PANC 2010: Planning Ahead

Every adviser needs a plan – but what sort of plan are we talking about?  An investment plan?  A benchmarking plan? And how short- or long-term should a plan be? 

A panel discussion at the PLANADVISER National Conference in Orlando last month provided advisers with some planning possibilities.   

Panelists discussed implementing service plans and/or communications plans for servicing the needs of plan sponsors and participants.   

One sort of plan that every adviser should play a role in is constructing the investment policy statement (IPS) of the client. Larger plans may have an internal investment committee to handle the IPS. Carlos Tocabens, a consultant with RetirementRx, Inc., said that he likes to be the “driver” in the IPS process.   

“I’m very involved… I can help them write the policy statement. Or we can get very specific with a charter and how a committee should work,” said Tocabens.

Bruce Gsell, managing director-investments, Merrill Lynch Wealth Management, pointed out that smaller plans don’t always have an investment committee, and you’ll need to take a much more active role in shaping in the investment policy.   

Investment committees also hold meetings with some regularity – the panelists discussed how advisers should plan for these.   

Tocabens said that he always prepares a formal agenda, and tries to keep it the same every time so everyone knows what to expect. He said they review the IPS to make sure everyone is still comfortable with it.  And he said that he keeps market commentary to a minimum to keep the long-term goals in focus.   

Gsell said he has quarterly meetings with all his plans. He does conduct a market overview, and they go over the IPS to make sure it’s still working in conjunction with the market. He’ll also go over Morningstar reports on the plans’ various investments.

Paul Temple, vice president of retirement sales at Oppenheimer Funds, suggested that advisers start to bring up fee disclosure changes in these meetings as well.   

However, a plan adviser should not only be concerned with the investment committee. The “retirement plan committee” angle also needs to be attended to. All three panelists said that they keep the two separate. Gsell said he thinks of it as “plan wellness,” (investment decisions) versus “participant wellness.” Tocabens said he lets the client decide which he should focus on.

Communicating with clients also requires a plan, and there are many products available to help in this process. However, one product might not cut it. Tocabens said that because he tries to work with the individual needs of each client, he might have to “steal” a little from everyone. “A little from this vendor, a little from that one… depending on client needs,” he said. And if there isn’t a vendor with a communications plan that fits his needs, he will make one up himself. Temple reassured him and all the financial advisers in the audience that everyone takes a little nugget from each vendor to find a solution that works best for them.   

Every well-thought out plan isn’t complete until it’s been determined that the plan was a success. So what is the plan for determining success?  It’s different for every adviser, panelists agreed.

Gsell said he measures success by the participation rates. Temple said benchmarking is key–gather the data, analyze it, and provide a solution for weak spots before they become serious. Tocabens said his plan for success is measured in client retention and feedback. When he gets positive feedback, he feels that he is succeeding, referring to it as the “happiness measurement.”