The Odd Couple: Bettering the Relationship Between Advisers and Recordkeepers

Plan advisers and recordkeepers are still learning the best way to each manage the same types of plan participant services, to share participant information and to adjust in how they partner, to coordinate it all.

According to Alexandria Francis, vice president and adviser consultant at Fidelity Investments, there has been a change in the industry where recordkeepers are taking on some adviser functions.

“We’re seeing this shift where the recordkeeper wants to be on the same side of the table [as advisers], and we’re still trying to figure out how to do it,” she told the audience.

The services that both now offer include plan design and plan participant guidance tools, said speakers in “The Odd Couple,” a discussion on the changing relationship between advisers and recordkeepers, at the PLANADVISER 360 Conference in Orlando, Florida, on Monday.

Leah Sylvester, executive partner and president of retirement plans at adviser firm Shepherd Financial Inc., said her firm works with more than 27 different recordkeepers, which can make it all the more difficult when it comes to administering complex plan design or overseeing participant decisionmaking.

“[We need to] understand, within those 27 recordkeepers, who can actually administer that type of transaction?” said Sylvester. “As an adviser, that’s yet one other barrier we have to consider overcoming. … When [services are] not universal, like having in-plan Roth transfers available, it can make our job that much more difficult. I think, the more uniform that offerings can be among recordkeepers, [that] would be helpful for advisers.”

Aligning on Plan Design, Participant Guidance

Sylvester’s suggestion was one of many from the panel on aligning recordkeeper services with adviser needs.

Phil Sherman, founder and lead adviser at FoxHedge Advisors LLC, said there is confusion over who owns what when it comes to plan design, and also a need to understand recordkeepers’ processes.

“If we want to bring a cool idea to the table, at what point do we hand off responsibility [to the recordkeeper]?” he said.

For both, to understand the processes involved on each other’s side is where the need for transparency comes in, according to Francis.

“One of the things we’ve really focused on over the past several years is making sure there’s transparency to your book of business,” she said. “We offer a platform where you can run reports as needed, if you want to know who’s terminated [or] who needs a beneficiary—small acts like that to make sure you’re able to do what you do best without necessarily having to reach out to any person at Fidelity. I think the other piece is really listening to advisers when we have things like our adviser summit.”

While panelists agreed that both advisers and recordkeepers play important roles in helping participants navigate retirement plans, speakers said better communication is needed to avoid overlapping efforts.

Sylvester noted that firms often develop participant engagement calendars and communication strategies without coordinating with their recordkeeping partners, which can leave participants with multiple messages about the same topic or miss opportunities for more targeted support.

“We should all lay our cards on the table and say, here’s what our participant service calendar looks like,’” Sylvester said. “Where are we overlapping? Where are we duplicating efforts?”

Sherman added that advisers are less concerned about specific business models than they are about understanding how those models operate.

“I don’t necessarily think there’s a right or wrong,” he said. “Everyone has their separate business model. … We just want a recordkeeping partner to be honest to us about where it stands.”

What Recordkeepers Want Advisers to Know

Asked what can help advisers and recordkeepers improve their relationships, panelists repeatedly went back to: transparency.

Sylvester said both sides should be more intentional about meetings and relationship management, including setting clear agendas and expectations before conversations begin.

“I think it comes down to transparency and open dialogue,” Francis said. “We’re all saying the same thing from a different perspective, which is just that we want to work together in the best way to get the best result for the individuals we impact.”

Sherman agreed, arguing that both advisers and recordkeepers ultimately serve the same stakeholders.

“We are all here for the same reasons, and we are trying to help people,” he said. “We might take different avenues to get there.”