Driving better savings discipline and loving the work you do

Stig Nybo is not afraid to admit that he’s made mistakes. He’s also happy to have been part of a movement that improved the thinking around retirement savings.

Nybo, a keynote speaker at the Employee Benefit Plans Accounting, Auditing, and Regulatory Update, a Dec. 4-5 virtual event, co-wrote the book Transform Tomorrow: Awakening The Super Saver in Pursuit of Retirement Readiness.

In this episode of the JofA podcast, Nybo talks about finding passion at work, why attempts to fix things can lead to breaking other things, and the “entire ecosystem” that’s aiming to drive better retirement-savings habits.

What you’ll learn from this episode:

• The circumstances that led to Nybo co-authoring a book emphasizing saving for retirement.
• The 2019 JofA podcast guest that Nybo interviewed for his book.
• Why his message is about more than saving, creating retirement plans, or auditing such plans.
• Why he agrees with the words of Mark Twain when it comes to career choice.
• The issues Nybo and others aimed to fix related to retirement saving – and what got “broken” in that process.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript

Neil Amato: Welcome back to the Journal of Accountancy podcast. This is Neil Amato with the JofA. I’m recording today with Stig Nybo. He’s a consultant with Strategic Retirement Partners and a keynote speaker at the December virtual conference on Employee Benefit Plans Accounting, Auditing, and Regulatory Update, or AARU.

Stig has spoken before this audience before. He is an author. He is a sought-after speaker, and we’re going to discuss, I think, some fun topics today. Stig, welcome to the Journal of Accountancy podcast. We’re glad to have you on.

Stig Nybo: Thank you, Neil.

Amato: I like to start with this. More than a decade ago you wrote a book about changing behavior around savings. Briefly, what was the goal in writing that book?

Nybo: It’s good question, Neil. I had just taken over the pension operation at Transamerica. Actually, that was the primarily a 401(k) recordkeeper. We took great pride in returning phone calls timely and accurately filing 5500s, all of those kinds of things. But in my view, that was table stakes. You have to do that in order to be a first-class record keeper.

What I wanted to do was put a stake in the ground about what we really stood for and how we could add value to society, to solve a societal problem, which is under-saving. So, talked about a lot of ideas and ultimately came up with this concept of writing a book and then creating speaking points around that to try and spread the message about what we as practitioners, and that’s the entire ecosystem, are here for, and that’s to drive better savings behavior so people can retire when they want and need to.

Amato: There are a lot of aspects to saving, retirement. One thing I want to focus on is, I guess, you’ve worked in the past with regulators, legislators, changing how retirement plans have been written. Tell me a little more about that. What have been some of the changes that you and others have been advocating for and have accomplished over the years?

Nybo: The list is long, not that I have any direct responsibility for, but that I’ve been involved in and seen peripherally. It’s everything from automatic enrollment, automatic escalation in plans, stemming the tide on leakage, money flowing out of plans, the whole QDIA realm, which is the Qualified Default Investment Alternative, target-date funds that we now see as commonplace. They weren’t at one point. These things were not common.

In fact, when I wrote my first automatic enrollment plan, and this was some time back, we weren’t even sure it was fully legal in California – consent and all kinds of things like that that were a concern.

This world has come a long way, and we’ve been involved in many different aspects. But I would say the common theme is reducing the resistance for writing plans that actually work, that shape behavior, and that draw people in and get them to save more and invest that money effectively so that they can retire ultimately in good shape.

Amato: I want to ask you one aspect of automatic enrollment, you touched on that. In a preview call, you mentioned something about plans having “automatic enrollment in a plan it didn’t belong in.” What’s an example of retirement plan in which auto enrollment doesn’t belong? Just to me as an outsider, it sounds like a good thing to have auto enrollment.

Nybo: No, it’s a great thing to have automatic enrollment, but you have to be real about it. Automatic enrollment comes with responsibilities, and the primary responsibility is that suddenly everybody in that company is going to be enrolled in the plan and oftentimes the administration of the company itself is not well prepared to handle automatic enrollment.

I should say, and/or you might have a population that’s just not well suited for it. The classic example of one of the early automatic enrollment plans was McDonald’s. Well, McDonald’s — that’s a tough road. In fact, one of my early mistakes was I wrote a plan for a fast-food franchise. I won’t even mention the name of the fast-food chain. It was a group that had 100 different locations. They had high turnover. They had low wages. They had undocumented employees. So, all of the things that make it really difficult to run an automatic enrollment plan, and this audience especially – auditors, accountants – they understand that if you put it in the wrong plan, it can be an absolute disaster. This one was, we got fired, and I got yelled at for doing it.

That’s just one example of plans that are just simply not well-suited. Our perspective at SRP is that you really have to come in eyes wide open, look at the plan, [ask] “does it suit?” And if it suits, then you go in aggressive. You don’t come in at 3%. You come in at something that’s meaningful to an employee. You default people in at 6%, you put automatic escalation in. When you do it, you do it with gusto, but you’ve got to be able to recognize when it simply does not fit the employer or the employee workforce, and both are real.

Amato: Your message is about more than auto enrollment in plans, retirement plans, auditing such plans. You want to talk some, I think, about being purposeful in work, and maybe part of your message is about thinking about a role as more than just a way to collect a paycheck. What do you have to say about that?

Nybo: Yeah for me, I work a lot. And people laugh at me because I spend a lot of time working, and whether it’s multiple ventures, if you will, but I do work a lot, and I’m very purposeful about my work. I get a lot of enjoyment out of my work.

