HALL OF FAME – Advisers of the Year
This year, in honor of PLANADVISER’s fifth anniversary, we have opened the PLANADVISER Hall of Fame, enshrining five advisers and five adviser teams that have made a significant contribution to this business.
A Hall of Fame generally acknowledges those who have accomplished noteworthy achievements in a particular field. This year’s “class” of inductees includes all the distinguished advisers who have been recipients of PLANSPONSOR’s annual Retirement Plan Adviser of the Year award or Retirement Plan Adviser Team of the Year award: John Mott, 2005 PLANSPONSOR Retirement Plan Adviser of the Year; Dorann Cafaro, 2006 PLANSPONSOR Retirement Plan Adviser of the Year; Chad Larsen, 2007 PLANSPONSOR Retirement Plan Adviser of the Year; John Barry, 2008 PLANSPONSOR Retirement Plan Adviser of the Year; Steven Dimitriou, 2009 PLANSPONSOR Retirement Plan Adviser of the Year; Rick Wedge, 2010 PLANSPONSOR Retirement Plan Adviser of the Year.
The criteria that underlie the PLANSPONSOR award are simple but meaningful: to recognize advisers who make a difference through increasing participation, boosting deferral rates, enhancing asset allocation, and/or providing better programs through expanded service or expense management. It is no accident that those criteria also underlie the Pension Protection Act’s designs for defined contribution plans for, only by getting more workers saving in these programs at effective rates, and investing in prudent ways, can they have any real prospects for retirement security.
The paths each adviser and adviser team took to that recognition varied widely, but their commitment to those they serve and the passion with which they do so are an example to us all. Through their ongoing service to their plan sponsor clients, the advisers we have inducted into the Hall of Fame continue to make a difference to retirement plans. When you think about the lives each has touched, and the influence each has had on the retirement security of those lives, we are honored to have played a role in helping bring their experiences to light.
In the pages that follow, we have extended that experience though interviews with the winners of the PLANSPONSOR Retirement Plan Adviser of the Year awards and a representative of the PLANSPONSOR Retirement Plan Adviser Team of the Year winners, in which they share their thoughts about the last five years and what lies ahead in our ever-changing industry. It is an exceptional legacy, both for the award, and for the advisers named above who have done so much to set a standard we could all stand to emulate. We are, as always, pleased and proud to have a role in sharing their example. —PA
John Mott – 2005 PLANSPONSOR Retirement Plan Adviser of the Year
John Mott is Senior Vice President—Investments and Corporate Client Group Director at Morgan Stanley Smith Barney in Houston, Texas.
What do you think are the most significant changes in the retirement plan industry over the past five years?
I remember that, five years ago (after reviewing minutes from a 1st quarter 2006 meeting with a committee), auto-enrollment was still referred to as negative election and that there were 13 states that did not allow employees’ paychecks to be accreted without prior approval. An awful lot has happened since then. The Pension Protection Act (PPA) was probably the most important piece of legislation to occur in ERISA plans since the creation of 401(k) plans in the early ’80s. The PPA has opened the floodgates of all that is mostly good and some bad things associated with our industry today.
What have been some of the most significant changes in your business/practice over the past five years?
I read now more than I ever have about the every facet of the industry. Companies deserve to have and employees’ need to have their advisers/consultants be the best at what they do. Everybody talks these days about commoditization but they can’t commoditize your brain.
What one piece of advice/information/caution would you offer to regulators/legislators?
Give it a rest with new legislation. You have done a yeoman’s work, now let the industry take in all the changes you have implemented and see what the results will be.
What one piece of advice/information/caution would you offer to plan sponsors?
Trust your providers, consultants, committees, and employees about the changes you hear that they would like to see implemented. It is a difficult time for plan sponsors because they are doing what they think is right for their employee base but have fears of retribution by a few. It is sad that they are being held hostage by a litigious society.
What one piece of advice/information/caution would you offer to other advisers?
Be humble and forever thankful that you get to help people in this way. What other business can you be in where you can affect so many lives—from committee members to employees who may think of you and thank you after they retire? This is a very difficult field to be in, but the rewards are eternal.
Five years from now, what do you think will have changed the most in retirement plan designs? What do you think won’t have changed, despite efforts to change it?
