In Practice June 6, 2007

Perspective: Do Your Best to Move Beyond 'Doing Your Best'

The second of seven ineffective habits of retirement plan advisers
Reported by
Many advisers, confronted by circumstances that stall their business, give in to the reasoning of “let’s just keep doing our best” and better days will prevail.
When you’re in charge of your own destiny, however, this faith in your business’ ability to evolve for the better may lead to missed growth opportunities due to lack of vision.
A more effective approach may yield results when you align your compass toward the most meaningful business and client relationship strategy. Pointing your firm in the right direction will be much easier if you develop a compelling mission and goals that will inspire you and your staff.
The trigger, or rallying point to advance your business, will be unique. A classic segment of movie dialog is fitting here. In the 1991 movie City Slickers, Jack Palance’s grizzled character “Curly” asks Billy Crystal: “Do you know what the secret of life is?” Crystal lacks insight so Palance raises his index finger in the air and says, “One thing. Just one thing. Stick to that and nothing else matters.” Of course, as Crystal is counseled, the “one thing” is something you’ve got to figure out for yourself.
So, how can you frame the future of your business around one thing? You may find the best starting place is a clear mission that provides a target and direction. With a mission serving as your compass, you can create drive and energy, increase the intrinsic interest of your staff and produce a creative tension that will lead your business out of the stagnant existence of just “doing your best.”
The right mission, derived from a thorough assessment of your capabilities and your target market, can increase persistence and generate consistent performance.
In support of your mission clairvoyance, you may benefit from writing a vivid description of your future. Your ability to visualize what you want will help you actualize the necessary tasks to get there.
A quality description of your future should include:
  • client experience (what do clients really want, not what do you think they need)
  • employee experience (how empowered are they to deliver on the mission and feel good about their contribution)
  • business results (i.e., more profit, less effort)
Nail these aspects of your business and you’ll have a triple win; happy clients, happy employees, and personal success.
Consider this example that guided Henry Ford in changing the transportation world. This excerpt is from his introduction of the Model T in October 1908.
“I will build a motor car for the great multitude … It will be so low in price that no man making a good salary will be unable to own one and enjoy with his family the blessing of hours of pleasure in God’s great open spaces … When I’m through, everybody will be able to afford one, and everyone will have one. The horse will have disappeared from our highways, the automobile will be taken for granted…and we will give a large number of men employment at good wages.”
Enrich your description of the future by creating a uniqueness and special nature of your services. Don’t get so caught up in tactical stuff that you forget you are doing important work. Describe the feelings associated with this work and its results.
Together, your mission and vivid description of the future will establish decision-making criteria that can justify day-to-day actions of your business. Pursue the excellence of your mission and vision and, then, at each key decision, stop and ask, “will this lead to excellence?”
This exercise may require a lot of effort and revision, but it can guide your practice toward exceeding expectations and generating client advocates. In the end, you can feel confident that you have a better grasp of your firm’s direction and you may start to see the invisible.


Previous articles in the Ineffective Habits of Retirement Plan Advisers series:

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Matt Smith is managing director of retirement services with Russell Investment Group. He is responsible for DC research and strategic development of Russell’s defined contribution investment management business in the United States. Smith joined Russell in 2001. Over his 20+ year career, Matt’s experience spans the spectrum of the qualified plan business. Prior to joining Russell, Matt held the position of vice president and general manager of ADP’s west coast retirement services operations.
In Practice June 6, 2007

Advisers Can Help Plan Participants Keep the Faith

Participants’ mood about their financial future has fallen off significantly during 2007 but sponsors can encourage participants to meet with advisers and construct or reconstruct a retirement savings plan to help keep participants optimistic.
Reported by

A Spectrem Group research report said at the beginning of 2007 64% of participants were confident their personal finances would be better in 12 months. Asked the same question in May 2007, Spectrem reported 55% expressed the same confidence level about their personal finances within a 12-month period.
Plan sponsors and financial advisers may choose to ride this trend out, or they can view it as another opportunity to offer more encompassing financial education and advisement to a group that can wield significant financial influence, Spectrem said. Asserted Spectrem researchers: “This is just a blip on their radar and advisers can help them realize it, using this opportunity to build their confidence up again.”

 

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Demographic Trends

 

Spectrem research found a positive correlation between the size of a participant’s account balance and their level of confidence in their retirement investment strategy. In January, 77% of those surveyed who have more than $100,000 in their retirement account believed they would be better off in a year, and in May of 2007, only 52% were still sure, Spectrem said. Participants with under $10,000 invested were least confident in their retirement investing approach (21%) while those with $50,000-$99,000 and over $100,000 were significantly more secure (43% and 45%) about their retirement investment strategy.

Almost as dramatic is the decrease in confidence for participants over age 50; the Baby Boomers and their predecessors. In January 2007, 68% believed that their financial outlook would be better in a year, and then when asked again five months later, that dropped to 48%, the survey found. Boomers are putting more of their income into their retirement plan while other factors are wearing at their standard of living, like high gas prices and debt. While Boomers play retirement investment catch up, they aren’t feeling positive about their near-term financial pictures, Spectrem asserted.

 

Fighting Back

 

The company said the retirement industry is not without ways it can fight back by offering advice and service to plan participants, designed to solidify their investment strategies and keep them on track with periodic reviews.

Specifically, Spectrem said that plan providers, sponsors and advisers can recommend periodic retirement strategy reviews for plan participants. Some of this may be automated, and include periodic electronic alerts to participants, as well as the use of online tools. It should offer a clear picture and method of how participants will achieve stated goals, with periodic review.

Also, as an important part of an overall benefits package, sponsors and advisers should consider lower income and/or lower balance investors as potentially strong participants and afford them similar advisement opportunities as their higher income/ balance counterparts. Once educated on a systematic and steady approach they too can be strong investors, the report said.

The text of the report is here.

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