“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.
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.