Simple Solutions

The past 12 months have generated a substantial amount of change for retirement plan advisers. Advisers who service retirement plans are being forced, by issues including public perception, self-preservation, and profitability, into:

• Improving operating efficiencies;
• Fending off unwelcome associations (in the form of a parent corporation, a service provider, or the industry);
• Promoting interest and enthusiasm among the throngs of hard working plan participants who still desire to plan for their future but are discouraged by the markets.
  

Any one of the above is sufficient to cause an adviser to reach for the Excedrin—but many are faced with a combination of the above challenges.

Addressing the challenges of our current environment may not be simple, but it may be easier than some advisers assume.

What Is the Financial Adviser’s Edge?

Most advisers conduct established meetings on a regular schedule (usually quarterly). Such a meeting schedule can easily result in four face-to-face client contacts per year. An adviser’s value proposition should be reinforced during every meeting—with the traditional topics such as: plan performance, participant education, and investment watch-list review. However, advisers should not overlook the true opportunity that these valuable client contact meetings present, especially in the current environment.

The Perception

Over recent months, plan advisers have morphed from the position of esteemed financial professional to becoming the purveyor of really bad news. The story for participants has become: “Because of the 401(k) plan, I now need to work 10 years longer!” For all but a handful of Americans, we are living through the most significant equity market adjustment of our lifetime. Unemployment conditions are continuing to deteriorate and there is a pervasive lack of optimism. Americans may need to work an additional 10 years to emerge financially intact, perhaps longer, but it is not because of the 401(k) plan. None of what we are working through today is “because of” a participant’s decision to make elective deferrals into a 401(k) plan. That is just not the case.

Embrace Meeting Opportunities

Advisers should recognize client meetings as an opportunity to espouse the virtues of the plan to the client—by describing what the plan has delivered in the past and what the plan is positioned to deliver into the future.

Consider preparing for every client meeting by highlighting:

• Where or how you performed above and beyond your contractual obligation;
• What the 401(k) structure has accomplished for participants;
• How the private pension system of America makes a meaningful contribution to the “Optimism of Tomorrow.”
  

Advisers sometimes fall short of telling plan sponsors of all the good they do. Do not be bashful in describing to a plan sponsor how you performed a task that was “over and above” the normal contractual requirement. (This could be something as simple as meeting with a plan participant after hours.) Tell them!

When conducting client meetings, advisers also should consider putting in a good word for the 401(k) structure. More than the government and more than the providers, it is the retirement plan advisers who have tirelessly shaped the employer 401(k) plan into a successful retirement alternative because of their commitment to the participant and their personal income. Awaken plan sponsors to reality. It is not the 401(k) structure that has resulted in Americans needing to work longer for a comfortable retirement; it is the lack of global support in the underlying markets (with very few exceptions) that has driven plan assets to seek their current level (admittedly, though, the exogenous demands on disposable income is not helping).

During your client meetings, do not hesitate to speak about the benefits of our county’s private pension system. We are in the midst of a seismic shift in Washington. Subtly reinforcing the benefits of our private pension system is a valuable use of time.

There is latent opportunity in most client meetings.

Steff C. Chalk is CEO of the Fiduciary Consulting Group, a fee-only fiduciary consulting practice serving corporations and nonprofits. A judge for the PLANSPONSOR Retirement Plan Adviser of the Year award, and a faculty member of the PLANSPONSOR Institute, he is also the co-author of How to Build a Successful 401(k) and Retirement Plan Advisory Business.