To me, I think it’s Mark Twain who said that “love your work, and you’ll never work a day in your life.” I strongly believe that that’s if you can really enjoy what you’re doing and feel like you’re doing good. By the way, back to your previous question about what you’re trying to accomplish by writing the book – doing  good for humanity, doing well by doing good. That’s a phrase that is really stuck with me.

And so I think, whether you’re an auditor, whether you’re a retirement practitioner on the advisory side or in everything in between, knowing where you fit into the overall ecosystem and how you can help humanity and how you can be purposeful about what you’re doing, it makes life a lot more fun.

My perspective is, and what I’ve told my kids is, find something you like doing, or find something that’s interesting and learn to like it, learn to love it. Learn what your niche is and then share that message and you’ll have a lot more fun.

Amato: What do you say to someone who says, I don’t really do passion work or I don’t have a job that makes me passionate?

Nybo: I say, bummer. The job doesn’t have to – it’s very narrow. My view is that I get it from work, I always have, but not everybody has to. I would just say, you’ve got to be passionate about something. Passion is important. I did some work with the Stanford Center on Longevity, and one of the things that they honed in on for people that retired, what makes them happy is purpose. Purpose, in my view, purpose and passion, are hand in hand.

It’s one of the fundamental things that makes life worth living, and it’s wonderful when you get it in your work. I can see from what you do, I can tell that you have passion around what you do, Neil, and it’s wonderful.

Amato: Well, first, thank you for saying that. That’s really nice. We’re proud of what the podcast has done over the years.

For your book, I was interested in this part, in particular., You interviewed Ted Benna, and Ted Benna for those who don’t know is regarded as the father of the 401(k) and, by the way, a 2019 guest on the JofA podcast.

What did you get out of talking to him about the whole notion of 401(k)s and retirement plans in general?

Nybo: I would say it was a little bit mixed from Ted. First of all, I’ll maybe take a step back and say, it was an amazing opportunity because part of what we did to try and make it meaningful and give the book some lift was to go out to the industry to people that were very influential, whether they were regulators, whether they [are] entrepreneurs, or practitioners.

We went across the board and talked to people that we thought would have something to say. Ted was big among that group. But we talked to Charlie Ruffel who started PLANSPONSOR magazine – very colorful, great human being.

We talked to Mark Iwry, who ran retirement policy at Treasury. Mark is one of my favorite people. Dallas Salisbury, who ran EBRI for years and years, Brian Graff and Nevin Adams. We talked to Jay Vivian, who ran the IBM retirement plan, which was one of the instigators for really good retirement plans. We talked to a lot of people.

It’s interesting because I think we caught Ted when he was like, hey, we did good, but we’re not doing nearly as much good as we could. It was kind of mixed from Ted, which is wonderful because it really kept the conversation real. We weren’t looking for, and I wasn’t looking for, all the glorious facts about 401(k). I wanted to hear what people really thought and what we needed to fix so that we could put a stake in the ground, as I mentioned before, and really go after something purposeful.

Ted was awesome. I enjoyed the conversation. I think I learned a lot from talking with him.

Amato: On that notion of “fix,” a lot of times when you’re trying to push for changes, trying to fix something, other challenges can be introduced. I guess, as kind of a closing thought, as you’re trying to fix and push for changes, what got broken along the way?

Nybo: That’s a really good question. Often we do something that has no visible negative to it, and yet, ultimately, something comes out that we didn’t do right. I would say what’s interesting about that question is the audience that we’re speaking to, the audience that this is geared towards right now is the audit audience, the accountancy audience.

What we broke, I think is, we really exacerbated some of the corrections that needed to happen. In other words, when you put in automatic enrollment, suddenly a correction applies to the entire population. Some organizations may not be well-suited to automatically enrolling people, to catching when they should do it. That results in a correction. It results in a missed opportunity to defer.

My colleagues at SRP, the folks in the audit community that know us, they actually come to us because we spend so much time correcting these very important pieces. The answer to your question is that we exacerbated a lot of the breakage that was already inherent in plans. In other words, I blew it. Now I blew it on a much wider group of people. I didn’t enroll people. I didn’t automatically escalate them.

The list goes on and on. But I think that’s what we did. We kind of amplified it. By the way, the challenge with that is that you end up with negativity in certain groups that have to fix it. Then you get additional resistance to putting it in.

Automatic enrollment, automatic escalation, defaulting into a QDIA – these are all incredibly valuable tools in the right context. And we need to support them – not blindly – but  we need to support them and that’s what’s going to move the ball forward. By the way, dramatically over the last 10 years. We have had massive change in retirement plans. It resulted in much better behavior, but we’ve also, to your point, broken a couple of things along the way, and we need to stay on top of that.

Amato: For people who may be interested in this book, can you tell me again, what’s the title of it?

Nybo: It’s Transform Tomorrow: Awakening The Super Saver in Pursuit of Retirement Readiness. That’s obviously the subtitle. It’s story-based. We tried to write it more based on stories and how humanity filters into the world that we live in.

Then, ultimately, with a serious message, which is that we as practitioners across the entire ecosystem, we need to band together and remember what we’re here for. Because we’re not here for auditing plans. We’re not here for designing plans, as our group does, or fixing problems as our group does. We’re here to make sure that people save for retirement, and that’s the ultimate message behind the book.

Amato: In the show notes for this episode, we’ll include a link to that December virtual event again that Stig Nybo is a keynote speaker for. Stig, thank you very much for being on the Journal of Accountancy podcast.

Nybo: Thanks, Neil. Had fun.