Added Value
Providers have valuable informational tools that are beneficial to the adviser business but, according to a panel of advisers and an asset manager, it is important to position the relationship to be most useful to the adviser business while also being fair to clients.
It is “so yesterday” to just monitor investments as an adviser, said Grant Arends, President—Consulting Services at Alliance Benefit Group of Kansas City. Advisers increasingly are expected to play a vital role in the overall retirement picture, and plan providers can help offer solutions for advisers trying to offer a “full-service” retirement plan practice.
As an adviser, you have to talk to the plan sponsor client to determine what he expects you and the plan providers to accomplish, said Mark Medlin, Senior Vice President at CAPTRUST Financial Advisors. Medlin said he handles clients differently depending on what they want: About half he handles on a plan level only, and the rest he also provides help to participants. Gregg Andonian, President of BayState Fiduciary Advisors, Inc., a National Retirement Partners member firm, summed it up: “Get in writing what their [the plan sponsor’s] definition of success is.”
Jim Stueve, Managing Director of Sales at Ridgeworth Investments, noted that, in an “auto-everything” world, the traditional adviser role in the enrollment process gradually is fading in importance. As advisers seek to leverage and expand their business in this changing landscape, Stueve pointed out that the advisers in the room are not competing with one another, but with the people outside the room.
Plan Participant Support
When it comes to serving the needs of the plan sponsor client, the relationship between the adviser and provider can be almost as important as that with the client. Providers offer many tools and support materials that help plan sponsors deliver the best possible plan to the client and support the financial adviser in meeting the sponsors’ expectations of service.
Bilingual materials are an example of a helpful tool that providers can supply for financial advisers, said Medlin, who says he leverages providers to help with bilingual materials. As he puts it, the adviser has to be somewhat friendly with the provider, because the provider has helpful informational materials. The adviser can obtain those informational and research materials from the provider, absorb the information, and bring them to the sponsor.
“T&E”
One area where the adviser and provider relationship may get complicated is in the area of travel and entertainment expenses. Plenty of providers are willing to take advisers out to lunch or on golf outings, but what is the ethical and legal way to accept or turn down these gifts? “You need to be careful in what you accept and what you don’t,” said Arends. According to Medlin, there is no good way to accept T&E from a provider, as CAPTRUST by policy does not accept gifts or special treatment from providers. If Fidelity wants to go to lunch, Medlin has to pay. He said that, if an adviser accepts a gift, it could show up somewhere on a Form 5500 Schedule C. “I would never want to be put in that position with any of my clients,” he said.
Andonian limits how much he will accept, and discloses it to clients. He requests expenses for the year from wholesalers—from golf outings to gifts—and then provides that information to his clients. Stueve said they are receiving more requests for T&E information, especially from broker/dealers. “We are being asked, as an asset manager, for that kind of info more and more,” he said.
The decision whether or not to accept things like baseball tickets from an asset manager aside, the adviser-provider relationship is a mutually beneficial bond. As Andonian said, providers are coming up with great tools that will prove to be helpful to advisers going forward. “See what they have up their sleeve,” he said.