Wellspring Financial Partners

"If the system is broken and for the sake of millions of families and the profitability of the businesses where they work, we should simply fix it," says Patrick Zumbusch, the Founder/CEO of Wellspring Financial Partners.

It probably helps that Zumbusch admits he's not a fan of the financial services industry. He observes that thousands of firms exist, but they are narrow in their services, and most firms don't want to take full fiduciary responsibility. He gives HRTech the troubling history in "one of the greatest social experiments in modern history; requiring the average worker to be skilled not just in their job, but in knowing how to manage their entire money life from the time of their first job to the last." American workers face an embarrassing threat to their retirement lifestyle. Changes to the approach to retirement funding were introduced when President Gerald R. Ford signed the Employee Retirement Income Security Act (ERISA) into law in 1974. With that sweep of the pen, the traditional "three-legged stool" of retirement security, 1) employer-sponsored pensions, 2) individual savings, and 3) government-run Social Security became a two-legged stool of individual savings and Social Security. Evidence abounds that the stool is tipping over. The retirement savings gap—between what people have and should have—was $28 trillion in the U.S. in 2015. By 2050, it's expected to swell to $137 trillion, according to the World Economic Forum, a non-profit international financial affairs research organization, and the disparity grows $3 trillion every year. Employees feel the effects of this retirement uncertainty, and when this uncertainty is coupled with the financial challenges of "the here and now," the result is significant stress.

Unfortunately, employers are also paying for this retirement uncertainty and financial stress. Employees spend, on average, over three hours a week on company time trying to solve personal financial issues, which costs the company about 2 percent of payroll. The cost of the current shortcoming is massive.

ERISA Failure and the Traditional Way

Forty-six years down the line, the ERISA promulgation has endured, albeit with many changes. Unfortunately, data suggests the approach isn't effectively working for the average person. While ERISA assures the security of employee retirement dollars, employees' understanding of how much they need to save, and how to invest the dollars they do manage to save, are woefully lacking. Per Zumbusch, "It is little appreciated that ERISA provides NO requirement to teach or inform employees on money or to invest. This leaves employees uninformed, confused, and fearful, and thus they don't appreciate the great amount of money being spent on the plan by the employer."

The problem is so severe that studies show the average employee will see their standard of living drop $10,000 - $20,000 per year, with managers and VP's experiencing a $30,000 drop when they retire.

That shortcoming is one of the drivers of turnover, with employees leaving higher wages elsewhere when the solution is better money management, and they'd be fine.

Further, in a cruel twist of irony, a company's ERISA plan, which, as observed, is not working well for employees, is also potentially creating a liability for the employer. The employer's goal is to try to help the employees, but the legal liability for poor plan investment choices and inappropriate fees rests squarely on the plan sponsor (the employer). This includes the owners and "trustees" of the ERISA plan representing one of the few ways to pierce the "corporate veil." Liability costs can reach right to the CEO's wallet.

Choosing investments and fee structures that are unbalanced, or inconsistent with market norms leave the employer exposed to a lawsuit by employees, and this lawsuit trend is rising.

Deirdre Kochanski, Director of Plans for Wellspring, sums it up this way: "These days employers must install an ERISA plan as a matter of 'table stakes' to attract employees. That particular benefit is less a hot spot internally than healthcare plans. However, it's still expensive and not appreciated by employees, and worse yet, research solidly documents that employees with financial stress drive healthcare cost up by 50 percent or more. Everybody is losing."

Thus, the employer is paying for increased liability, the employees are not going to succeed using the plan, and the employer is paying for the resulting stress.

We comprehensively address employee well-being through the ERISA plan, which substantially boosts productivity and saves money for organizations

Given the current coronavirus pandemic, the other by-product problem occurring is older employees are unable to retire, so they hang on, increasing healthcare costs even further and not always boosting productivity commensurately.

ERISA Plans Done a Different Way

The traditional ERISA plan advisor is doing only what the ERISA law requires, keeping the employer compliant with the process required by ERISA. That myopic view solves none of the issues identified above. These days many investment advisors in the industry hold themselves out to be 'an expert for your employees' but seem only there to answer sporadic questions and don't have a proscribed program to engage employees. But what if the Advisor had a different view, not a view of doing what is required, but what is NEEDED?

Meet Wellspring Financial Partners.

Wellspring Financial Partners approaches the challenge by understanding that; 1) Employers need a Retirement Plan to be competitive in the employee marketplace, and 2) making that retirement plan truly useful for the employees means the advisor would have to do 80 percent more than is required by ERISA. The neat trick that Wellspring brings to the table is to accomplish both with the same or lower overall cost to the employer, while at the same time reducing the liability that the employer has for the retirement plan.

Wellspring's comprehensive approach is to deliver an ERISA plan that:
1. Protects the employer from much of the liability that an ERISA plan can produce
2. Provides a world-class investment menu
3. Provides one-on-one counseling to employees to help them succeed with the plan and their full financial lives to relieve stress and help employees focus on their work
4. Provides planning services to the employees for their entire family that is worth over $2,000 per employee
5. Gets employees excited (to the point where they actually applaud Wellspring presentations) yet holds the cost for all of this at or below what the employer is paying now.

