How Passion Can Build an Adviser’s Brand

The 2015 PLANADVISER Adviser Value Survey discusses adviser value propositions and the influence of advisers on retirement plans, and concedes that quantifying the value of an adviser to a defined contribution (DC) plan can be a bit of a challenge.

According to Linda York, vice president of syndicated research at Cogent Reports, just citing passion is not enough for an adviser to prove they are different from the competition. Instead, she says, advisers aught to let the numbers do the talking, and focus on the particular elements of investing and plan design where an adviser’s touch can take a plan above and beyond. 

Looking to PLANADVISER’s research, larger DC plans, with 1,001 to 5,000 plan participants, are the most likely to work with an adviser, at 73.6%. Plans with assets between $50 million and $200 million appear to be a sweet spot for advisers, with nearly three-quarters of plans in that asset range using an external retirement plan adviser.

The survey’s findings reveal that DC plans that use an adviser have higher usage of plan features considered to be best practices. This holds across employer matches; average contributions; occurrence of auto-enrollment and auto-deferral increases; written investment policy statements; and target-date funds (TDFs), among others. Advisers drive more frequent scrutiny of investments, the survey says: 38.1% of plans with an adviser review their investment lineup every quarter, nearly double the 21.7% of plans without an adviser that do so.

With so many statistics to point to, just citing passion is not the best approach, York says. Besides, passion in danger of becoming an overused industry word, as retirement plan advisers across market segments increasingly cite it as a core strength or differentiator. 

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In addition to helpful information on investments, York points out that advisers can provide ongoing assistance to plan sponsors, helping them maintain a balance as they strive to juggle the various demands of running a successful plan. Advisers should especially be adept at optimizing auto-features and the use of TDFs, while at the same time making sure participants are supported enough to be confident decisionmakers.

York suggests advisers find ways to go the extra mile. “Bring the added benefit to participants in the plan,” she tells PLANADVISER. “That way, the adviser becomes an integral part of the ongoing benefit the plan sponsor is providing.” This in turn boosts the plan sponsor’s loyalty to the adviser.

York notes that in a recent survey on DC plan participants, Cogent looked at participants and what they seek most from an adviser. The general theme was that participants prefer to work with an adviser in person, in individual one-on-one sessions, she says, and the most successful interactions give a participant a holistic picture that lets them see their overall financial goals and investing needs.

The best interactions between adviser and participant go beyond describing the dozen options in a plan, York says. “Do they have assets outside the plan? What are their investing and savings goals? Are they saving for retirement, or are there short-, medium- or long-term strategies they want to put together?”

While it is more work to cultivate those relationships and some participants may be contributing just 5%, others might be very fruitful, York says, with assets outside the plan. But that effort is part of going beyond the basics of participants knowing how much to defer: “It’s giving them the confidence in the investing strategy, and the role the DC plan plays in their portfolio.”

Ellen Lander, principal of Renaissance Benefit Advisors Group, admits that many advisers tend to use the same words, with passion being one of the terms that comes in for a generous amount of industry love. The word passion may simply be, for many advisers, a kind of shorthand for the enthusiasm they feel for their work.

“I think it comes down to actually doing what you say you’ll do,” she tells PLANADVISER. “Just because you aren't passionate doesn’t mean you won’t do whatever it takes to take exceptional care of your client, and minimize their work and angst.”

In Lander’s view, passion typifies her interest in what she does, which includes an interest in researching to find out more about the necessary tasks that go into supporting a retirement plan, whether it’s choosing investments for a plan or going through a request for proposal (RFP) with a new client. “We like clients to ask questions—it means they are interested,” she says.

While some advisers may have a list of five bond funds they turn to when choosing investments for a plan, Renaissance Benefit conducts a new search each time they are getting a new client set up. Otherwise, Lander says, if you’re working off a list, where did it come from? How is it being updated?

“We are focused on our clients and our work,” Lander says, “not on building our practice. [Growth] comes about as a byproduct; we don’t sell or market.” She says the business is built completely on client referrals.

Serving the plan is critical, York agrees, but a plan sponsor’s loyalty to the adviser can also come about indirectly, when participants meet with the adviser and report back to their plan sponsor employer how satisfied they were with the information. While not a direct interaction with the plan sponsor, York says this can help establish the adviser as a critical part of making the DC plan a success. “And that’s really hard to give up,” she says. Few plan sponsors are as willing to replace an adviser who is getting high marks from participants while also helping the plan sponsor meet expectations about the plan.