2012 PLANSPONSOR Retirement Plan Adviser Team of the Year

According to McLaughlin, his firm sets the stage for the participant experience by educating clients about automatic features, fiduciary responsibilities and vendors. There are approximately 45 Graystone teams across the country, but the Danvers group’s specialty is plan advisers who focus on defined contribution (DC) plans, McLaughlin says.

Graystone Consulting was founded in 2009 to provide high-level investment advice to institutional investors and the upper-tier private wealth market. The Graystone team in Danvers comprises seven members: McLaughlin, who specializes in investment management; Al Hammond, institutional consulting director and financial adviser focusing on trends in plan design and legislative ­issues; Pete Ciovacco, corporate retirement director and financial adviser concentrating on participant ­services and education; Daniel O’Shea, analyst; Jeffrey Gray, financial adviser; and Nicole Somers and Melissa Mulloy-Mecozzi, client services administrators.

The team has 40 defined contribution plan clients and four defined benefit (DB) plan clients. McLaughlin says the firm plans to add more DB clients, particularly those looking for a discretionary asset management solution.

“We have transitioned several current clients [three in the past year] from [a] nondiscretionary to a discretionary platform that we believe best leverages the resources and strengths of both Graystone and Morgan Stanley Smith Barney,” McLaughlin says.

Clients appreciate the Danvers team’s proactive attitude in helping them, McLaughlin says. The team’s service model is designed with the clients in mind to ensure they will always work with someone they know. Ciovacco, Hammond and McLaughlin rotate the lead role when working with clients and assign primary and secondary consultants to each plan sponsor relationship. “The primary-secondary [model] helps make service more collaborative and seamless in an emergency situation,” Hammond says.

“Rotating the lead roles maximizes the capacity of the partners on the team,” Hammond continues. “In our opinion, it has helped us grow a really strong bond with the clients.”

The team works with plan sizes ranging from $15 million to more than $1 billion in plan assets. “If we look at [the] marketplace and our team, the larger plans do require a lot more service,” McLaughlin says. “The benefit is, you are affecting that many more participants.”

The framework and service philosophy are similar among plan sizes, but large plans require more internal resources because their size and number of locations create significant education and communication challenges, Hammond says. For large plans, Graystone Danvers works closely with the plan sponsor to ensure the company’s messaging and branding is consistent across all mediums.

“So we are working with them together to help make sure the messaging and branding that they want [in the retirement avenue] … are coming through,” Hammond says, whether that be for the website, ­retirement plan statements or marketing ­materials.

To help participants and sponsors, Graystone’s Danvers team has access to tools and materials tested by Graystone’s home office and Morgan Stanley Smith Barney—such as participant asset allocation questionnaires, white papers, marketing materials and client education presentations. Graystone’s home office also provides specialized training, legal support and research, Hammond says.

The Danvers team works with ­clients to keep them organized and provide relevant, easy-to-understand information about trends in the industry, fiduciary responsibilities and more. Too often, plan advisers and sponsors take the lead from plan administrators based on their idea of education, ­Ciovacco says. The Danvers team’s approach is unique ­because it ­reverses the process, working with the sponsor on a strategic education plan that is more likely to drive desirable results and is feasible, given the culture of their employee population, he adds.

“Each plan sponsor is so different in the resources that they have,” Ciovacco says. “They … know what works and what doesn’t.” For example, some companies do not give desk workers Internet access, so Web tools would be a pointless option.

Fiduciary education is also important to Graystone Danvers. The firm organizes a fiduciary presentation for each new plan sponsor client and reviews it with them every couple of years, as a refresher.

“We feel it’s very important for the people running the plan to be educated about the markets and their different investment managers,” McLaughlin says.

To that end, the team invites guest speakers such as managers who discuss their investment philosophies with the clients, and explain why underperformance can occur. In-person guest speakers are generally reserved for the large-plan committees, though all plan sizes have access to the speakers’ material.

“Each client has had exposure to the same content, but the difference is in the delivery,” Hammond says.

The team’s holistic approach and concentration on plan sponsor education keeps clients happy, McLaughlin says. “I think having clients stick with you for a long time, you can’t ask for more than that. We have had relationships go back 15 years, and we have … grown with a lot of these relationships, so I think that’s probably the most enjoyable, rewarding part of the business.”

