Data & Research October 22, 2010

Emotional, and Functional, Connections Drive Business

Cogent Research found that providers will gain business and loyalty from advisers if they are able to establish both a functional and emotional connection with advisers.   
Reported by

In a recent survey done by Cogent Research, “Advisor Touchpoints 2010,” advisers were asked to select which provider they feel most connected to, and then, to identify various emotions that come to mind when thinking of that provider.

Speaking to PLANADVISER, Christy White, Principal at Cogent, said that advisers were drawn to emotions which helped them fulfill four needs: collaboration, support, marketability, and personal connection.  A provider that is able to provide evidence of having these four criteria will fair best when working with advisers.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The study used a new research method called “Emotion Mining,” developed by Tom Snyder, a PhD specializing in consumer behavioral patterns.  How it worked for purposes of this survey is that once advisers had in mind which firm they felt most connected to, they were asked to draw lines on a screen connecting positive words such as enthusiasm or contentment, as well as negative words, such as stress or insecurity.  Using the “Emotion Mining” technology, researchers were able to compare the results from all the advisers and determine which emotions were strongest or most prevalent.   (They were even able to analyze the psychology behind how straight or curvy the lines drawn between emotions were to come up with the results.)

With the results from the “Emotion Mining,” researchers were able to determine the high level of importance of collaboration, support, marketability, and personal connection.  For instance, emotions such as “confidence” or “security” can be matched to marketability. Advisers want products that are easily marketable in order to feel confident when making a pitch to prospective clients. They want to feel secure that the client will buy in to whatever the adviser is trying to sell. A trust-worthy brand and easy-to-understand pitch products are the marketing tools advisers look for at a functional and emotional level.

Cogent found that the companies that established the strongest connections with advisers are American Funds in the mutual funds space, iShares for exchange-traded funds, and Prudential Financial for variable annuity products.   

Compliance October 22, 2010

Cash Balance Plaintiff to get Attorney’s Fees

A federal judge in Illinois ruled that a participant in the Verizon Communications cash balance plan is entitled to attorney’s fees for her long-running legal battle even though she lost in her primary claim.
Reported by

U.S. Magistrate Judge Morton Denlow of the U.S. District Court for the Northern District of Illinois decided that granting Cynthia Young lawyer fees was appropriate even though she did not win her claim that the plan should not be allowed to escape liability by merely correcting a plan document drafting error (see Verizon Allowed to Fix Plan Drafting Mistake).

In his ruling, Denlow said he relied on a U.S. Supreme Court decision earlier this year in which the high court held that an Employee Retirement Income Security Act (ERISA) litigant is eligible for attorneys’ fees under ERISA Section 502(g)(1) if the litigant has achieved “some degree of success on the merits (of their claim)” (see U.S. High Court Sets New ERISA Attorneys’ Fees Standard).

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

Young was able to meet that requirement, Denlow ruled, because in a previous ruling in the case, he had found Verizon’s administrative committee had abused its discretion when it disregarded the drafting error. Young’s victory on the issue, even though she did not receive a monetary award, represented more than a “trivial success on the merits” or a “purely procedural victory,” the court said.

The disputed plan language, which Verizon insisted was an innocent mistake, directed that participants’ benefits were to be calculated by using a “transition factor” twice instead of once.

Fees were also appropriate, Denlow contended, because they would discourage administrators from making similar careless plan document drafting errors.

“[A]n award of attorney’s fees against Defendants would serve to deter similarly situated plan administrators from making drafting errors through “profound” negligence,” Denlow wrote. “ It is not too much to expect that Verizon would have had a second set of eyes proofread the crucial provisions of the Plan. Perhaps a fee award would encourage Verizon and other plan sponsors and administrators to put in place better drafting practices for the future. A fee award would also send the message that a plan administrator may not flout ERISA’s “plan documents” rule simply because of its own mistake.”

The latest ruling is here. 

«