A Process, Not a Product

According to Geoffrey Ward, National Director of the MetLife Pension Resource Center, the retirement plan advisory business has transformed from one that sells products to one that takes on a consultative role.  

In the 26 years that Ward has been in this business, he told PLANADVISER there have been too many changes to recount. But in the last five years, the issues of transparency and fiduciary responsibility have clearly taken center stage. Ward said this is being driven by the Department of Labor and the myriad of regulatory activity; some of it successful and some not.  But regardless of how successful the DoL is in implementing its proposed regulations, “the genie is out of the bottle in terms of fiduciary responsibility and total transparency of fees and compensation.”   

Ward said the emphasis of the retirement plan business used to be on the total expense of a plan, which is when many plans turned to large providers like Fidelity to save on basis points. “It seemed fitting for a time, but now with downturn of market, this is all meeting up with fiduciary responsibility. Sponsors are getting the message that they have a very significant role, and it’s really personal liability,” he says. “There needs to be a prudent process in terms of making decisions.  After the Madoff scandal, the Mets scandal, sponsors are being named personally.”   

The result? “Rather than the old world of just selling a product, it’s shifting to a consultative process,” said Ward. “For years, we had our Travelers product and MetLife product, and our duty was to sell it. They were good products, but now we don’t even have a product of our own. Now we’re a shopping service; taking a plan fiduciary through everything they need to do, which includes buying a product.”

Ward mentioned a new sponsor client of one of MetLife’s advisers.  It was a sizeable plan, about $20 million in assets.  The adviser found out that this plan didn’t have an investment policy statement (IPS), and the fiduciaries were concerned.  Using training and material from MetLife’s Pension Resource Center, the adviser went back to the beginning with the client and reevaluated the plan design.  

MetLife offers a tool, Ward said, that allows advisers to "shop out your case all our plan providers, over 40 of them." The MetLife Plan Investigator then scores each provider according to the plan’s needs and the adviser and sponsor can compare three side by side. This tool, therefore, Ward explained, helps to ensure proper due diligence was carried out.

The last part is the most important, says Ward. “It’s shocking how many plans sponsors don’t have anything in place.  We reverse the process and say ‘Not only do we want to get you the right product, but help you be the best fiduciary you can be - for ongoing documentation that proves you have ongoing monitoring. We haven’t put in a product, rather a whole process, which will help a sponsor get to a successful plan, not just a cheap one.  So they have what they need so they can stand up to the DoL or any legal challenge to say we are fiduciaries that demonstrate a process of prudence under ERISA.”