrative fees there are the annual investment and management fees of 2-4% on each of the accounts that are inside of the 401K. As a result, these additional fees would significantly reduce your retirement funds even further.

By the way, that same $20,000 earning 7% per year… without any annual fees… would be worth $80,775.

Yes, there are much better options than a 401k plan; where you don’t pay any annual fees; all of your money immediately goes to work for you; and you can still get a tax write off!

- Doug Myrick

Practice Vigilance Against Driver Fatigue While Traveling This Labor Day

Labor Day Weekend is one of the busiest weekends of the year for Highway Travel in the US. Did you know that fatigue is more likely to set in on high-speed and long rural highways and interstates? 

Drivers should be aware of this ever-present risk. Thus, the following tips may help you stay awake behind the wheel.

• The obvious cause of fatigue is lack of sleep. You should begin a long trip early in the day, after 7 or 8 hours of sleep.
• If possible, avoid driving long distances alone. Passengers can take turns driving and keep the conversation flowing, which can help keep you awake.
• Abstain from drinking any alcohol before driving. Drinking compounds with sleepiness to increase the chances of a fatigue-related accident.
• Long drives at night are a recipe for driver fatigue. The glare of lights, both on the dashboard and on the road, increases the danger of highway hypnosis. This term refers to driving in a trance-like state while gazing at a fixed point, an unsafe situation.
• Adjust your vehicle's environment in order to stay alert. Avoid using cruise control for long stretches of time. This helps keep your body involved in the driving.
• Take frequent breaks. Schedule regular stops every 100 miles or every 2 hours, including stops at a rest area or gas station. Getting out of the car and walking a short distance can help fight fatigue.
• If anti-fatigue measures do not work, there is only one solution. Find a safe, guarded rest stop or motel and sleep.

Have a safe and Worry Free Labor Day weekend! 

- Doug Myrick

Leverage Social Media Recruiting to Find Great Employees

According to LinkedIn’s annual recruiting trends report, between 2011 and 2013, the percentage of employers who use social media recruiting strategies jumped from 29% to 42%. Tied with corporate career websites, social media recruiting is the second most prevalent source of hire, and social networks are the source of “quality hires.” While online job boards and other recruiting programs decreased between 2011 and 2013, more than a third of U.S. employers now view social media as a lasting trend in recruitment.

What does this mean for you?

As a recruiter or hiring manager, you can’t ignore the growing social media resources for finding the best candidates. It’s an important piece of recruitment that should be considered before narrowing down the final candidates; in fact, it’s something that recruiters must think about prior to posting an open position.

While posting openings on a job board and on your website is still important, as the LinkedIn report shows, more people are searching for jobs via social media. If your company doesn’t already have social media accounts on the top sites including Facebook, LinkedIn, Twitter and Google+, create them. Social media is no longer something that companies of any size can ignore; it’s part of today’s world and it’s only growing.

Social media provides extended reach because content is easily shareable, which increases visibility and is more trustworthy. Job seekers can search keywords, find positions and then some: with a robust social media presence, potential candidates can view your accounts and gather information about your company, including insight into your culture, which is a growing concern for candidates. Further, using social media gives current employees and recruiting team members an easy avenue for sharing job postings with their networks.

How does this work?

Social media is constantly evolving; something that works today might not work two months from now. The important thing is to understand the power of social media recruiting, and find the right tactics for your company at any given time. For example, there is a growing trend on Twitter for recruiters to post jobs and use hashtags, like “#PRjobs,” to make it easy for job seekers to find jobs in the right industry. Other companies are using Facebook advertising to target people looking for jobs.

No matter the specific tactic, the key to social media recruiting is building up an audience and sharing content frequently. The more you promote your job openings, the more likely you’ll reach the largest possible number of people. Finally, it’s helpful to ask your current employees to share openings; for each share, you are exposing your job postings to thousands of people. Do the simple math if 10 employees share a job posting in their social networks that has 200 connections each you are exposing your trusted job posting to over 2,000 people. If you receive a 1% response you have generated 20 candidate leads for free!

Can I search for candidates’ accounts?

As potential employees are in control of their own social media presences, you can search for public profiles to gain insight you likely won’t get from an in-person interview.

It’s critical to remember that not all profiles are public and an individual’s social media account does not necessarily correlate with success as an employee. It does, however, lend insight into a candidate’s dedication to obtaining a job. If a person hasn’t updated their LinkedIn profile or their Facebook account is inappropriate, it shows a lack of attention to detail or a lack of dedication to getting a meaningful job.

- Doug Myrick

How long will $1 million last in retirement? Is there a magic number?

