Deals & People April 16, 2012

FSI Hires Tax and Retirement Expert

The Financial Services Institute (FSI) announced it expanded its advocacy agenda to include retirement and tax issues.  
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The organization hired Robert Lewis as government affairs for tax and retirement to address these issues for its independent financial services firms, their affiliated financial advisers and their clients.

“FSI does one thing and does it well: successfully advocate for our members and their Main Street American clients,” FSI President and Chief Executive Dale Brown said. “During Tax Week, it is fitting that we announce the expansion of our agenda and our team to include tax and retirement—two issues critical to our members.”

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Lewis joins FSI with more than 10 years’ experience in Washington, D.C. He spent four years working for Sen. Zell Miller (D-Ga.) on the Senate Banking Committee. After Sen. Miller retired, Lewis joined Financial Executives International as manager of government affairs, focusing on pension and retirement issues. 

After graduating from a Catholic law school in 2010 Lewis was a law clerk for U.S. House Judiciary Chairman Lamar Smith (R-Texas). Most recently, he was manager of federal affairs for the Community Financial Services Association of America. Lewis is a 2001 graduate of Morehouse College with a B.A. in political science.

“Not only is this Tax Week, a time when most Americans focus more closely on tax issues, but April is Financial Literacy Month,” Brown said. The new hire will help the organization in its expanded mission.

 

Compliance April 16, 2012

408(b)(2), 404(a)5) Present Prospecting Opportunities

Preparing for fee disclosure regulations may be tedious, but there is a silver lining: 408(b)(2) and 404(a)(5) can create prospecting opportunities for plan advisers.
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“[Fee regulations are] creating a huge opportunity for the sophisticated retirement adviser to gain new business,” Jim Sampson, managing principal at Cornerstone Retirement Advisors LLC, told PLANADVISER.

Covered service providers have until July 1, 2012 to be in compliance with the Department of Labor’s (DOL’s) 408(b)(2) regulation, which requires disclosing information about fees and services to plan sponsors of Employee Retirement Income Security Act (ERISA) plans (see “DOL Issues Final Rule on 401(k) Fee Disclosure”). Under 404(a)(5), plan sponsors have until August 30 to provide fee information to participants.  

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Knowledgeable advisers will be in demand to provide education and guidance to plan sponsors and plan participants about these regulations. Sampson recommends ways advisers can bring added value and create opportunities with current and prospective clients:

‘Quarterback’ the Process

Advisers can help the sponsors reach out to their service providers and review all service agreements to ensure they are compliant.

“They can really quarterback the whole process” to make clients feel comfortable with the new fee disclosure regulations, Sampson said. “If we can take one more thing off that plan sponsor’s to-do list, that’s the extra value.”

Sampson said he is amazed by how many plan sponsors do not know what the regulations are, so explaining them in simple terms is extremely helpful. Advisers can ask questions such as, “Do you know fee disclosure is coming? Do you know your responsibilities? Are you prepared for participants’ reactions [to 404(a)(5)]?”

Meet With Participants About 404(a)(5)

A sophisticated adviser, Sampson said, will also meet with plan participants about 404(a)(5). Educating the participants before the compliance deadline is crucial so they are clear the fees are not new, Sampson said. “If a company is not prepared for this, poor HR is about to get swamped,” he added.

The adviser should explain the value of fee disclosures to participants and prepare them for their upcoming statements, which will show the fees that have always existed in their plans. Make it clear that the visibility of these fees is a positive change for participants and plan sponsors. Sampson suggested a good way to explain the benefits of participant fee disclosure: “When is the last time you bought something and had no idea what it cost? We do it every week in our 401(k) plan.”

Plan advisers should also schedule a meeting with participants to teach them how to read their quarterly statements, Sampson suggested.

He added, “[Good advisers] are looking for the opportunity to get in front of people and affect outcomes.”

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