I recently attended the 2017 National Association of Plan Advisors (NAPA) Conference that brought together industry thought leaders and retirement plan advisors to discuss the latest industry trends, regulations, and best practices. In the session, “What Plan Sponsors Really Want,” we reviewed a recent survey conducted by NAPA and The Plan Sponsor University (TPSU). According to the survey, 53% of respondents indicated they are overall satisfied with their plan advisor. I think most of my readers would agree that is a meh number; not great, not bad. However, Fred Barstein, founder and CEO of The Retirement Advisor University and TPSU, was quick to point out that “plan sponsors don’t even know what it means to be satisfied.” That statement got me thinking, “how do you measure satisfaction when you don’t know what it means to be satisfied in first place?” To answer this question, I thought maybe we could compare the services of plan advisors to that of your family physician.
- You Should Be Able to Clearly and Quickly Define What Your Advisor Does for You and Your Plan Participants
When asked what your family physician does, you probably quickly said check my vitals (blood pressure, temperature, weight), assess my symptoms, provide a diagnosis, and prescribe a course of treatment. Can’t answer this question about your plan advisor? You’re not alone. In many of the sessions, it was revealed that plan sponsors believe plan advisors are only there to provide guidance regarding the investments in the plan (and some plan sponsors aren’t even sure if their advisor does that). It is my belief that your plan advisor should be able to not only provide advice on the plan investments, but also should be able to provide plan design and compliance support, vendor management, and participant education.
2. Your Advisor Should Be a Thought Leader
You wouldn’t visit a doctor that didn’t have a medical license and proper credentials, so why would you work with an advisor that doesn’t have the proper credentials? With so much changing in the retirement plan industry, such as the definition of a fiduciary, acceptable compensation forms, and fee scrutiny, your advisor should be able to demonstrate that she is a thought leader by understanding the rules and regulations, but also being able to explain them to you and your participants in an understandable way. One way that your advisor can demonstrate her level of knowledge is through industry recognized designations, such as the Certified Plan Fiduciary Advisor (CPFA), Accredited Investment Fiduciary® (AIF), and Certified 401(k) Professional® (C(k)P), just to name a few.
- Your Advisor Should Follow a Process
Your doctor probably does not walk in straight away and write you a prescription. And, if she did, would you take it? Similarly, your advisor should not make investment changes to your plan without first understanding your participant demographics, company philosophy, and plan structure. Additionally, there needs to be a documented process in place for when investment changes are made. I recommend a written Investment Policy Statement (IPS), consistent investment monitoring reports, and meeting minute notes as forms of documentation for your plan’s processes and procedures.
With company retirement plans, there is often the “if it’s not broke, don’t fix it” mentality when it comes to analyzing the plan. However, my question is again, “how do you know if it is broken, if it never was working correctly in the first place?” If you would like a check-up of your company’s retirement plan, please give me a call at 205.970.9088 or e-mail me at firstname.lastname@example.org. I would be happy to help you.