Speaking at the PLANADVISER National Conference, Ken R. Olson, President and CEO of DataChem Laboratories, Inc., a mid-size plan with 850 participants, said he wants to make sure his adviser will choose decisions that are best for his plan and plan participants even if that means the adviser leaves money on the table. Olson added that he wants his employees in all five company locations to be able to recognize the plan’s adviser by face.
“You have to have an adviser you truly trust,” added panel member Debbie Hall, Director of Human Resources at JHT Inc., who oversees a small plan with 450 participants. Hall said that it is difficult to reach her employee base and that she realized she needed someone who knows much more about 401(k)s than she does and who can devote more time that she can to maintaining the plan.
Hall said her company did not use an adviser’s services and was only looking to change providers when someone recommended a discussion with an adviser. After hearing at the first meeting what the adviser could do for the plan, Hall said she thought, “Where do I sign?”
Last year was the first year JHT’s plan passed discrimination testing, and Hall said that was thanks to their adviser. Further, she added that their overall fees went down after hiring the adviser from when the plan had no adviser.
What Could Be Better?
The main complaint of panel members: advisers are not proactive enough. Olson said his adviser was good at choosing investment options for the plan and an investment policy, but he had to approach the adviser to help increase the plan’s participation rate. The fact that the adviser provided this service after being asked at no additional fee let Olson know he had been paying for this service all along.
Hall agreed that although she thinks her adviser is doing a great job, “an extra phone call now and then” would be nice.
Panel member Sandra Lamparello, VP, Human Resources of Sumitomo Mitsui Banking Corporation, said she also feels her adviser lacks initiative to perform a service without being asked. She said an adviser should have the same goals for the plan and participants that the sponsor has and should be proactive in calling with suggestions or updates on regulatory information.
As Lamparello summed up, “I just want to have that sense that they’re just working for me.”