In Practice September 18, 2012

PANC 2012: The Value of an Adviser

Plans with an adviser implement more plan design features, according to PLANSPONSOR’s Adviser Value Survey.

Reported by

Quinn Keeler, SVP Research & Surveys at Asset International, presented findings of the survey to attendees of the 2012 PLANADVISER National Conference. The survey also showed plans with advisers have more frequent evaluations of plan investment options.

Keeler said plans with advisers are more goal-oriented – they use success measures more than plans without advisers. And, plan sponsors responding to the survey have great confidence in their advisers.

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Scott Buffington, national sales manager at MassMutual Retirement Services, said it is important for advisers to differentiate themselves from their competition. “You may know your value proposition, but are you effectively conveying that?” he asked.

Mention something besides funds, fees and fiduciary responsibilities, Buffington added. Advisers should talk about participant outcomes and how they measure that. If they don’t have a means to measure participant outcomes, they should hold providers accountable for doing it for them. According to Buffington, an example would be showing the difference in participants’ projected retirement income after one year of adviser-driven education.

Steff C. Chalk, CEO of Fiduciary Consulting and Governance Group, suggested that advisers focus on how they will accomplish the goal of making a client’s plan better than it is today. It could be increasing participation or participant diversification. He said advisers should determine what levers of change they will use, and convey that to their client. For example, an adviser may use education and reenrollment to increase participation. Advisers should measure the results of their efforts and communicate that to clients.

Keeler added that advisers should dig down even deeper; for example, showing that they not only increased participation, but did so for the lowest income participants.

Chalk added that adding value does not mean just keeping plan sponsors happy, but also keeping participants and regulators happy.

When prospecting, Buffington suggested advisers tell why they are in the business. Say “I’m about improving plans,” or “I’m about helping participants retire.” Advisers should have a case study showing how they improved plan processes for a plan sponsor or how participants were better off after what the adviser did.

Chalk said if advisers have a process for examining plan health and fixing issues, they should let prospects know that in their pitch. In addition, they should use some of the positive feedback they received from clients to show their reputation.

Every time advisers are in front of plan sponsors, they have an opportunity to show their value, and they should not pass that up, according to Chalk. But, at least annually, they should review with the plan sponsor what value they have added to the plan over the year.

Keeler added that it is easier to show the adviser’s value with a new client or one that has never had an adviser, but it is harder to show ongoing value. Advisers must show continuous plan improvement and talk to sponsors about improvement every year. For example, overall participation may be good, but maybe for a certain demographic it could be better.