Offering retirement plan a key growth component for dealership group
Phil Acton is the CEO of California Motorsports Group, a successful dealership with five locations in California. Prior to entering the powersports industry, Acton spent nearly two decades as a certified public accountant. Armed with both a bachelor’s degree and master’s in accounting, Acton oversees California Motorsports Group as CEO officially, with CFO also an appropriate moniker.
Acton discussed with Powersports Business editor in chief Dave McMahon his decision to offer a 401(k) plan facilitated by Fisher Investments to employees at his five dealerships.
Powersports Business: Why did you feel there was a need to offer a 401(k) plan to your employees?
Phil Acton: What we’re seeing in the market is that we had some good employees who were migrating to the car industry over the years. When we did their exit interviews, we found that one of the biggest reasons they were leaving was that the car dealerships were offering 401(k) plans. So our decision to offer a 401(k) plan was really to keep good employees happy and offer them a benefit that can help them with their long-term financial goals.
We started noticing this trend about two years ago. Everybody stayed put after the financial crisis for a year or two, until 2011 or so. But once the recovery started to show, we noticed that some of our employees were getting a little more secure in their own personal lives, and they started looking. Or car companies started selling more and they started poaching employees. We knew we needed to offer something to combat that.
PSB: When did you first consider offering a 401(k) plan, and what were the options you looked at?
PA: I started investigating firms in late 2013, and did that through the balance of 2014. We interviewed several companies, some of the big brokerage houses that offer retirement plans. Fisher Investments is in our backyard, so
I started doing some research on them, talked with them, and found that they’ve got a very good track record. They’ve got investment programs that fit everybody’s needs and timetable. At the end of the day, they’re nationally known as well as locally known.
PSB: How difficult was the process of setting up the plan?
PA: Their setup process is relatively seamless. That’s not to say it’s not a large process, but it is with anybody. They’re hooked up with Verisight, the plan record keeper. They’re very organized, and it was done in steps. There’s some information that needs to be gathered along the lines, but it was done in steps. This allowed me to get the information to them and move on to the next step, but still not bury me so bad that I couldn’t operate the stores.
PSB: How did your employees react to the news that you would be offering a 401(k) plan? I’ve seen some data that shows that the average retirement plan participation rate of private businesses in the U.S. is 49 percent.
PA: We told our employees in January that there would be a 401(k) option in place for this calendar year. It was very well received. People were very happy to have it rolled out. We received nothing but a lot of ‘thank yous’. We rolled it out store by store. In some stores we have more than 70 percent participation, which was the case at the three big ones. The two small ones have 30-50 percent participation. When we rolled it out we hoped for 50 percent participation, and when you do it by the number of employees, we have over that number.
PSB: That’s an impressive percentage, especially considering that your dealerships range from 10 full-timers at one to closer to 60 full-timers at the largest, with about 160 employees total. What helped get the plan participation rate so high?
PA: One of the things is when Fisher came in, they showed a variety of retirement plan examples. Obviously the younger you get into it, the better. And they illustrated the compound growth of money. The rollout and presentation was clear and concise and had a lot of graphics.
It was an extremely user-friendly presentation. Our employees walked away with a very good understanding of what makes a successful retirement plan. The Fisher retirement counselors went through a bunch of examples, like if you think you can’t afford to contribute to a 401(k), look at some of the things in your life that you’re choosing to afford. Coffee is a good example, you go and spend $3-4 a day on coffee, well that’s $90-$120 per month. There are a lot of things in our lives that we can all do that don’t really change us, but that can better us financially. We just have to choose to make that change. The rollout was seamless. Fisher had a great presentation, including some gifts for employees, and it just was a good experience for us and them. So far everybody is still glad they’re in it.
PSB: How important is it to the newer employees who now come into their position knowing that they have the advantage of a 401(k)? I imagine that’s considered an asset by them?
PA: It’s absolutely an asset. When we can put that on our list of benefits, all of a sudden it gets us a level of employee that may not otherwise be interested. Anytime you can put money away and get a tax write-off for it, we’re all better off.
PSB: How much of an impact does the 401(k) plan itself make on the dealership’s business plan for the future?
PA: Plain and simple, it gives us greater stability than we have had.
PSB: How beneficial has adopting the 401(k) plan been to you as a business person?
PA: As an owner it has enhanced my personal retirement process. It’s put a notch on our belt as far as being a quality employer. There’s a little bit of work to getting it rolled out, but honestly after that, Verisight and Fisher handle it all.
I think for the most part it makes us stand out as more of a premier employer when we can advertise that we offer a 401(k) to our employees. Honestly, we were very aggressive in how we rolled it out. You don’t have to be here that long to start participating — just 60 days. So we were very aggressive that way. It makes us look better in the eyes of current and potential employees.
PSB: With the plan underway, how has the after-sales service been from Fisher?
PA: Any time we’ve had any needs, they’ve been there. And we hear from them asking if we need anything. They provide true follow-up calls. And you know that we harp on that in our industry, but you also know it doesn’t always happen like that. So yes, their customer service has been outstanding. They’ve done everything they said they would, and then some. I think Fisher Investments would be a good fit for those dealership groups looking to step their game up a notch.