PSNC 2017: Offering Participant Advice

The panelists reviewed differences between education and advice, and how to acquire the right fiduciary protection for a plan.

The 2017 PLANSPONSOR National Conference panel “Offering Participant Advice—Advisers, Third-Party Solutions” examined the difference between participant-level education and advice provided by retirement plan advisers.

The panel’s live polling questions found that 50% of plan sponsors have participants pay for investment advice—included out of the plan’s investment expenses—while 17% of employers pay the whole fee. Thirty-three percent share the cost with their workers.

When asked how their plan’s investment advice is delivered, 10% of plan sponsors answered “through one-on-one counseling”; 20% said, “via the internet and asset-allocation model questions.” Additionally, 5% provide webinars, while another 5% offer none of the options. The highest percentage—60% of employers—supply a combination of these options.

Throughout the session, panelists discussed methods to ensure that plan sponsors can differentiate what is purely education from personalized advice. Garin Danner, human resources (HR) director for The SSI Group LLC, explained how he introduced an advice module for his company’s plan, in close collaboration with Charles Schwab, the plan provider. Schwab would support participants by supplying plan modeling via web, call-in and in-person pathways. “Every quarter, [Schwab advisers] come into our offices and meet one-on-one with our employees to determine their retirement goals and what they need to do to get there,” Danner said.

Considering that SSI Group, a supplier of cycle management solutions and services for health care providers, is paternalistic toward its participants, Danner said, the firm enthusiastically polls its workers to help ensure its plan’s success and to verify workers are content and satisfied.

Jenny Kiffmeyer, director of educational content for the Retirement Learning Center, commented on the shift in plan sponsors’ attitude toward education, as, she said, more are noticing how beneficial budgeting and financial wellness calculation tools can be for participants. However, in light of the new fiduciary rule—effective as of June 9—she recommended that sponsors particularly focus on any practices related to giving product-specific investment advice. The rule’s enactment has motivated some advisers to transform themselves into 3(38) fiduciary investment managers, she observed. 

To complement their efforts to monitor the work of plan fiduciaries, Kiffmeyer said, employers might implement extra fiduciary liability insurance. Concluding, Kiffmeyer warned how, especially with requirements of the fiduciary rule now becoming active, no plan sponsor is safeguarded from litigation.