In Practice September 26, 2007

PA NC: Be Prepared: Acing Your Finals

A panel of experts at PLANADVISER’s National Conference in Orlando, Florida, offered insights on how to win a finals presentation.
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“Preparation is the key” to a winning finals presentation, according to Steff Chalk, President of CHALK 401(k) Advisory Board, Inc. Chalk suggests advisers understand what the decision-making process will be when sponsors are searching for an adviser, and that they understand a sponsor’s hot buttons – three points that are working well for their plan and three points that are not. He also suggested appointing an adviser “quarterback” ahead of time to field difficult questions from a sponsor or committee attending the finals presentation.

Panel member Wade Walker, Global Private Client Group, Merrill Lynch, added that advisers should know where the plan stands, the previous experiences of the decision-makers, and what is important to the sponsor.

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An adviser should know why a company is searching for a new solution and the sponsor’s desire for employees, according to panel member Brian Dillon, Regional VP, Investment-Only Specialist of John Hancock Retirement Plan Services. He suggests a visit to the company before even responding to a Request for Proposal (RFP).

In addition to preparation, an adviser should think, “How can my firm be the most attractive decision?,” offered panel member Peggy Whitmore, Managing Director of 401(k) Advisors. She suggested advisers think of why their firm would not get the business and answer any rationales they come up with ahead of time. She pointed out the finals presentation should convey that an adviser will be the one who will make the sponsor’s job easier – seamlessly and behind the scenes.

Chalk agreed that advisers stand apart that can explain the process they will use to keep a sponsor on track with its goals and how they will address the current solution’s shortfalls. In the finals presentation, an adviser should tell what he is going to do for participants and what he is going to do for the sponsor.

In Practice September 26, 2007

PA NC: Formula 409: Building Your Deferred Comp Business

409A has shaken up the deferred compensation business, and the changing landscape offers many opportunities for advisers.
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“This is one of the great untapped marketplaces,” commented Thom Shumosic, Founding and Managing Partner of Rockwood Financial Group, speaking on a panel of industry professionals at PLANADVISER’s National Conference 2007 in Orlando, Florida, this week.

Shumosic pointed out an adviser’s first responsibility is the qualified plan business, so an adviser is not necessarily an expert on non-qualified plans. However, a plan’s adviser should know what the sponsor wants and find providers who can deliver.

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According to Darrell T. Alford, Financial Advisor Representative of Alford-Jungers Financial and Insurance Company, an NRP Member Firm, advisers should have “in their bag” a provider using COLI funding, a provider using mutual funds, and a provider for those plans that are unfunded. Alford suggested advisers approach the deferred compensation marketplace as having two tiers: smaller plans with $3 million or less in deferrals and larger or institutional-sized plans.

Michael G. Goldstein, Senior VP and Counsel of The Newport Group, added that using this two-tiered approach an adviser will be able to assess the fees associated with running the plan and know which providers to approach to keep fees reasonable.

A way to open the discussion regarding the deferred compensation plan, Goldstein offered, is for advisers to ask their plan sponsor clients how many executives received corrective distributions after non-discrimination testing for their qualified plan. He also provided the hot tip of tapping into the opportunity provided by a provision of IRS Notice 2006-79 that allows participants to turn short-term bonuses into a 409A deferral until December 31, 2007, saying it was a way for an adviser to proactively step into the deferred comp adviser business now.

Finally, Bob Nienaber, Executive Benefits National Sales Manager of The Phoenix Companies, Inc., suggested advisers use the impact of the stock option expensing rule in addition to the impact of 409A regulations to tap into the deferred compensation marketplace.

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