Interesting guy, just south of here.
Gregory W. Kasten
Chief Executive Officer Unified Trust Co.
Career Began: 1985
Home Base: Lexington, Ky.
Civic Affiliations: Habitat for Humanity, United Way, Tates Creek Christian Church
When Gregory Kasten was an anesthesiologist in the mid-1980s, he didn’t like the advice he was getting on the retirement plan offered through his private practice. It was biased, it was weighted toward high commission-type products, and the advisor appeared undone when Kasten pressed him on fee disclosure.
“I figured nobody cared about my own investments more than I would,” says Kasten. “I needed to examine these things myself.”
So Kasten, now 56, became a successful do-it-yourselfer who in small talk with other doctors began to realize that there were a whole lot of people who needed just what he was doing — and that they might actually pay a fee for it.
Today, Kasten heads the nationally chartered Unified Trust Co., which got its start as the aptly named Health Financial in Kasten’s basement in 1985. With 95 employees and $2.7 billion in assets under management, the company has experienced a single trajectory: up. The recent launch of Kasten’s cutting-edge UnifiedPlan — a managed-account platform that creates a pension-like experience for 401(k) plan participants — could take the firm to new heights.
“Obviously, we’d like to grow. We feel we have something extraordinary,” says Kasten, the author of Retirement Success. “We want to improve the outcome for more participants. We feel that’s our mandate.”
First, a number that isn’t at all encouraging. According to industry statistics, only 25 percent of retirement plan participants are on track to retire successfully. Over the last four years, Kasten with a team of developers and analysts have fine-tuned a software solution based on actuarial science to beat that number. Early results are promising.
In the first group of existing Unified Trust plans to complete the UnifiedPlan conversion process, the percentage of people on track to retire with adequate funds increased from 33 percent to 66 percent. Participants also experienced improved portfolio outcomes with less portfolio risk and better risk-tolerance matching. Plans new to Unified Trust saw an even bigger bump, from 11 percent to 66 percent.
The goal: to replace 70 percent of a person’s annual income in retirement.
“Most people spend more time thinking about what kind of flat screen TV they’re going to buy than modeling their retirement,” says Kasten, a certified pension consultant who has given hundreds of lectures on fiduciary best practices to pension professionals and federal banking regulators. “We figure out how much your retirement is going to cost along with a solution. By age 66, this method will produce the assets that match your liability.”
Every quarter, the program collects 700 data points on each participant. Those are then analyzed to make sure the person has a prudent asset allocation to stay on track. If changes are needed, Unified Trust makes them automatically. UnifiedPlan also combines personalized “intelligent defaults” such as automatic enrollment, savings increases and rebalancing portfolios with fiduciary oversight to improve participant success.
“This is Defined Benefit 101. It’s how a pension plan would have run in the ‘50s or ‘60s. There’s nothing magical about what we’re doing,” Kasten says. “But there are a lot of moving parts. What we are able to deliver is something advisors can’t do for themselves: provide a mass-produced, individualized pension experience.”
Kasten’s career path has been nothing if not unique. During his first seven years as an advisor, he both practiced medicine full-time and ran his fee-only business out of his home. “I always kid people that my wife said in 1992 that you can have one 60-hour week job, but you can’t have two,” says Kasten, a former officer in the U.S. Army Reserve Medical Corps. When he left medicine to fully pursue an advisory career, Kasten had 300 clients and $70 million in assets under management. In 1993, he hired receptionist Michele Hardesty. The day she started, they moved to an office space. Currently, 70 percent of Unified Trust’s business involves retirement plans; the rest, high-net-worth families.
Hardesty, now the company’s chief operations officer, calls Kasten “visionary” and “driven.”
“Greg is an incredible leader. Our underpinning is we are doing things the right way for the right reasons,” she says. “We’re not doing what everybody else does. We’re not structured the way everyone else is. We feel it’s kept us ahead of the industry.”
Next year, Unified Trust will offer UnifiedPlan to all of its 30,000 plan participants. Kasten is also introducing the product — which took more than 40,000 hours to develop — at industry trade shows.
Albert Einstein, Kasten likes to point out, is quoted as saying the definition of insanity is doing the same thing over and over again and expecting different results. He believes most 401(k) plans fall into that category.
“Statements may be a different color or a website will change but companies basically are doing the same thing over and over again. There’s never been any real change in how many people are able to retire successfully,” he says. “This gives a solution. It figures it out. It’s not theory. We can show conclusively this works. We’re trying to get past that definition of insanity.”
Hall of Fame Judges
- RONALD L. DELEGGE is the editor of ETFguide.com and has contributed Research magazine’s Exchange-Traded Products Reporter since 2004. He worked as an investment advisor for 11 years and lives in Southern California with his wife. His new book is Gents With No Cents: A Closer Look at Wall Street, Its Customers, Financial Regulators, and the Media (Half Full Publishing).
- KENNETH L. FISHER is chairman and CEO of Fisher Investments, which manages $36 billion in assets. He has been “Portfolio Strategy” columnist at Forbes for 27 years. His latest book is Markets Never Forget (But People Do): How Your Memory Is Costing You Money — and Why This Time Isn’t Different (Wiley).
- JAY NAGDEMAN is president of Suasion Resources (www.suasion.com), a marketing consulting firm to the financial services industry. He is author of The Professional’s Guide to Financial Services Marketing: Bite-Sized Insights for Creating Effective Approaches (Wiley).
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