Building a Retirement Plan – What the Construction Industry Can Teach You About Your 401(k)

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Financial advisor and CERTIFIED FINANCIAL PLANNER™ Colin Day continues his recent series of videos and podcasts getting to know the people who help Correct Capital and our clients thrive. He recently sat down with Director of Business Development Steve Paulus, who spoke about what he learned at a recent cooperative meeting between the Missouri Department of Transportation and the Associated General Contractors of Missouri.

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Below is the transcript of our most recent Capital Conversation podcast episode, “The Portrait of a Maestro: Our Dexterous Director of Business Development”

Building a Retirement Plan – What the Construction Industry Can Teach You About Your 401(k)

Colin Day: Hello everyone, this is Colin Day once more, financial advisor with Correct Capital Wealth Management and CERTIFIED FINANCIAL PLANNER™. With me today is Steve Paul. Steve, thanks for coming back.

Steve Paulus: It's good to be back. Thank you.

Colin Day: Well, good. I was worried you weren't going to accept my invitation. Steve, the reason I wanted you on this particular video/podcast is to maybe not talk about how cold the office has been this morning, but rather talk about the industry event that you went to last week.

Steve Paulus: Sure.

Colin Day: And maybe give us some ideas in regards to what you learned there and how we might be able to apply it as financial advisors, wealth managers, and 401(k) partners. I’m just trying to see what else other people are talking about because we feel a little insular maybe in our financial advising community in regards to what we feel we need to talk about with folks. But really we have to get out into the general public to really understand.

Steve Paulus: We do, exactly. So, this event is called a “co-op,” and it’s a cooperative meeting between the Missouri Department of Transportation, MODOT, and the AGC, the Associated General Contractors of Missouri.

So it's between the state – that lets all these contracts for bridge repair, bridge construction, infrastructure construction – and companies and the workers who actually do the work. So it was fascinating. And, something that has nothing to do with anything, but that fascinated me, is that they are now developing a clear concrete. I mean, this is weird.

Colin Day: What? Clear concrete?

Steve Paulus: So you can actually see the bottom of a bridge, and you can see when you pour something over the top of the concrete, maybe something to drive on, if it's curing correctly. It's just, it's kind of amazing.

Colin Day: Wow.

Steve Paulus: Yeah. It has nothing to do with anything, but I just thought, “Okay, that's pretty cool.”

Colin Day: That is pretty cool. I don't know what the benefits actually are, but the first thing I think of is if I had a fish tank underneath there, that'd be pretty cool to watch while I’m walking or driving by. Or, more practically speaking, I can see if there's something that's cracked or something doesn't look good. And I don't have to dig up a road to be able to see everything underneath there.

Steve Paulus: That's actually an insightful point. And look, I'm a civilian; these are very technically educated people who are doing this work and holding these seminars. But one of the big issues is, as you know, the Federal highway system was started back in the mid-fifties. The highways are now getting to the end of their expected and useful lifespan. So, what you're seeing is a lot of these highways and bridges – especially that have concrete that's reinforced by steel rebar – they're rusting. I mean, it's not bad workmanship or anything. It’s the fact that 5, 6, or 7 decades have passed. Right?

Colin Day: Right.

Steve Paulus: So now they're coming up and the work that's being done is amazing in terms of the polymers and the glass-reinforced concrete, you know, rebar that's made of reinforced glass. Some of this technology is absolutely amazing.

So, to your original question, for the most part, in the panels and everything I attended, there's a lot of optimism about what's coming down the pike. For instance, I think I had mentioned this to you, the state had budgeted about a billion dollars or so for bridge repair and construction over the year for Missouri.

Well, the federal law that was passed recently, the Infrastructure Act, is going to give another $600 million to the state. And that's gonna happen for every state around the nation. So you've got a lot of positive activity coming down the pike in terms jobs being created and in infrastructure being repaired and created. It's gonna be very positive, and that was reflected in the seminar.

However, the one theme you keep hearing again and again and again is the uncertainty beyond the next couple of quarters. Not that whether there's going to be business there, they have pretty good visibility to that. It's: can we get the materials? Things that are as simple as rock and sand and things that make concrete. Can we find the skilled people to do the work that we need to have done? So, in terms of what our world is – retirement planning, 401(k), and that kind of work – I think one of the ways that we can be most helpful to these folks is to treat this not as only a tool to help somebody get to retirement. It's also recruiting tool. It's a retention tool. Because there is really stiff competition for skilled people. And this is a great tool to use to bring those folks into the business.

Colin Day: Yeah, absolutely. I mean, AGC Missouri specifically does a really good job at encouraging people before the working age, those that are maybe interested in the trades and trying to get those individuals up and ready for work, in this case in construction.

But the challenge then is is that all these people are coming up, I mean, we're biding our time. We've got work now. We've got money that we could be potentially spending – from the MODOC perspective at least – but we don't have the workforce to be able to do that. And so then that creates the crunch of, if I'm a competitor and I'm also trying to lay the same kind of road as another person across the state, and we're fighting for our contract, we need to have the bodies to be able to do that too, not just the materials. So like you said, we try to position the retirement plan benefit like other benefits.

