PLANADVISER: Tell us about your practice and how you and your team members got into advising retirement plans.
Francis Investment Counsel: The team at Francis Investment Counsel LLC has been providing investment advisory and employee education services to qualified retirement plans since 1988. We are proud to say we continue to serve our first client to this day. Our team was initially developed while affiliated with a national brokerage firm and over a 15-year period was recognized as the firm’s top 401(k) advisory team.
In March 2004, in order to eliminate numerous conflicts of interest (e.g. shelf-space payments by mutual fund companies, the strong incentives to gather assets from retail investors, etc.), we formally severed ties with the national firm and established Francis Investment Counsel as an independent Registered Investment Advisor (RIA) focused solely on serving the qualified retirement plan marketplace. With no conflicts, clearly fixed fees, and decades of experience, Francis Investment Counsel continues to provide investment consulting and employee financial education and advice to plan sponsors and their participants.
PA: How is your team/process/structure unique? How has it evolved?
FIC: Most advisers invent something unique about the way they run their businesses, yet when compared side by side, actual differences in services and process may be difficult to discern. Francis Investment Counsel breaks this mold. Our firm is unapologetically different in what we do.
We are truly unique in our exclusive focus on qualified plan consulting and plan participants, while not accepting individuals as clients for retail or wealth management purposes. We intentionally structured our firm in this manner to provide exceptionally objective advice to participants, while collecting a tremendous amount of valuable information that can help plan sponsors maximize the utilization of their retirement plans.
Our exclusive focus and conflict-free approach makes our client experience not only different, but also definably better. Plan sponsors and participants who have partnered with Francis Investment Counsel have the peace of mind that comes from working with a conflict-free advocate. They enjoy the certainty of expert Employee Retirement Income Security Act (ERISA) fiduciary advice from people they trust. This relational transparency shapes all parts of our service model, integrating the participant perspective into our proprietary research, plan governance process, investment menu construction, and overall cost management strategies. With the knowledge and experience gained from thousands of participant interactions each year, we effectively counsel our clients’ oversight groups, assisting them in designing a retirement benefit that truly meets the needs of their participants.
While the financial services industry continues to evolve, Francis Investment Counsel stands out in the marketplace as a voice that has remained steadfast. We are unapologetically straightforward, continuing to deliver ERISA fiduciary advice that makes plan sponsors better employers and plan participants better family finance managers. While our services have modified to incorporate increased technology to reach out to greater populations, we remain committed to building relationships with people, through our people. The trust we build with our clients and their participants supports the advice we provide and the actions we facilitate.
Francis Investment Counsel is definably different in what we do: We connect the people we serve to the ERISA fiduciary advice they need. And we are truly unique because that is all we do.
PA: Describe a difficult client relationship issue, and how it was resolved.
FIC: Francis Investment Counsel was retained by a client for investment consulting and employee education. At the time of hiring, our client maintained a provider relationship with the same company for both lending and recordkeeping services. While the banking relationship was strong, our client experienced consistent problems and mistakes with the recordkeeping services. Our client initiated a vendor search in order to evaluate and potentially replace the current recordkeeper.
While our client was determined to run the vendor search internally, Francis Investment Counsel participated in a consultative role throughout the process. Per our recommendations, the client’s committee of finance and human resources professionals narrowed the search to five different providers. Upon completing the finalist presentations, the incumbent provider and one other remained in the final decision process.
It became evident during the decision-making process that a divide existed within the committee. Those members on the financial side of the business favored staying with the incumbent provider. They had greater exposure to the banking and lending relationship. Being a family-run company, they desired to remain loyal to a relationship that had remained steadfast for better or worse over the years. The human resources professionals on the committee were prepared to make a change. With frequent exposure to the headaches produced by the recordkeeping mistakes, they were ready to move on with a new provider who would meet the service standards they expected.
