PANC 2010: Plan Sponsor Confidential

At the PLANADVISER National Conference, retirement plan advisers got to hear straight-talk from four plan sponsors about what they expect from their advisers.   

Facing a crowd of hundreds of financial advisers hungry for their business, four plan sponsors attempted to shed some light on how they perceive the adviser/sponsor relationship. These sponsors told advisers in their own words about their experiences (the good and the bad) with plan advisers.  What are the key differences between a good adviser and a bad one?

Education would lead to more participation 

Each sponsor came from very different companies, yet they all had one common concern: how do you educate participants so that they are actively engaged in the retirement planning process?

Christina Giese is the Director of Retirement Plan Administration at Stage Stores Inc., a national retail chain operating five department stores at 770 locations. Her plan has a very low participation rate; 15% out of 17,000 employees. Her main obstacle is reaching employees in the hundreds of retail stores spread across the country, mainly in small to mid-size towns. She said if the store manager isn’t enrolled in the plan, no one else at the store was either.

Darren Rieger, Director of Benefits at Itron Inc., a large software technology firm, described a different problem he’s challenged with–his company is divided into the manufacturing side and the technology side. The manufacturing employees make substantially less money than the tech employees–he struggles with designing a plan appropriate for this range of income.

Donnie Brown is the Vice President of Human Resources at the Tindal Corporation, a small, highly-specialized construction firm. He pointed out that his company, like most construction companies, has been hit hard due to the economic downturn. They haven’t been able to match employee contributions, but are hoping to be able to do so again one day soon.

Marion Wise represented the non-profit sector, as Finance Director of Southwinds Inc., a social services agency in Pittsburgh. She explained how non-profit employees have very limited salaries, so many are hesitant to make any contribution to a retirement plan with money coming out of their paychecks.

Wise got right to the point when she said that she “almost jumped out of her skin” when an adviser in a previous panel (see “What to Expect in 2011”) said that often the employers are the main obstacle preventing them from educating participants.

“From my standpoint, that’s one of the most important things I look for in an adviser. I’m confident that when we have issues, I know that [my adviser] can explain the plan to them. This is really key for us because we wear so many hats and we look for advisers we are comfortable with,” she said.


Rieger also said that education for participants is a priority for him as well–however, his adviser doesn’t offer any.  He said that the recordkeeper provides it, and that the adviser only sends out a basic quarterly newsletter.

“We think we need to be doing more for those getting closer to retirement. We want to have an intensive one or two day seminar with spouses, but our adviser just doesn’t do that,” Rieger explained.

Giese’s adviser does make it to the corporate headquarters in Houston quarterly–but for her company’s situation, she said, that just doesn’t cut it.  She explained how many people who work in the Houston office are frequently traveling to the retail sites and will miss the adviser’s visit. And visiting the corporate office doesn’t do much to educate all the employees working in the stores.

A Lasting Relationship? 

All of the sponsors said they “liked” their plan adviser–but sometimes it takes more than just liking the person.

Giese, for example, says she has a good relationship with the adviser, but the company will probably have to make a change in the near future. “We’re growing and I’m not sure he can stay up with our growth.  He’s great on the phone, but a lot of the conversations are too rushed.  And even if there’s a problem, sometimes he can’t get to us for two months,” she explained.

Rieger’s company has been working with its adviser for eight years and doesn’t plan to change soon. But at his previous employer, he said that the adviser was replaced because he wasn’t coming up with enough new ideas–he didn’t “evolve with the times” nor think about redesigning the plan. He was too “stagnant.”

So if the time comes to change advisers, the panelists were asked how important fees were in making their decision. Three of the four answered that fees were very low on the priority list of qualifications. They cared much more about the services being offered, such as plan design consulting, education programming for employees, the adviser’s ability to converse well with participants and themselves, and expertise and knowledge in the field.

“It’s a total package, it’s not just about a low fee for service,” Giesesaid, summing up the general sentiment.

 So to the relief of the advisers in the audience, fees were clearly not a priority for the sponsors–but what about the adviser having fiduciary liability? Again, not a major concern.

Brown got a hearty laugh out of the audience when he said his adviser is not a fiduciary–and he wasn’t even sure if it mattered.   

“Why would you want to go to jail with me if something goes wrong?” he joked.  (In another panel the next day, it was revealed that his adviser is in fact a fiduciary!)

Only Rieger said his adviser is a fiduciary, and he said it was a requirement.    

Measuring a Successful Plan 

The sponsors were asked how they determine if they have a successful plan.

Rieger said that he’s looking at participation rates, deferral rates, passing discrimination testing, and whether participants are attending meetings and logging on to the plan’s website.

Neither Brown nor Wise said they have any metrics–they were mainly concerned with just being able offer employees a viable plan.

Giese said the most important thing to her is having participants give good feedback on the adviser. “People who talk to him say he’s personable–that’s a successful plan to me.”