Connecting With Clients

Best practices in adviser presentations

When an adviser first meets with a plan sponsor, he/she has the opportunity to show how savvy he/she is—about the company, the employee base and the challenges the sponsor faces in preparing these employees for retirement. However, if the presentation is deficient, that opportunity can dissolve before it is ever realized. PLANADVISER spoke with Jordan Burgess, senior vice president, Head of Institutional Sales, Fidelity Financial Advisor Solutions, and Derek Wallen, senior vice president, defined contribution investment only (DCIO) division manager, Fidelity Financial Advisor Solutions, about how good presentations can enhance client relationships.

PA: Where can advisers get help preparing for client presentations? 

Burgess: The first step is to gather as much information as you can about the plan sponsor’s point of view. The sponsor has many challenges, needs and perceptions; the more the adviser knows about his/her potential client, the better likelihood of success.

To that end, we have been doing a survey of plan sponsors across many plan sizes since 2008 to see what their attitudes are toward their retirement plan and their relationship with their financial adviser. This is invaluable research material we call “Plan Sponsor Attitudes,” which can help advisers as they prepare a client presentation. This year, we surveyed 937 retirement plan decisionmakers—such as chief executive officers, chief financial officers, heads of human resources and benefits executives. We garnered tremendous insight about their views on many issues, such as how they define a knowledgeable retirement financial adviser, how confident they are about their fiduciary responsibilities, why they may have listened to solicitations from other advisers for their retirement plan business and how retirement ready they believe their participants are.

As an example, we learned that 38% said they are less than ­satisfied/not satisfied with their current financial adviser, and about 10% said they are actively looking to switch advisers. The primary reason for making the switch was to find a “more knowledgeable” adviser. We asked plan sponsors to define what this meant and discovered the three biggest requirements were regulatory, fiduciary and plan design technical capabilities. We often see advisers put in a lot of time preparing for a plan sponsor meeting with respect to the investment lineup, but it’s interesting to note that investments are the seventh most important characteristic when sponsors define a more knowledgeable adviser. 

When preparing for a client presentation, make sure to focus on those big three: regulatory, fiduciary and plan design. Interestingly, when asked how they evaluate their existing adviser, 58% said investment performance was the No. 1 area of focus. This shows expectations are high to be knowledgeable in many areas.

We also garnered some important insights on how to demonstrate value and showcase efforts with current plan sponsor clients. The sponsors told us that their advisers were not reporting back on how well they support the plan. Notably, 78% of plan sponsors say their adviser does not report how much time is spent working on the plan; 69% don’t report on types of activities performed for the plan; and 60% don’t demonstrate how plan performance has improved. As you prep for your ongoing client reviews, reporting activities, success metrics and time spent working on the plan can be an opportunity to illustrate your value and differentiate yourself.

PA: After assimilating all this information, how does the adviser proceed in presenting to the plan sponsor? 

Wallen: The Employee Benefit Research Institute’s 2012 retirement readiness model estimates that people in this country have $4.3 trillion put away for retirement—a big number. But the model also states that they should have $8 trillion put away to maintain their standard of living in retirement. Our research indicates that plan sponsors are well aware of the issues facing plan participants, such as individuals planning to delay retirement because of underfunded retirement savings. The plan sponsors want a successful plan to help attract and retain employees and to ensure employees can accumulate enough for retirement. To that end, consider addressing those issues with the sponsor, and proactively suggest strategies to help improve retirement outcomes.

We have created a presentation for advisers to use with plan sponsors called “Overcoming Barriers and Driving Better Retirement Outcomes.” In this presentation, we examine multiple issues that are potential barriers to successful retirement outcomes: historical market expectations, the role of equity and fixed income in plan allocation, confidence of participants, longevity risks, inflation risks and the high cost of health care in retirement. As an example, Fidelity’s 2013 Benefits Consulting survey states that a 65-year-old couple may need $220,000 to pay for uncovered medical costs during retirement; also, in 2012, the Pew Research Center found that Americans are less confident about meeting their retirement needs today versus just after the market correction in 2009. Framing out these challenges to retirement success is an important step with the plan sponsor.

Once these barriers have been framed, the adviser can use the presentation to begin a dialogue with the plan sponsor as they seek ways to address the barriers participants may be experiencing. The presentation is organized into two action-oriented steps: plan design strategies to help close the retirement gap and strategies to improve participant engagement.

From a plan design perspective, the presentation helps the adviser begin a conversation with the plan sponsor about the importance of auto-enrollment, the benefits of increasing auto-deferral rates and why it’s important to employ company match programs strategically. Together, all of these efforts may help close the retirement income gap. For instance, when we look at our own proprietary data, moving the default deferral rate from 3% to 6% does not increase participant opt-out rates. This can be very useful information for plan sponsors as it helps their participants strive for better retirement savings outcomes.

From a participant engagement perspective, the presentation helps the adviser share ideas with the plan sponsor to help address low deferral rates by participants—especially prevalent with younger participants—and the importance of leveraging equities for their growth potential. The presentation also helps educate the sponsor about key retirement risks participants are likely to face: longevity, health care expenses, inflation, asset-allocation risk and excessive withdrawal-rate risk. Knowledge of how to properly prepare for those risks in the savings years can be crucial to success.