PANC 2010: Let’s Make a Deal

 A panel discussion at the PLANADVISER National Conference revealed setting fees for your services is a subjective process.

Barbara Delaney, Principal, StoneStreet Equity Inc., an NRP member firm, said the pressure from sponsors to set a fee structure and detail what fees are charged for what service is a challenge. What an adviser does and the time spent on a particular service can vary by client, depending on the level of service a sponsor wants or a plan’s size.  

Adrian Hodge, Senior Vice President, Retirement Sales, Fidelity Investments Institutional Services Company, pointed out that for this reason, some clients may subsidize the fees for others, as some may be paying the same price for a service that for other clients takes more time and effort for the adviser.   

Lucas Barton, Partner-Vice President, Lockton Investment Advisors, said as more regulations come out, the services advisers provide will change and the processes involved in existing services may change. This will also create a challenge for setting fees.  

Delaney suggested advisers benchmark their own fees. List all services provided to a sponsor and the time spent on each and determine if the fee makes sense.  Hodge said advisers should base their fees on the amount of risk they take on when providing a service and what services a plan sponsor values. He suggested advisers list their services and associated fees and let sponsors choose what they want.  

Hodge also said he believes the industry will see a trend toward more mixed fee structures; some services will incur a flat fee and some will be charged by the hour or by participant.  

Finally, while most panelists say they do not take on project work, Barton said his firm uses project work – usually Requests for Proposals – to try to win a long-term relationship, offering to cut the project fee in half if his firm is given the retirement plan business.