Products May 6, 2014

Guide Outlines Opportunity in DB Trends

A new defined benefit (DB) service provider guide, developed by The Principal Financial Group, explores best practices for advisory firms to engage and win new DB plan clients.
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The service provider guide is designed to help financial advisers take advantage of the significant funded status improvements experienced by many DB plans over the last several years. Even with a muted start to 2014 for public and corporate DB plans, researchers at The Principal predict many plan sponsors are considering ways to lock in recent gains (see “S&P 1500 DB Plan Funding Decreases Again”).

A significant change in plan strategy often triggers a search for a new service provider, The Principal says, implying that financial professionals who can break into the search process have a significant opportunity to showcase their value.

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“Searching for a new DB provider is very different from a defined contribution (DC) provider search,” explains Janet Kubik, assistant vice president of retirement and investor services at The Principal. “We developed this guide, based on more than 70 years in the DB market, expressly to help support financial professionals in leading plan provider searches. This allows them to further demonstrate their value and help DB clients accomplish their goals.”

The step-by-step guide identifies tips and considerations that are unique to DB plan provider searches and includes sample, non-branded resources that can be customized, such as:

  • A fact finder to ensure accurate information about the DB plan;
  • Plan assessment to understand the plans strengths, weaknesses and priorities;
  • Fee assessment to help evaluate total soft and hard dollar costs;
  • Search evaluation criteria and sample request for proposal questions; and
  • Finalist scorecards to more easily identify which provider is the best fit.

The guide is part of a new set of DB prospecting resources available online from The Principal to help financial professionals expand their DB businesses. The resources include talking points to help guide DB conversations with plan sponsors and a series of DB prospecting campaign communications to help engage sponsors more easily.

Additional research and analysis is available at The Principal Knowledge Center.

Data & Research May 6, 2014

Adviser Credentials Key to Success, IMCA Says

Investors expect financial advisers to earn and maintain professional credentials beyond the minimum licensing requirements, according to research from the Investment Management Consultants Association (IMCA).
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A recent study conducted by the IMCA and Advisor Impact, “Economics of Loyalty Research,” finds 62% of investors believe it is important or critical that their financial adviser maintain voluntary certifications, and 65% value certifications issued by an objective third party.

IMCA researchers say the analysis contained a few surprises. For example, younger and more inexperienced investors appear to be the most stringent in their credential expectations for advisers, with 84% citing the importance of voluntary certifications above minimum requirements.

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“This is the latest in a long line of consumer research to foretell rising client expectations, particularly among Millennials,” explains Sean Walters, chief executive officer of IMCA (see “A Designation with Fiduciary Muscle”).

Walters says the survey also provides valuable insights for advisers to consider in pursuing new credentials, including which knowledge competencies are most valuable for a practice. Fifty-nine percent of investors, for instance, believe the most valuable adviser competency is in investment management, followed by competency in holistic financial planning, sought by 22% of investors.

A strong majority of investors (81%) believe is important or critical that advisers maintain their credentials once earned.

The findings are based on a set of custom questions asked on behalf the IMCA as part of an Advisor Impact study, which polled 1,200 investors. IMCA is a nonprofit professional association and credentialing organization. More information is available here.

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