Wellspring firmly believes this is what ERISA plan advisors should be doing. Why? Because it is what makes companies more profitable and leverages the reality that the number one avenue to reaching and improving employees on their personal financial needs is done naturally through the company savings plan.

For the employer, Wellspring offers a comprehensive suite of best fiduciary practices designed to safeguard the plan sponsors while serving as an ERISA 3(38) plan investment manager. "As an ERISA 3(38) plan investment manager, we can reduce clients' investment menu liability and risk," says Patrick Zumbusch, the founder and CEO of Wellspring Financial Partners. "The menu of investments employed by Wellspring is not only the best in the industry; we put our 3(38) obligation in writing to assure that if an employer is ever sued, Wellspring will replace them in court," continues Zumbusch.

Beyond the investment choices, Wellspring is committed to helping employers make the right choices about their retirement plans. The deep expertise Wellspring holds in retirement plans, ensures that the plan sponsors keep their plan sound. "Business leaders and employers are already over-committed, and they need to spend their time running the business. So, we take the burden off their shoulders and help them run the 401k plan efficiently. It's highly uncommon for advisors, but we step in to make sure any issue on the plan is our issue, saving time for company personnel," mentions Kochanski. Wellspring also annually tests the plan's design to ensure that it is right for a company and its budget.

The Impetus behind the Company's Mission

When we asked for the driving reasons behind the company's original formation, we learned the company mission is not only strategic, but it's personal.

As the Founder, Zumbusch said, "In large part, Wellspring exists because I grew up poor in a rural Minnesota community with seven brothers and sisters around me. I know first-hand how the lack of money impacts your self-confidence and can eat at your core. Once you change the direction of that family, providing real hope and not just hype, you actually impact that family positively for generations to come."

From a strategic side, PricewaterhouseCoopers (PwC) documented that the number one benefit request from employees was to have direct assist on financial matters so that they were smarter and more in control of their monetary life. Spurred by the massive shortcoming in retirement readiness outlined in earlier studies, Wellspring expanded its services to fulfill that need, by cost-effectively delivering both solutions through the company savings plan.

Focused entirely on clients' financial well-being, Wellspring Financial Partners provides financial planning and investment advice to individuals as well as companies that sponsor retirement plans for their employees. Wellspring is highly focused on creating a meaningful relationship with employees through one-on-one counseling for employees with abroad view of their entire financial life. "Our deep knowledge in developing and implementing financial plans for individual clients is transferred to the workplace. We know employees will not engage in a company plan (no matter how good it is) unless they have other areas of their financial life under control," mentions Zumbusch.

"Whether a company chooses to partner with Wellspring or not, implementing ERISA plans differently and effectively will not only bring additional profits to the company, it’s simply the right thing to do for employees.”

To this end, Wellspring educates and provides essential help on excellent 'money saving skills' in general—building emergency funds, paying bills on time, managing debt (student loan, mortgage, credit card, and FICO Scores), saving for higher education (529 plans) and keeping sound budgets. Zumbusch mentions a success story to substantiate the claim wherein a distressed senior woman approached Wellspring with financial problems. The company's Social Security education session opened her eyes to a critical benefit she had been missing out on. On just one of many occasions, Wellspring helped a couple retire on time with the help of a tailored financial plan that showed them exactly what they needed to do and motivated them to implement critical changes.

The creative and thoughtful solutions Wellspring brings to the table are simply the result of looking at what's not working and then solving it. As mentioned before, the vast bulk of what Wellspring does for companies is not required by ERISA, but it's essential to make ERISA plans work. Zumbusch comments, "The biggest learning for us was understanding the human psyche. Money is extremely personal, and it's easy to tell people that they are accountable for their financial affairs, yet no one ever teaches how to do it. Wellspring was formed to correct that inherent defect." By expanding its understanding of the psychology of money, Wellspring works to instill motivation and discipline for its clients, extending far beyond the 401k company plan. "We don't just talk about doing it differently, we measure the results of what we do, and we know of no other investment advisor that concretely measures their effectiveness," says Zumbusch. Perhaps the most substantive proof of positive impacts that Wellspring has brought about is effectively boosting employee deferral by more 400 percent more than the industry average! "That's not luck; that's Wellspring providing unique services to fix a broken ERISA system for employers and making it work for employees," Zumbusch proudly mentions. "Though our fee is most often paid by the plan, we want our services to pay for themselves by their impact because that's what I wanted when I was running companies."

Wellspring is keenly focused on staying responsive to financial issues in the workplace and being at the forefront of solving them. For instance, every employer in the country is currently struggling with the coronavirus pandemic. Very early in the game, Wellspring took the initiative to contact its sponsors and set up meetings to discuss options for remote working employees and plan survival steps for the company. Even live digital meetings were conducted with all employees to talk about the Coronavirus Aid, Relief, and Economic Security (CARES) Act and explain to them what exact provisions their company has for them, along with financial advice on what to do during the most significant economic collapse in the market's history.

"Going by the age-old expression 'noblesse oblige'—it is incumbent on those that are in a position to make a difference to actually make a difference. Whether a company chooses to partner with Wellspring or not, implementing ERISA plans differently and effectively will likely bring additional profits to the company and, it's simply the right thing to do for employees," ends Zumbusch. "We love being slapped on the back for bringing benefits both to shareholders and employees simultaneously. Everyone enjoys talking about it because it is SO good."