We have so many smart people in this industry I can’t even imagine what five years from now will look like. Maybe a movement to have all services/costs of plans to be split out like the old profit-sharing days. Maybe more automation. I think it is interesting that Congress wants to change the employees’ mindset from total dollars needed for retirement to what their savings looks like as a monthly amount. It will be interesting to see how that plays out.
Education is always a quandary. I hear so many people say we don’t need it—that it doesn’t work. What are we afraid of? That participants will figure out they don’t need us anymore? They will only come to realize that they need our counsel even more. It is like anything in life: If you can change one person (you will never know who), it is meaningful. People in our industry do not think the employees are smart enough to understand the financial implications of what they do. They just need to give them a chance.
Too many people have removed themselves from getting in front of the employees. That is where you really get an understanding and an appreciation of what we do in this industry.
What has being named a PLANSPONSOR Retirement Plan Adviser of the Year meant to your business? What advice would you have for advisers who want to achieve that recognition?
First, being named was an honor. To even be considered is an incredible achievement. To my client companies, being named has set me apart from the field as a qualified consultant.
For those striving to attain that honor and achievement, just take care of your clients and the rest will follow.
Dorann Cafaro –2006 PLANSPONSOR Retirement Plan Adviser of the Year
Dorann Cafaro is a consultant with Cafaro Greenleaf LLC in Little Silver, New Jersey.
What do you think are the most significant changes in the retirement plan industry over the past five years?
Several trends have gained traction over the past five years, not the least of which is the increased dependence on the DC plan to provide a major source of retirement income. Embedded in this trend has been increased regulation adding additional burdens to administration that, in turn, has driven technological changes. Technology has produced efficiencies that might have increased profits, yet the competitive landscape actually has caused fee compression that, in turn, has led to consolidation of retirement vendors. With this trend also has come greater litigation exposure, driving the need for greater plan sponsor due diligence and documentation and the need for a professional retirement adviser. In addition, it has become critical for participants to participate in the defined contribution employer retirement plan, not just for supplemental income in retirement, but often to provide the main source of income. The automatic solutions coupled with managed accounts, target-date funds, and other professional investment options assure that employees have a better opportunity to retire in comfort.
What have been some of the most significant changes in your business/practice over the past five years?
Fee compression competition and the recognition of greater fiduciary responsibility have confirmed the decision to become independent. The emphasis on fee transparency has moved us to be totally committed to fee benchmarking and plan sponsor fee education. Also, an increased use of technology has allowed our business to become more efficient while increasing services and clients.
What one piece of advice/information/caution would you offer to regulators/legislators?
As the defined contribution world tries to “DBize,” I believe defined benefit plans will be recognized in the future as the best, most cost-effective retirement income replacement plan and regulators/legislators should focus on making these retirement plans successful, not adding legislative burdens.
What one piece of advice/information/caution would you offer to plan sponsors?
Ask lots of questions, document and benchmark all aspects of your retirement plans, and have a professional adviser on your team.
What one piece of advice/information/caution would you offer to other advisers?
Don’t be dabbler in the retirement plan arena; be fully committed as a fiduciary or work in a partnership with a professional retirement adviser who is committed to the business.
Five years from now, what do you think will have changed the most in retirement plan designs?
Plan designs will be driven by company needs rather than by “that is how it has always been” and auto-everything will be implemented with much higher initial percentages. I believe many plan sponsors lack the understanding of what plan design options are open to them to better fit the plan to their employee population or to meet company needs. I do not believe auto-everything will be the single solution chosen; however, those who do auto-enroll will use higher starting percentages than the traditional 3% used today and they will add the auto-increase feature with recognition that their participants are not able to replace enough income in retirement under present plan designs.
What do you think won’t have changed, despite efforts to change it?
The ability to meet the retirement income needs of the average employee.
What has being named a PLANSPONSOR Retirement Plan Adviser of the Year meant to your business?
Peer recognition has been extraordinary and this includes vendors. It also has moved us to rebrand with a more detailed focus of what we do, how we do it, and why a plan sponsor should use us.
What advice would you have for advisers who want to achieve that recognition?
Commit to being the best, most professional retirement adviser.
Chad Larsen – 2007 PLANSPONSOR Retirement Plan Adviser of the Year
Chad Larsen is President of Moreton Retirement Partners in Denver, Colorado.
What do you think are the most significant changes in the retirement plan industry over the past five years?