How much is enough? When can I retire? Millions of Baby Boomers, even generations following them with visions of early retirement, are all wondering these same questions. The longing for an answer, a definitive finish line, has prompted many large financial institutions to market a “number.” Reach this number and you’ll be set. Anyone wise and patient enough to run some stochastic analysis will quickly realize there is no perfect “number.”

A financially successful retirement is dependent upon hundreds of variables, some within our control and others beyond our management. Nevertheless, a frame of reference can at least offer a starting point.

Spenddown

That leads us to the magic question, “How long will $1 million last in retirement?” The easiest do-it-yourself solution to translate to a spendable asset is to take your nest egg and divide by retirement time horizon. i.e. $1million over a 20-year retirement will offer $50,000 of annual income, assuming a linear paydown with no other influencing factors. Such a retiree will then probably posit that their funds are invested and not just cash under the mattress.

This segues into another common solution of interest-only distributions, an attempt to preserve principle. Assuming the retiree receives a net return of 4% every year in retirement and peels this off as income, he or she receives $40,000 of annual income.

But why not combine the interest with the original linear paydown you ask? If Mr. and Mrs. Retiree were to do so they’d now enjoy $70,752 annually and die right on time after year 20 with zero dollars remaining.

Inflation

The figure, one million, has long held an aura about it. To some, $1 million is still a sexy fortune that cures all worries. Others may confess that $1 million just isn’t what it used to be. This concern introduces the first wealth eroding factor, often considered the silent killer … inflation. In 1913, when federal income tax was permanently enacted, $1 million would be equivalent to a staggering $25.8 million in 2019! In 1945, when World War II ended, $1million would equal $14.2 million today.

In 1981, when the first millennial was born, $1million would spend like $2.8 million today. Hopefully you’re getting the idea. If you consider an average retirement from 65 years old – 85 years old that means $1 million at the start will feel like $744,000 at the end, assuming 3% inflation devaluing your dollar.

Uncle Sam

The above spenddown scenario offers a nice visual, albeit in a laboratory-like environment. It would be foolish to ignore one of the most notable certainties in life and harshest wealth-eroding factors… taxes. While $1 million may look the same on the cover letter of any statement, all accounts are not created equal. For instance, a Roth IRA totaling $1 million can offer the same mathematical outcome referenced above. If over the age of 59.5 and distributing from a Roth IRA held for over 5 years, there is no tax consequence.

However, if Mr. and Mrs. Retiree were to apply the same strategies to their nonqualified joint brokerage account, their take-home annual income could be reduced to $28,000 in the interest-only approach and a variable net income in the combo plan starting at $59,601 increasing to $70,752 in their last year as more tax-free basis is returned (assuming a 30% total effective tax rate from state and federal).

Lastly, if our sample clients were employing the same distributions from their Traditional IRA getting hit with income tax throughout, they’d realize $28,000 or $38,924, respectively.

The markets

So far, we’ve addressed two major wealth-eroding factors in isolation, we’ll do so with the last key variable… the markets. When John Pierpont Morgan (if you don’t know who that is, just use the first two initials) was asked what he expected the stock market to do, he famously answered, “It will fluctuate.” These fluctuations can wreak havoc on a nest egg or buoy your funds to a golden retirement. This introduces a concept known as the sequence of returns.

If Mr. Retiree and Mrs. Retiree were to average the same rate of return on their portfolio’s during retirement, but Mr. Retiree experiences bear markets in the early years of distribution, whereas Mrs. Retiree experiences bull markets during the same years, his money risks depletion far earlier than hers.

This is where averages can be somewhat misleading, note the classic example of an investor with $1 million losing 50% in Year 1 and gaining 50% in Year 2, the portfolio average annual return is 0%, however, there is $250,000 missing. This is where distributions can make an investment more fragile.

— — —

So how long will $1 million last in retirement? I don’t know, you don’t know, nor does anyone else. We’ve explored three popular wealth-eroding factors in isolation, and the reader may notice each exercise repeatedly mentioned assumptions. If we were to combine these three variables the assumptions only become more exaggerated.

Other issues that affect the longevity of $1 million include housing costs, food, insurance, transportation, vacation, legacy goals, dependents, location, additional income or financial resources, long-term care, and the ultimate risk/reward multiplier — life expectancy.

Proactive financial planning that addresses each of these concerns can provide risk mitigation and a potentially longer duration for $1 million.

- Doug Myrick

A Simple Guide to Interviewing Candidates for Attitude

Interviewing for attitude presents a dilemma: Most people are on their best behavior when interviewing and even during their first six to twelve months of employment. You may not realize you have a problem on your hands until the new hire has been trained and is a fully functioning part of your team. 