So just like many employers are offering health insurance, life insurance, disability, dental, vision, all those kinds of things, the 401(k) plan kind of gets its own bullet point in there, right? And it just kind of says, “401(k). Retirement plan offered.” No other information is generally implied or offered at the time of application unless somebody asks in an interview. Or they just say, “We offered a competitive match. We offer an opportunity for you to save in our retirement plan.” They give no specifications as to what kind of plan it is. It could mean I'm only able to save around $15,000, as opposed to $20,000 or $30,000 in my retirement account. So really trying to position the retirement plan as something of a differentiator for these companies that are struggling to find employees. It’s maybe a little bit of a different way of thinking about it compared to how we might think about it normally in regards to a 401(k) just kind of being a boiler plate thing that we're offering to folks.

Steve Paulus: Yeah, it is. That's very true. The more we can customize it, not just the content of the 401(k) itself, but how we position it. And as you know, people don't get real serious about saving for retirement until they get the kids out of the house or whatever. But they know they need to do it.

And again, I think we can provide some connection to the future, some connection to the worker, to show the benefit that this provides. I think that's a real benefit for those folks who aren't covered by a union contract or work in the office or are in management, whatever it might be.

But this is an industry that is actually growing. You think about infrastructure, you think about roads, and then you realize what goes into it, the research that goes into it, the effort that goes into it, both on the part of the state and the contractors, to understand each other. What are the state's needs when they're letting contracts? What are the contractors' needs when they bid on a contract? One particular example was, when they're putting in guardrails in a bridge, very often the simple fact of attaching a guardrail to a wall is missed. Then, when you get on the job site and you're doing it, it’s “Oh, we gotta stop this job site to just get this one piece.” In this environment, forgetting about that one piece now means days or weeks of delay. So, both the state and the contractors understanding how you must plan ahead. Really understand what the job entails so that there aren't any surprises on the site.

When we offer retirement plans, whatever we do, that's all just trying to take things off their plate, so they don't have to worry about that, and they can focus on the job at hand.

Colin Day: I think that's really interesting, Steve, because when we think about just the delays and how hard it is to just do the job that you're being paid to do, it becomes that much more,of a concerted effort to make sure that other things are running as productively as possible.

I like to think, what are the things that we, as maybe your financial advisor, or in this case, like a 401(k) advisor, what can we take off your plate? What can we make just a little bit easier for you so you can focus on the task at hand, which for a lot of folks is just making sure that everybody is working. So for us that might just be helping you understand the plan as best as you could. That could come down to if you're offering an employee stock ownership plan or 401(k) profit sharing plan, whatever that might be, communicating that benefit as efficiently as possible, working through any kind of plan updates or issues that are coming down the turnpike, to use a construction term. So thinking about, “What are the things that we can do that would make your life easier as a plan sponsor?” Because what we want to accomplish is we want to make it so that your plan is as understandable as possible, that it’s s as manageable as possible, so that when something comes down, we understand where we're at and how to communicate it to other folks.

A good example would be, if the legislation ever gets out of the Senate, for some plan updates, what they're calling secure Act 2.0, that could result in some changes that you as an employer or you as an employee need to consider in a retirement plan. The common thing that people are pointing to right now is the fact that required minimum distributions, the withdrawals you have to make every year when you reach a certain age, could be increasing. It could go all the way up to 75. It used to be 70 and a half, then a couple years ago went to 72, and now it could be going up even further. So just even communicating the most basic functions, just to make your life easier as an owner of a business or for the participants to understand exactly what their options are, what they can and can't do. Just try to take something off their plate. That’s always my goal.

Steve Paulus: I agree. Because, as you say, the job is hard. There's a lot going into what these folks are doing. They are geared to thinking in long term. When you're talking about these infrastructure projects, you're not talking about something that we'll start this month and finish next month. It's like, we'll start this year and we'll finish in a year or two, just because they're massive projects. So I think they're already predisposed to understanding the long term benefits. It's just, how can we make it easier to get those benefits started and not be something they have to worry about while they're worrying about these huge infrastructure projects they're building us?

Colin Day: Just try to make one thing easier for them.

Steve Paulus: Right.

Colin Day: Well Steve, thanks so much for joining us today. I appreciate your insight into the conference you were able to attend. And, we'll look forward to having you again real soon.

Steve Paulus: I'd love it. Thank you for your time.

Colin Day: All right, thanks.

The opinions expressed in this program are for general informational purposes only, and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

Correct Capital Wealth Management is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Correct Capital Wealth Management and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Correct Capital Wealth Management unless a client service agreement is in place.

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At Correct Capital, we help businesses of all sizes develop great retirement plans for their employees. As a fiduciary, our only legal and ethical concern is doing we believe is in your and your employees' best interest. If you're looking for 401(k) services for your business, or have any wealth management needs, call Correct Capital at 877-930-4015 or contact us online.