The most significant changes over the past five years include: the acceptance and willingness of plan sponsors to adopt auto-enrollment features for their employees; participants in general are much more engaged and taking a personal interest in their accounts; and committees and fiduciaries are much more aware of the vital role that they play in not only meeting their duties but also actively seeking assistance from specialists to help them to improve their plans.
What have been some of the most significant changes in your business/practice over the past five years?
We are very fortunate to have had tremendous growth during the past five years, despite very turbulent investment markets. We have expanded our practice here in Denver to include individual retirement specialists as well as added an office in Salt Lake City, Utah. We have tried to be innovators in utilizing technology to help us and our clients in a world that seems to have an overabundance of paperwork.
What one piece of advice/information/caution would you offer to regulators/legislators?
I hope that the regulators and legislators don’t forget these plans are voluntary. We should reward and praise every private or public company that provides a retirement plan for its employees instead of putting them on the defensive and adding to the administrative costs and increasing their liabilities for offering such a benefit for their employees.
What one piece of advice/information/caution would you offer to plan sponsors?
I would encourage plan sponsors to remember the original reasons why they have a retirement plan for their employees. If we can get back to focusing on employees and their future outcomes and the incredible benefit it is to have access to a successful retirement plan, it should be a great benefit and not an administrative burden.
What one piece of advice/information/caution would you offer to other advisers?
My advice for other advisers is to work only with people and organizations that they like and that respect the value and expertise they provide. I’ve learned that, even with a vast reservoir of expertise, experience, and knowledge on our team, some individuals and organizations don’t appreciate the personal attention and added value that we bring. If those things are not important to a plan sponsor, I respect their decisions but choose to work with other organizations that are looking for a committed partner to help them improve their plans.
Five years from now, what do you think will have changed the most in retirement plan designs? What do you think won’t have changed, despite efforts to change it?
I believe that, in five years, 80% to 90% of plans will have auto-enrollment features compared with the current rate of approximately 30%. I believe that there will be much more attention (i.e., regulation) given to asset-allocation and target-date investment options. The one thing that I don’t think will change, despite it being one of the most destructive and inherent flaws in 401(k) plans, is the “leakage” problem due to loans, loan defaults, and cash distributions among job changers.
The other key item that I personally hope changes over the next five years is that everyone (regulators, legislators, plan sponsors, and advisers) will be more willing to tell participants the truth about what it will take to reach their retirement goals. Until we realize that someone deferring 2% into the plan can’t make up the difference by choosing “superior” funds and instead focus on increasing deferral rates, we are still a long way away from solving the problem.
What has being named a PLANSPONSOR Retirement Plan Adviser of the Year meant to your business? What advice would you have for advisers who want to achieve that recognition?
The primary result of receiving national recognition is that it simply has validated the business principles and practices that I have worked on perfecting and improving for more than 20 years.
My advice for advisers who want to achieve that recognition is simple: If that is your goal, you are focused on the wrong target! I’ve been fortunate to personally associate with all those who have achieved these PLANSPONSOR honors and there is a very common theme. We all love this business and feel like we can make a huge difference in our clients’ lives as well as the individual participants in the plans that we service.
John Barry – 2008 PLANSPONSOR Retirement Plan Adviser of the Year
John Barry is registered principal at JMB Wealth Management, Inc., in Torrance, California.
What do you think are the most significant changes in the retirement plan industry over the past five years?
Regulations due to 408(b)(2) will bring the most sweeping changes yet to the industry. While greater transparency ultimately will be a good thing, it may create some short-term challenges for uninformed or uneducated sponsors and participants who thought that there were “no costs” to their plan or accounts. Well-informed, or well-educated advisers will be even more important to help sponsors and participants understand what all these new disclosures mean. Hopefully, they will flush out those advisers who are not really dedicated to the retirement plan industry.
What have been some of the most significant changes in your business/practice over the past five years?
No question that there is an ever-increasing workload, with margins getting crushed. More rules, and more regulations mean more paperwork. We constantly are having to keep track and document everything with respect to retirement plans. Mix this with a government that is scrutinizing every angle in this industry and you see this field is getting squeezed in all directions.
What one piece of advice/information/caution would you offer to regulators/legislators?
Speak with professionals in the industry prior to enacting laws. After you have an idea of the law, you want to speak to recordkeepers, TPAs, advisers, and even plan sponsors to see how it actually can be implemented. One very important area would be to require some advanced designation(s) to be able to act as an adviser to an ERISA plan.