Knowing you’ll have to begin the selection process all over again—a long and costly procedure—makes it harder to part with the employee. Meanwhile, the good-natured people on the team have to pick up the slack, putting strain on your best people and leading to harmful side effects. Burnout, discontent with management, and customer service deficiencies are likely to develop. Since this is a major problem in many organizations, guerrilla tactics are needed.

Before you start interviewing for attitude, identify and eliminate employees who cause problems. Otherwise, your new hires will be entering a negative environment. The harder part is replacing those individuals with good-natured people.

Read the rest here at the DougMyrick.com blog.

A Simple Guide to Interviewing for Attitude

Interviewing for attitude presents a dilemma: Most people are on their best behavior when interviewing and even during their first 6-12 months of employment.

You may not realize you have a problem on your hands until the new hire has been trained and is a fully functioning part of your team. Knowing you’ll have to begin the selection process all over again — a long and costly procedure — makes it harder to part with the employee. Meanwhile, the good-natured people on the team have to pick up the slack, putting strain on your best people and leading to harmful side effects. Burnout, discontent with management, and customer service deficiencies are likely to develop.

Since this is a major problem in many organizations, guerrilla tactics are needed.

Before you start interviewing for attitude, identify and eliminate employees who cause problems. Otherwise, your new hires will be entering a negative environment. The harder part is replacing those individuals with good-natured people.

Step One:

As you screen resumes, identify potential attitude issues. Look for people who have stayed in positions longer than four years and haven’t had more than three jobs in a five-year period. (Obviously, this won’t apply to candidates just entering the workforce.) Longevity in a position doesn’t guarantee competence, but it’s usually a reliable indicator of success and a positive attitude. Just remember that it’s a starting point, not a rock-solid rule.

Step Two:

Begin the interview by asking questions about the candidate’s work history. Go through each job on their resume one at a time, starting from the most recent position. Cover at least three past jobs, but understand that three is usually not enough. Discuss five or more if possible. The more senior the position you’re filling, the more important it is to examine additional past positions.

Step Three:

Focus your interview questions on why the candidate left a position and how they interacted with their supervisor and others on their team: Why are you no longer with ABC company? Why did you decide to leave? If you were laid off, who picked up your workload? Why were you chosen to be laid off? Do you regret leaving that position? What reason would your supervisor give for why you are no longer with ABC company? What did you like most about the position? What would your supervisor tell me about your performance? Who was your favorite person in that company? Why?

The key is to keep digging. Once the applicant answers a questions, ask for more information. Ask for specific examples. Ask them to clarify their answers. Don’t be afraid to probe.

Step Four:

Once you believe you have a good-natured and competent person (talented team player) on your hands, dig deeper. Behavioral-based questions and scenarios that put the candidate between a rock and hard place will expose their true underlying values. Try a few of these questions:

A manager leaves sensitive information out in the open on their desk, and an employee reads the documents. Who is at fault here and why? Make the candidate choose one side or the other. If the candidate refuses, then he or she makes choices based on convenience, which often indicates dishonesty or a tendency to blame others. This individual will likely tell white lies when it benefits them, or half-truths to cover up mistakes. If they say the manager is at fault, they may be unsupportive and lack personal responsibility.

A manager asks you to lie to a customer about an important delivery date. Do you follow their instructions or not? Make the interviewee choose, and ask why they chose their answer. Agreeing to lie indicates fundamental dishonesty. Equivocating suggests a lack of conviction and may signify weak core values.

Devise additional questions that reveal a person’s values, and remember to make candidates choose one way or the other. Be wary of those who refuse to take a stand.

Step Five:

Consider using an assessment tool that accurately measures attitude traits. Use these tools to help you validate your interviewing efforts or as a backstop in case someone slipped past the interview stage. Using these assessments early in the selection process can save time and money.

If you decide not to use attitude assessments, make sure you conduct at least one more interview that includes another leader in your organization. The hiring manager should participate in each interview to look for inconsistencies and dig deeper into questionable areas. Taking a day or two to reflect on an interview will help the hiring manager identify areas of concern and prepare questions for future interviews.

Step Six:

Check references! And make sure your candidates know you will check their references early in the process. Get their direct supervisors from at least their last three jobs to talk to you. It’s acceptable for candidates to contact these people to ensure they will speak to you, and they‘ll probably do it even if you don’t encourage them to. If a candidate was good-natured and competent, their past supervisors and their supervisors’ supervisors will most likely speak with you candidly, despite any company policies against giving performance referrals. Candidates who cannot produce valid references are probably hiding something and should be approached with great caution. Finally, consider speaking to candidates’ supervisors’ managers to get a more objective perspective.

Find people who are both competent and have good attitudes. Too many companies suffer in silence with competent problem generators who do more harm than good.

- Doug Myrick