As the decision-making process came near a close, the CEO spoke to the committee as well, emphasizing there must be a compelling reason to implement a relationship change. The ensuing decision led to the retainment of the incumbent provider, with specific performance expectations outlined. The relationship was to be reassigned to the large market service model, and a new service team was to be put in place. Additionally, the committee established a one-year probationary period, where the recordkeeping services would be closely monitored. Within three months of installing the new service team, the mistakes at the recordkeeping level continued.
Concurrent with the recordkeeping search, our client was in the process of renegotiating its entire lending relationship. During these talks, it became clear to Francis Investment Counsel that the terms of this provider’s lending relationship were contingent upon the inclusion of recordkeeping services. Based on the vendor search process, this provider was more expensive than other options in the marketplace and had a well-documented history of service shortfalls. When the committee acknowledged that the service and price of the lending relationship was inclusive and dependent upon retention of the recordkeeping relationship, Francis Investment Counsel felt the need for a dramatic course of action.
The overt act of linking the terms of the client’s lending relationship to the decision of terminating or retaining the recordkeeping assignment put our client at risk of engaging in a prohibited transaction. Maintaining a plan service provider because of the further benefits this provider brings to other areas of the organization breaches the duty of loyalty to plan participants outlined in ERISA. While Francis Investment Counsel understood the value of a long and strong relationship between our client and the provider in question, we could not endorse retention of a recordkeeping relationship that was not motivated purely by the plan participants’ best interests.
In a final meeting with the committee and their CEO, we discussed the service issues experienced during the probationary period. We further discussed the potential of a prohibited transaction resulting from the dual relationship with this provider. We therefore advised our client to move forward in retaining the alternative provider identified in the vendor search process. In recognition of the situation and our role as an ERISA fiduciary to the plan, we further requested a letter of indemnification acknowledging our recommendation should our client choose to maintain the current provider relationship. Our client pushed back, refusing to sign the letter of indemnification. Confident in our recommendation, we informed our client that our ability to remain as their ERISA 3(21) fiduciary was dependent on their decision regarding the recordkeeping service provider. Francis Investment Counsel’s continued engagement was clearly at risk.
Ultimately, this organization decided to fire their banker and retain a new recordkeeper for the plan, preserving our partnership with them. Afterward, one of the committee members commended the “managerial courage” of Francis Investment Counsel’s relationship manager in leading these difficult discussions of fiduciary responsibility versus corporate interests with the committee and CEO throughout the recordkeeping evaluation process.
This difficult client relationship issue demonstrates Francis Investment Counsel’s commitment to the fundamental tenants of ERISA and willingness to put participants’ interests before its own.
PA: As a retirement plan adviser, what do you take the most pride in?
FIC: The “ah-ha moment” occurred in 1988, while helping a small manufacturer design and roll out its new 401(k) benefit to its employees. The financial services industry is really good at helping rich people get richer, but not set up to help average American workers ensure their financial security in retirement.
In this moment, the dream of Francis Investment Counsel was born: A firm solely dedicated to getting the necessary tools, training, and advice into the hands of the workers desiring to plan for a financially secure retirement.
We are most proud of how much progress, over the last 27 years, we have made fulfilling this dream. We created a Firm devoid of the common industry conflicts that make it so hard for workers to get good advice and have a well-designed benefit into which they can deposit their hard-earned savings. Each day, our advisers’ pride comes from the “lightbulb” moments in the eyes of plan participants, when they learn they CAN achieve their financial goals. Daily we are thankful for the opportunity to help Americans’ retirement readiness, one participant at a time.
With decades of experience, advisors with a missionary zeal to help the common worker, and complete objectivity that comes from the elimination of industry conflicts, we strongly believe Francis Investment Counsel is the best firm on the planet to help a retirement plan sponsor fulfill its fiduciary duties.
BUSINESS AT A GLANCE
LOCATION: Brookfield, Wisconsin
TOTAL ASSETS UNDER ADVISEMENT: $5.8 billion
MEDIAN PLAN SIZE (IN ASSETS): $27.5 million
TOTAL PLANS UNDER ADMINISTRATION: 72