What one piece of advice/information/caution would you offer to plan sponsors?
Organization, organization, organization. I can’t emphasize that enough. Stay on top of what needs to be done and kept on file. Keep your files organized and orderly. You will save yourself a multitude of headaches— present and future headaches!
What one piece of advice/information/caution would you offer to other advisers?
There are many areas an adviser can speciaize in. Find your niche, passion, and stick with it. By choosing a specific area that suits you—whether it’s acting as a personal financial adviser, retirement plan specialist, or working within a specific industry— you will have the drive to keep learning, continue with education, and have the opportunity to become a better adviser for your client and future clients. In other words, don’t try to be the jack of all trades. There are very few advisers I know that are experts in multiple fields. With respect to the retirement industry, my best advice is to either get in the business or out of the business. “One hit wonders” have no place in the retirement plan industry.
Five years from now, what do you think will have changed the most in retirement plan designs? What do you think won’t have changed, despite efforts to change it?
More automation likely will be the biggest changes. Things like auto-enrollment may end up being the norm, not the exception.
What has being named a PLANSPONSOR Retirement Plan Adviser of the Year meant to your business? What advice would you have for advisers who want to achieve that recognition?
It has been a great honor, and one I am very thankful to have. In many ways, receiving this recognition has impressed upon me and my office staff that it is imperative for us to keep ourselves even more educated and aware of the ever-changing rules and regs in our industry. My clients were excited when I received the award, but I would not say I rest my reputation on it. I find I need to work just as hard today as I did before the award.
Going forward, I do have the article in my marketing portfolio. When I am visiting prospective clients, I hand them our marketing folder and explain, if they are having a hard time getting to sleep at night, here would be some reading material that can assist them! I keep it light and hope they see the whole picture of what we have to offer.
Advice. Hmmm. Be honest and truthful, not only with clients but with yourself. Do the right things for the sponsor and the participant and it will show as genuine. Never boast, never claim to know more than you do, and always put your client first. How’s that? I may not be rich with this philosophy, but I sleep at night! It’s a great industry to be a part of and I wouldn’t change a thing, unless you know someone in the government that we could talk to? Oh, that’s another story!
Steven Dimitriou – 2009 PLANSPONSOR Retirement Plan Adviser of the Year
Steven Dimitriou is Managing Partner at Mayflower Advisors, LLC, in Boston, Massachusetts.
What do you think are the most significant changes in the retirement plan industry over the past five years?
Over the past five years, I think the development and evolution of open-architecture fund menus that provide revenue-sharing control to the plan sponsor have been the most significant changes in the industry. It has forced the industry to move away from selling products and created a much more consultative sales environment that, ultimately, benefits plan participants and sponsors. Advisers have had to become much more specialized and knowledgeable in order to succeed.
What have been some of the most significant changes in your business/practice over the past five years?
Aside from the continued growth of our practice, the continued migration to a fee-for-service model and away from a commission/12b-1 environment has probably been the most significant change to the way our practice operates.
What one piece of advice/information/caution would you offer to regulators/legislators?
My advice to regulators is to be careful with fee disclosure. All participant behavioral studies have shown that making things confusing for participants leads adverse behavior. The intent of fee disclosure is absolutely proper, but too much information (and even the right amount communicated improperly) will lead to “analysis paralysis” and cause participants to always opt for the simplest or cheapest options, not necessarily the best options. Those who are confused will migrate naturally to what appears to be the lowest cost. That often will be a money market option or an index fund—and having 100% of one’s assets in either may not necessarily lead to the best retirement outcome.
What one piece of advice/information/caution would you offer to plan sponsors?
My advice to plan sponsors is to know what you are paying for with both a vendor and a consultant. This means that they need to identify their priorities (e.g., education, fund expenses, services, etc.) and be sure that they are receiving what they are paying for.
What one piece of advice/information/caution would you offer to other advisers?
My advice to advisers is to either be in the retirement plan business or not. For better or for worse, the industry has evolved to the point where specialization is worth a premium to most plan sponsors. If an adviser does deliver all the services required or doesn’t have the knowledge to compete long term with those who do specialize, he or she eventually will lose the few plans they have.
Five years from now, what do you think will have changed the most in retirement plan designs? What do you think won’t have changed, despite efforts to change it?
