Dividing Up the Roles

Because a retirement plan adviser firm’s greatest resource is its staff, how you segment employees’ talent to maximize their value is critical.­

For some advisory firms, specialization is where you start—at least as a long-term goal. “It hit me years ago that it was impossible to be an expert in all the different areas of financial planning,” says Brian Allen, a founding partner and president of Pension Consultants Inc. in Springfield, Missouri. This insight led him to develop a business model where teams were built based on function—i.e., investments, compliance, participant education and vendor selection. “We’ve only had this total structure in place for maybe 30 months,” Allen says. “So, as each of these disciplines has crystalized, we’ve developed very specific job duties. We’ve been very stable with [the roles].”

Advisers should also consider skill levels when assigning responsibilities. Allen used to have new employees attain licensing and sometimes shifted people’s roles as the team grew. Today, though, his firm hires experts from the start. J.D. degrees are needed for the ERISA (Employee Retirement Income Security Act) compliance team and a Certified Financial Analyst (CFA)  designation to serve on the investment team as either a fixed-income or equity analyst.

Graystone Consulting Cincinnati also seeks experienced support staff, which minimizes on-the-job training. “We tend to hire people with a lot of seniority instead of training people from scratch,” says Joel Handorf, first vice president, institutional consultant and senior portfolio manager.

And of course, what responsibilities need to be filled is somewhat dependent on how much is handled in satellite offices versus home office. While Pension Consultants’ manages its own operations, Graystone can leave many of those duties to parent company Morgan Stanley and focus on clients, Handorf says.

Also to be considered when a firm divides responsibilities is a practice’s client base. Graystone Consulting Cincinnati assigns service teams based on a client’s needs. Handorf himself has found a niche with physicians’ practices that are hold-outs from joining large medical systems. Medical office plan design is very different than design for manufacturers, he explains. Likewise, the firm’s other institutional consultants each have focus areas: fiduciary services, investments, plan design, employee education and financial planning.

Once service teams in the Graystone Cincinnati office are formed, they generally stay intact. Reviews are important—the team has six-month formal reviews—but consistency is key, so these do not lead to reassignments, Handorf says. “Most projects we’re working on are much longer-term in nature than that. Movement typically occurs when the current full-time analyst is ready to advance toward institutional consultant.”