Going forward, the firm plans to focus on stable-value funds, custom asset allocation strategies and alternative investments—including whether they will be worked into the plan menu—as well as focus on automatic enrollment and automatic escalation.

“I think [auto-enrollment and auto-escalation] will continue to be something that companies are going to have to get more and more behind,” McLaughlin says. “Automatic enrollment is something that we educate every single plan sponsor on.”

On the other hand, the team generally reserves alternative investments for a more select audience, with a higher level of investment experience.   

Despite industry challenges, the Graystone Danvers team still thinks stable-value funds are a better choice than money market funds for most plan sponsors, because generally they have a longer time horizon.

The team is also spending more time educating clients about guaranteed income solutions. “The market for this is just starting to ripen, and these products are starting to be portable and a little more viable,” McLaughlin says.

Steff Chalk, CEO, Fiduciary Consulting and Governance Group Inc.

Phil Fiore, representing FDG Advisors of UBS, 2011 PLANSPONSOR Retirement Plan Adviser Team of the Year

Ryan Gardner, representing Fiduciary Investment Advisors LLC, 2009 PLANSPONSOR Retirement Plan Adviser Team of the Year

Alison Cooke Mintzer, global editor-in-chief, PLANSPONSOR and PLANADVISER 

Doug Prince, representing The Price Group of Stifel Nicolaus, 2010 PLANSPONSOR Retirement Plan Adviser Team of the Year

In their own words… 

What about this business are you most passionate about? 

Matthew McLaughlin: We often refer to retirement as “the challenge” because it is one of the most difficult issues faced by virtually every working American. We are most passionate about the impact we can have on improving retirement outcomes for those retirement participants that really need our assistance. The great thing about our business is that our retirement philosophy and strategy can have a positive influence on so many plan participants. Today, the decisions we make with our plan sponsors impact tens of thousands of individual plan participants. There are many levers we can use to enact change in plan design and investment options using technology and education. The better we understand the factors influencing retirement outcomes, the better we can develop strategies to help guide our plan sponsor clients.

If you were to speak to a qualified plan sponsor prospect today, what one question would you ask to initiate the opportunity? 

Al Hammond: Are you satisfied with the advice and service you are getting from your independent retirement plan adviser?

What is the one thing you hope your competition never figures out? 

Peter Ciovacco: We hope that many of our competitors continue to see the retirement plan business as a “new business line” or think a personal relationship is as important as developing true craftsmanship in advising retirement plan sponsors. Our business is interesting because the level of “competition” varies so dramatically. We have a lot of respect for what we consider elite retirement plan advisers across the country. Similar to the PGA Tour today, there is a lot of talent in the top 100 and there are many unique and different philosophies that can be successful. But if you look beyond the top 100, the level of talent and commitment falls off dramatically.

Where are the biggest opportunities for business expansion in the future? 

Hammond: We believe there remains a minority—but yet significant in number—of plans today that still have not hired independent advisers for oversight. We come across plans without independent advisers in all markets, including the large market. However, we continue to see more and more plan sponsors, who have historically relied on their plan administrator vendor for guidance, seek out independent advisers.   

One of the niche areas where we have had success and where we have found adviserless plans is in health care and nonprofit organizations. These organizations are experiencing dramatic changes to their retirement programs and are changing from a “hands off” approach to a much more “hands on.” It is not uncommon for these organizations to have multiple vendors and few processes in place for oversight. Consequently, we see opportunity to assist these organizations by advising, educating and communicating the necessary changes required to improve their retirement benefit programs.

What are the most important issues that your plan sponsors face with their company retirement plan, and what specific actions do you take to assist them in overcoming those issues? 

McLaughlin: The biggest challenge for plan sponsors is the ability to move back and forth from the “big picture” to day-to-day issues. Oftentimes, the topic of the day or relatively minor issues can devour the time and resources of plan sponsors, at the expense of the big picture. For example, a plan sponsor can easily become fixated on a particular fund’s underperformance, despite the fact that it represents a small fraction of the plan assets.    

How do you continue to grow your business and maintain the high service standards that have made you successful? 

Ciovacco: We have been committed to business planning throughout our careers and this has helped us anticipate and plan for growth so that our service model is not at risk. We are continuously gaining efficiencies through refining our processes, leveraging technology and training our staff to deliver on our service standards. We have also added staff over the years, but we prefer to maximize the talents and capacity within the team as opposed to adding personnel.