Joining Forces

Retirement plan advisers often say there is a fine line to walk when encouraging plan sponsor clients to take steps that will significantly improve plan outcomes.
Reported by Lee Barney

A fear of alienating their clients with aggressive plan designs, and subsequently losing their business, prevents many advisers from making an appreciable difference in the plans they serve.

This issue’s cover story, “Growing Plans Together,” shows the financial advantages of some such steps, as well as the benefits of partnering with a plan sponsor’s finance department to show the value of adequately preparing employees to retire at age 65. When educated about the substantial costs of an older work force unable to retire, finance “gets it.” This gives advisers an opportunity to make considerable strides in plan design and education. If advisers forge true partnerships with sponsors’ chief financial officers (CFOs), more successful results are bound to happen—both for participants and for advisers’ practices.

Our research this month, “Expanding Territories,” details the products and services of 36 leading defined contribution investment only (DCIO) providers. Collectively, they manage nearly $2.2 trillion in assets, as of the end of this year’s first quarter. The vast majority, 83%, of these DCIO providers have a sales team dedicated to the financial adviser market, and they offer a plethora of services to advisers, including: due diligence meetings, research, adviser conferences, practice management, retirement plan sales and service training, support for investment committee meetings, plan benchmarking and lead generation. Notably, over the past year, the DCIO providers say they have decreased their reliance on mutual funds and increased their offerings of collective trusts, separate accounts and asset-allocated funds, including target-date, target-risk and balanced vehicles.

Advisers’ work with investment committees is a crucial part of the value they bring to the table. The better educated the committee, the easier it is for the adviser to recommend a robust lineup and monitor investments. However, committee members often come with varying experience and knowledge, which can lead advisers to become teachers to ensure everyone understands his role and responsibilities. In “Investment Committee Training,” we discuss how advisers work with clients to draft an effective investment policy statement (IPS), educate committee members about how to evaluate a wide variety of funds—particularly since diversification has become essential for investors since the recession of 2008—and show this group information about the demographics and retirement readiness of its employees so it can select appropriate funds for its plan’s investment menu.

While benchmarks for a plan and for participants have been converging, there are differences, as we demonstrate in our “Plan and Individual Benchmarking” feature. Sponsors’ greatest focus at the plan level is fees and how their plan compares with similar companies’. For their participants, advisers need to hone in on whether they have invested their portfolios appropriately and examine participants’ savings rates, projected retirement income and overall retirement readiness. With this benchmarking information in hand, advisers have the ammunition to improve plan design.

We hope these features and news stories help you to improve your practices, forge stronger rapport with your clients and win new business.

Mark Your Calendars. The 2014 PLANADVISER National Conference (PANC) takes place Monday, September 15, through Wednesday, September 17, at the JW Marriott Grande Lakes in Orlando, Florida. The conference is a leading event that helps retirement plan advisers remain competitive in the current—and changing—industry environment, while continuing to provide excellent service to their plan sponsors and to participants. The gathering of a few hundred of the nation’s best retirement plan advisers offers a wonderful opportunity to meet and network with peers, tap into the expertise of industry experts, and probe the product and service offerings of the industry’s leading service providers, investment managers and broker/dealers (B/Ds). Again this year, we will give out the PLANSPONSOR Retirement Plan Adviser of the Year awards and highlight the finalists on panels ahead of the awards ceremony.

The conference agenda touches on all aspects of an adviser’s business, from sales and marketing to ongoing client service, to building a team—or going it alone. Sessions also discuss the latest in plan design and investment trends and, of course, talk about the influence of legislation, regulation and litigation on our industry. We hope you can join us. For more information, or to register, please visit: www.planadviser.com/event/PANC2014.