In Practice September 26, 2007

PA NC: Search Me? Monitoring Plan Providers

Due diligence requires that fiduciaries monitor the performance and suitability of their plan providers on a regular basis.
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A panel of industry professionals at PLANADVISER’s National Conference in Orlando, Florida, shared best practices in how to keep the process moving.

David Katz, Partner of Rocaton Investment Advisors, noted that it is sometimes hard to differentiate the services offered by different providers when performing benchmarking – technology, communication and education, plan sponsor services, and administration can all look alike among different providers. What differentiates a provider the most is the offer of unbundled investment solutions for a plan, he said.

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Katz also suggested when benchmarking advisers focus on:

  • QDIAs – Does a recordkeeper have the capability to handle a particular default option? Will the recordkeeper force the use of their proprietary or partner target-date funds? Also, ask whether that recordkeeper will balk at re-enrollment or embrace that process,
  • The number of investment choices a provider makes available for a plan, and
  • Fees – especially separating recordkeeping costs from investment costs.

Panel member Dorann Cafaro, President of The Cafaro Group, an NRP Member Firm, suggested benchmarking providers ongoing every three to five years and also when something changes, such as merger and acquisition activity between providers. Benchmarking helps with a renegotiation of services with a plan’s present vendor or to know if it is time to search for a new plan vendor.

Cafaro also suggested a side-by-side comparison of vendors to help advisers determine the subtle differences between vendor offerings.

 

In Practice September 26, 2007

PA NC: Making Your Designation(s) Work

Plan sponsors and participants may not appreciate what specific adviser designations mean, but designations can still be useful for a retirement plan adviser’s business.
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Because most sponsors and participants do not understand specific designations, panel member Barnaby W. Horton, Assistant VP of Merrill Lynch Global Private Client Group, speaking at PLANADVISER’s National Conference in Orlando, Florida, said he incorporates an explanation of his designations in his marketing materials. He said advisers should get designations that show clients they are focused on a specialized space in the market.

A designation should be practical, helping an adviser grow business. According to panel member Gregg Andonian, Accredited Investment Fiduciary of Bayside 401(k) Advisors, an NRP Member Firm, designations should parallel with an adviser’s business model or focus. He said a good designation delivers processes for advisers to use in their businesses.

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Advisers should also be warned that legislation focused on retirement planning designations is coming. Horton pointed out that legislation currently pending in Massachusetts dictates that those with designations identified as dealing with retirement or labeled Elder, Chartered, or Specialist, among others, will be audited by a state regulator, something that might become more prevalent as other states look to the possibility of similar legislation (see Target Market).

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