PLANADVISER: Tell us about your practice and how you and your team members got into advising retirement plans.
Pension Consultants, Inc.: We started Pension Consultants in 1994 after realizing that a high percentage of employer-sponsored retirement plans were not being managed right, exposing the plan’s sponsor and fiduciaries to liability. We set out to protect our clients from this risk, while at the same time giving them top-performing retirement plans and doing it in the best traditions of professionalism.

These underpinnings have stayed with us for nearly 22 years and resulted in a firm very different from most in our industry. These differences have created a strong, values-conscious culture that is uncompromisingly focused on three things: plan performance; protecting the employer, and; saving the employer time. Headquartered in Springfield, Missouri, we have grown to service clients with retirement plans of all sizes and in locations around the Midwest and Southern United States.

PA: What is your mission statement?
PC: Our purpose is to provide security. An employer with a top-performing retirement plan is secure and able to devote more time to managing their core business. Successful businesses are able to employ more individuals and provide them with a platform to build a secure retirement. People who are secure in their employment and are able to prepare for retirement are more productive workers. They are also less dependent on others, leading to a stronger society and robust economy.

PA: How is your team/process/structure unique? How has it evolved?
PC: Here are just a few examples of how we are unique.

• We emphasize performance, not relationships.
• Our entire staff is, and always has been, salaried.
• We do not accept any commissions, gifts or other compensation from firms that we might recommend to our clients.
• Each of our consultants and analysts are dedicated to one of the following areas: The Employee Retirement Income Security Act (ERISA), investments, participant education, or vendors.
• We operate as a business, not a practice.
• We were early pioneers of many practices that have recently become more common among plan advisers.
• In 1996, we started providing written service agreements with detailed listings of each service, the amount provided and the fee charged. Our client engagements also included ongoing ERISA compliance audits.
• In 1997, when we were receiving product commissions, we accounted for and reported any commissions or other revenue sharing arrangements to the client each quarter, and fully offset our fee with any received. In addition, we provided written acceptance of fiduciary status for our investment recommendations.
• In 2005, we developed a multi-disciplinary consulting model, moving from generalists to creating teams of specialists in each of the four areas of retirement plan management: ERISA, Investment, Participant Education and Vendor. This allowed us to provide the most thorough, expert advice possible to our clients and their employees.

PA: What have you done in the past year to improve participants’ retirement readiness?
PC: We continue to have discussions with our plan sponsor clients about the effectiveness of plan design auto features in helping participants become retirement ready. This past year, we had several plans institute auto enroll for the first time.  We also had several plans who already were using auto enroll decide to add auto escalate. Plan design remains a topic we continue to discuss with plan sponsors; consulting with them on how to best construct their retirement plan to meet their goals.

PA: Describe any particularly noteworthy initiatives you have led with your customer base in the past 12 months (investment, education, plan design or communication).
PC: One of the most common services that plan advisers provide is the recommendation of mutual funds for the plan.  While nearly all plan advisers track the performance of each fund and compare it to a defined benchmark, surprisingly, no one benchmark’s the advisers’ performance of picking those funds.  So we started.  During the last year, we began reporting how our recommendations have performed from the time they were added until they were removed. That performance is then benchmarked, net of fees, against an index lineup.

Our vendor team has been working to create a fair, transparent process in paying for the plan’s record keeping fees.  As a result, we have been working with our clients to ensure that all funds are in the lowest expense share class and, if revenue sharing is occurring, it is rebated back to the participants in that investment. The fees are then paid on a pro-rata basis, which creates transparency and fairness among participants and is a prudent process to help protect the plan fiduciaries.

Fiduciary governance has been an emphasis for our ERISA team for several years.  As a result, last year we developed comprehensive, committee by-laws for our clients. We consult with our clients to create formal plan governance documents, which include committee by-laws and committee member acceptance and resignation forms, for our clients to incorporate into their  permanent plan documents.

We also have created a new Settlor/Named Fiduciary annual meeting service. This annual meeting clearly separates the Settlor/Named Fiduciary duties from the plan committee. The purpose of the meeting is to review the plan’s terms and document the oversight of fiduciary delegation.

PA: As a retirement plan adviser, what do you take the most pride in?
PC: We take pride in our uncompromising commitment to transparency and accountability; it is the basis of our business model. Our clients always know what service deliverables and fees to expect from us. And as a fee-only firm with no parent or subsidiary companies to consider, our clients can trust that the advice we give them is always objective and in their best interest.

PA: What benchmarks do you use to measure plan and client success? How do you react to clients or prospects who don’t share your goals for their retirement plan?
PC: We believe a successfully managed retirement plan has these elements:

1. It is top performing;
2. protects an employer from fiduciary liability, and;
3. is easy for the employer to oversee the plan.

With these thoughts in mind, we regularly track and report on metrics to monitor the success of the retirement plans we manage. Our investment team measures success by its ability to create an investment line-up that can consistently outperform a comparable index line-up. The team selects and maintains a buy list and measures its performance monthly. The team has a fixed income analyst and equity analyst whose ability to pick successful active managers is a key component of their compensation.

Our participant education team determines success by defining, measuring and improving retirement readiness metrics of plan participants by using plan participation rates, plan deferral rates, investment diversification, income replacement ratios / percent of participants on target to meet retirement goals. We conduct these benchmarks on both a plan-level and on age-group basis. We also benchmark average account balance and plan features such as auto enrollment, auto deferral increase and match structure.

For our ERISA team, we measure success by keeping the employer and plan fiduciaries out of trouble.  Client plans should be fully compliant and able to withstand a Department of Labor or IRS audit if one should occur.

Our vendor team’s success is defined and measured by its ability to make our clients’ plans compliant with ERISA’s 408b(2) regulation, which states plan fiduciaries must ensure that arrangements with service providers are reasonable and the services are necessary.

When a plan is top performing and the client does not have to worry about potential audits or lawsuits, they can focus on managing their business.

BUSINESS AT A GLANCE

LOCATION: Springfield, Missouri
TOTAL PLANS ASSETS UNDER ADVISEMENT: $2.4 billion
MEDIAN PLAN SIZE (IN ASSETS): $14.3 million
TOTAL PLANS UNDER ADMINISTRATION: 91