I think there will be more emphasis placed on creating a DB-like environment that drives the participant’s focus more toward retirement income. This may come in the form of plan design or simply offering a new suite of investment options. With that said, if there is a prolonged stock market rally, I also believe that this notion will fall by the wayside as participants and sponsors chase returns. I think a mass migration to ETFs and index funds will not necessarily happen. Fee disclosure will naturally make the industry focus more on costs, but it also will help advisers and sponsors to recognize the practicality of various fee structures and management styles.
What has being named a PLANSPONSOR Retirement Plan Adviser of the Year meant to your business? What advice would you have for advisers who want to achieve that recognition?
The RPAY award was a tremendous affirmation of our service model more than anything. Naturally, it has led to some additional business for us, but it also has given us an opportunity to take an active industry leadership role and stay on the cutting edge as our industry evolves. This has been immensely important to us.
The advice I would give to advisers seeking RPAY recognition is the same I gave when we won the award: Always place the participants’ well-being first and everything else will work out from there.
Rick Wedge – 2010 PLANSPONSOR Retirement Plan Adviser of the Year
Rick Wedge is an investment adviser representative at Northgate Retirement Group in Novato, California.
What do you think are the most significant changes in the retirement plan industry over the past five years?
Fee disclosure is almost here and I am hopeful it is going to make a big difference in our industry. Employers and participants should know what they are paying. Advisers will need to be advocates for their clients and really know what they are doing. It should eliminate the brokers that have a couple of plans and really be a benefit for our industry.
What have been some of the most significant changes in your business/practice over the past five years?
Almost all of our plans now utilize auto-enrollment and auto-increase. This approach significantly affects plan participation and plan deferral levels. Participants need help understanding how much they truly need to save if they hope to have a successful plan. As a byproduct, highly compensated employees have the chance to max out their contributions while the plan still can pass nondiscrimination testing.
What one piece of advice/information/caution would you offer to regulators/legislators?
Understand why you are being lobbied. Fee disclosure had been delayed for what seems like years and it is possible it will be too complicated to have an impact when it finally does go into effect. We need to make it easy for participants to save—and this includes providing them clear information about how their plan works and how they are paying for it.
What one piece of advice/information/caution would you offer to plan sponsors?
Find an adviser you trust that specializes in the retirement industry. In the same way you wouldn’t want a retirement specialist to handle your employee benefits or your personal investments, you shouldn’t look to these types of brokers to handle your corporate retirement needs.
What one piece of advice/information/caution would you offer to other advisers?
Don’t dabble in this business. You will do your clients a disservice, as well as the industry as a whole. We have a huge responsibility to help participants we work with successfully retire one day while, at the same time, making sure our plan sponsors meet their fiduciary responsibilities. You need to truly commit to being a retirement specialist.
Five years from now, what do you think will have changed the most in retirement plan designs? What do you think won’t have changed, despite efforts to change it?
We are seeing the change right now to target-date portfolios utilizing the core investments offered in the plan. We spent years working with vendors to get away from proprietary fund requirements. Once we succeeded, we went backwards with the popularity of target-date funds offered by just one mutual fund company. We are now in the process of transitioning clients over to target-date portfolios that utilize the best-in-class investments we have chosen within each asset class. We find this offers participants a much better mix of funds and usually at a lower cost.
I don’t think the majority of participants will have received the proper advice on how much they need to save to be successful. Auto-enrollment with aggressive auto-increase is the answer. If we can get a participant to commit to starting at 5% of pay and then increasing that percentage by 2% a year with a cap at 15%, we can be successful. The participants will feel 5% but, if they can get past a couple of paychecks, hopefully they will adjust. The additional 2% every year has much less of an impact on take-home pay, but the good news is, five years out, all of a sudden the participant is saving 15%. It works!
What has being named a PLANSPONSOR Retirement Plan Adviser of the Year meant to your business? What advice would you have for advisers who want to achieve that recognition?
There is no doubt the recognition has been huge for our business. We can point to several new clients where being able to say we were named as Adviser of the Year helped solidify the plan for Northgate Retirement Group. It also was a positive message to our existing clients that they made a good decision.
My advice for other advisers would be to engage fully in this business. This means participating in conferences, sharing best practices, and working with the vendors to move our industry forward. We have found that continually improving our service model for our existing customers makes them raving fans and, as a result, the awards and recognition will follow.