REINVENTING THE 401(K) TO MAXIMIZE EMPLOYEE ENGAGEMENT

Alvin Rappwww.RPGconsultants.com

Burke Pembertonwww.stok.com@teamstok

Jennifer Andersonwww.sustrana.com@sustranaTalks

R. Paul Hermanwww.HIPinvestor.com@HIPinvestor

AGENDA401(k) as lever for engagementWhy reinvent your 401(k)?How do you reinvent your 401(k)?What results are possible?Q&A

• Retrieved from http://www.forbes.com/sites/samanthasharf/2014/07/30/the-recession-generation-how-millennials-are-changing-money-management-forever/

Fry, R. (2015, May 11). Millennials surpass Gen Xers as the largest generation in U.S. labor force.

Millennials in USA Workforce

MILLENNIALS #1 PURPOSE OF BUSINESS IS BUILDING A BETTER WORLD

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• 80 million Millennials in USA• Inheriting $40 Trillion from Boomers

Source: Deloitte global survey of Millennials

6https://ngam.natixis.com/us/resources/2016-survey-of-defined-contribution-plan-participants

401(K)FIDUCIARYDUTY NOWINCLUDESNET IMPACT ON SOCIETY

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HIGHER IMPACT = HIGHER POTENTIAL RETURNS

CONFIDENTIAL © 2006-2017 HIP Investor Inc.

MANY SRI FUNDS RATE HIGHER ON RETURN

http://my.morningstar.com/ods_images/161207_sustainability-02(en).png

© 2006-2017 HIP Investor Inc. 10* Past 5 years, as of 7/31/2015 HIP Scores (2013/14)

ALL 401(K)FUNDSCAN BERATEDFORIMPACT

Why reinvent your 401(k)?

Kristen MagnusonLEED & WELL APMaterials Expert401k Crusader

Walking the Talk

Stronger, more resilientorganizations.

Why would a company create a 401(k) with mutual fund, insurance company or payroll platform that:• Doesn’t allow freedom in investment choices?• Doesn’t have fee transparency?• Doesn’t offer ESG investments that align with values?

Conflict & NeedEDITED: trying yellow color for readability,

How do you reinvent your 401(k)?

1 Impact of current plan?

ERISA FiduciaryChampions & InfluencersStakeholder EngagementESG Impact Assessment → HIP Investor

Financial advisorRecord KeeperThird Party AdministratorAcquire Fidelity Bonding

2 Make Changes

Cloud-based Advising & Record KeepingPush Button Fossil Free PortfoliosPayroll Integration & Automation

3 Make More Changes

401(K) PORTAL, WITH PERSONAL IMPACT METRICS

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Re-assess Impact & Participation AnnuallyReport results to relevant stakeholdersRefine plan offering

4 Reassess, Report, & Refine

1 Select the Provider

B Corps first Identify criteriaEvaluate options

Started with all “sustainable choices”Internal dialogue Combined list of 23 funds

2 Select the Funds

SUSTRANA’S 401(K)

Vanguard LT Gov’t

Vanguard Int. Term Gov’t

Vanguard Short Gov’t

Vanguard IT ETF

T. Rowe Price Health Sciences

Vanguard Total Stock Mkt Idx.

Vanguard Global Equity Inv.

Vanguard Federal Money Market

Calvert US Large Cap Core Index

Parnassus Endeavor

Shelton Green Alpha

Virtus Small

Pax Small

Portfolio 21

Calvert Green Bond

Calvert Global Water

Green Century Balanced

HIP FFF All Equity

HIP FFF Growth

HIP FFF Balanced

HIP FFF Balanced Income

HIP FFF Conservative

Vanguard Info Tech ETF

Roll out planEducate employeesContinue to grow!

3 Implement and Grow

1 A Superior 401(k) Provider

2 More Value + More Competitive

SAMPLE:Plan Assets =

$5.5M

3 ESG Integration ✓ SRI, ESG and FFF Fund Choices

✓ Conflict-Free Philosophy

✓ Partner with Sustainability

Experts

✓ Financial Wellness Education

✓ HIP Fund Ratings

✓ HIP Model Management

4 The 4 “C”s of a Retirement Plan

✓ Confidence✓ Compliance✓ Cost-efficient✓ Comfort

What results are possible from reinvented 401(k)s?

OUR MILLENNIAL CONTRIBUTIONSIN TOP THIRD OF USA

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STOK

“It's really important to me to use my 'spending power' appropriately and invest my money in funds that align with my core beliefs.”

“My last job didn't offer any sustainable 401(k) options so I'm really grateful to work for a company that "walks the walk" with regard to their values.”

LiliUnder 30, Customer Service + Product Content

2nd retirement plan 100% in sustainable funds

“Investing is not just about getting a return –that’s certainly important – but what your money is doing is also really important.”

“When I have more time to review, I am very interested in moving to fossil fuel free funds.”

“What is great about this is the curation is done for us to find good sustainable funds, which is half the battle.”

JennySoftware Developer, over 55

Previous retirement plan had some ESGInitially 66% in sustainable funds

Superior QualityInvestment FreedomConflict-Free PhilosophyLow Investment CostsFull Fee TransparencyPayroll Integration & AutomationSustainability RatingsFinancial Wellness & EducationIncreased ParticipationBest-In-Class Client Services

Inferior Consulting & ComplianceInvestment LimitationsSupports Fossil Fuel IndustryHigh Investment CostsRevenue Sharing & Hidden Fees

RPG

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How will you reinvent your 401(k) to engage your employees?