Deans List October 29, 2006

Alphabet Soup

What do your designations really mean to plan sponsors?
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“You know, Mrs. Buckman, you need a license to buy a dog, to drive a car–hell, you even need a license to catch a fish, but they’ll let any *()&)(&*n be a father.”

That’s a telling statement about parenthood from the Ron Howard movie “Parenthood,” a story about a family about as dysfunctional as any you are able to imagine. However, when it comes to retirement plans, if you substitute the word “plan sponsor” for “father,” you’d also have an accurate statement.

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The fact is, ERISA doesn’t require any training or credentials to serve as plan fiduciaries-it just holds them to the standard of someone who possesses both, the so-called “prudent expert” rule. Fortunately, both for plan sponsors and for the advisers who work with them, ERISA also contemplates that plan sponsors, where necessary, will enlist the assistance of experts.

A Daunting Task

Unfortunately, for plan sponsors that lack that expertise in the first place, choosing a qualified expert to help can be a daunting task. It’s one thing to hire someone for a position you once occupied, or for a business you built from the ground up and understand, but how does one go about the process of determining experts in a field in which you have no expertise?

Typically, plan sponsors interview advisers the same way they might interview job candidates. They check references, look for demonstrated expertise in an interview, do a “gut check” based on personal interaction during the interview, and evaluate professional and academic credentials. Now, there are no “required” credentials for advisers seeking to serve retirement plans (some licenses may be required by various state and federal laws for activities that relate to retirement plan servicing)-but there is no shortage of advisory designations.

In theory, an evaluation of these designations and certifications provides some means of discerning an adviser’s expertise. However, all too often, what they provide instead is a chronology of sorts for the adviser’s career development. Indeed, some designations that continue to linger on adviser business cards have no real relevance to the retirement plan engagement at hand, though they may well speak to an overall knowledge base or experience level. However, to many plan sponsors that have no experience with retirement plans or the advisory business, the jumble of letters is little more than “alphabet soup.”

I’m not suggesting that a long list of designations won’t win you business—plan sponsors who don’t want to appear ignorant may simply decide that quantity equals quality, after all—or that you shouldn’t have enough pride in the accomplishment to reflect that on your cards and stationery, particularly the ones that carry with them relevant continuing education requirements.

I would suggest, however, that there is an advantage to be had in highlighting more than just your service experience or the accolades of happy customers. I think there’s a real advantage in highlighting-be it in requests for proposals, finals presentations, or even informal inquiries-the relevance of the designations you have earned to the interests of the retirement plan sponsors you seek to serve. There’s no better way to show your continued commitment to staying on top of the developments that add value and provide comfort to plan sponsors that may not be experts, but are expected to conduct themselves as if they were.

In Practice October 29, 2006

Getting Better

Is your continuous improvement stalled at the expense of the plan participant?
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“If you are not getting better, you are getting left behind.” That applies in many aspects of business, but nowhere perhaps as critically as for retirement plan advisers. So, what motivates you to improve your practice on a day-to-day basis? In my encounters with advisers, the answers tend to encompass the following:

A. What?
B. Nothing
C. The industry
D. My clients
E. My own high standards (the desire to deliver a superior product)

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A and B, of course, are abysmal responses that cause businesses to stall and eventually shrink. Response C is infinitesimally better, but it still stifles growth. Only responses D and E will position your firm for solid growth and success, particularly when those motives are integrated with a “continuous improvement” effort.

Serving as the adviser of a retirement plan carries with it a profound responsibility. Over the life of a plan, the retirement plan adviser is, by far, the single biggest noncash contributor to a plan participant’s account balance at retirement. Many retirement plan committees, plan sponsors, plan providers, fund managers, managers of open-architecture recordkeeping systems, and even communications specialists believe that what their group or firm delivers to the plan is paramount to everything else. I respectfully disagree.

I disagree because I have seen too many successful “broker-of-record” changes (where participation increases by more than 50% after the change) to believe that anyone is more important in helping plan participants attain financial security than the retirement plan adviser. I have seen too many fund lineups substantially improved when a new retirement plan adviser begins attending the retirement plan committee meetings. The retirement plan adviser is in a position to make a substantial difference and, because I know that the retirement plan adviser can make that difference, I again pose the question: “What drives your efforts to ‘get better’ on an ongoing basis?”

Start by approaching your best clients and asking them for feedback on what you can do better to help them, the retirement plan committee, and the plan participants. This approach has many benefits; your clients learn that you value their input, and they learn that you are open to change. Most importantly, the feedback helps you to improve, while you also solidify your relationships with your best clients.

Make an appointment specifically to discuss how you can improve your service-you may be surprised at the response you get. By making the commitment to focus on finding out how you can do a better job for your clients, you quickly will differentiate yourself from the rhetorical comment that many of us have used to close a telephone conversation, such as, “Is there anything else that I can do for you?”

Your request will let your clients know that their feedback will be incorporated in your overall “continuous improvement” effort. Advising them of the topic in advance should motivate them to share honest and meaningful content with you, and it should give them a chance to prepare thoughtful responses.

The successful retirement plan adviser knows that the only acceptable response to “How are you getting better?” requires that you take an active role in continually making your business more efficient, and then delivering those efficiencies to your clients. You owe it to plan participants and plan sponsors to force yourself, and this industry, to get better at delivering real outcome-based solutions.


Steff C Chalk is founder and president of CHALK 401(k) Advisory Board, with a client list that includes corporations, nonprofits, and governmental units. A judge for the PLANSPONSOR Retirement Plan Adviser of the Year award, and a faculty member of the PLANSPONSOR Institute, he is also the co-author of How to Build a Successful 401(k) and Retirement Plan Advisory Business.

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