Honing Your Craft

Across industries, companies often hold focus groups so they can learn the myriad thoughts of their customers and, with this information in hand, improve their products or services.
Reported by Lee Barney

Our cover article this issue, “Client Insights,” is a mini focus group of its own, telling the stories of six plan sponsors and their relationships with their retirement plan advisers. These varied plan sponsors discuss what they appreciate about their advisers—and how, in their minds, these people make a significant difference.

What stood out to me was the range of services that were mentioned by the advisers’ clients. Some spoke of plan design changes, others of the relationships with plan participants, and another spoke of being thrilled to get a broad-based retirement plan consultant when expecting just an investment professional. In one case, the adviser convinced the 403(b) plan sponsor to automatically enroll participants at a 5% deferral rate and to combine that with a 2% match—resulting in a bountiful 15% deferral rate.

To continue on the role that advisers play in improving plans and supporting plan sponsors, “Taking It a Step Further,” presents multiple case studies where retirement plan advisers were able to convince reluctant plan sponsors to automatically enroll their participants, or re-enroll them, and automatically escalate their deferral rates. The advisers interviewed for this piece note how they were able to overcome objections and help sponsors feel more comfortable about automatic enrollment. For me, one interesting aspect of this was that the adviser was able to convince the recordkeeper to not raise administrative costs as more people were brought into the plan.

Our research this month, “Stacking Up,” again segments a portion of the PLANSPONSOR Recordkeeping Survey, specifically asking recordkeepers about their business delivered through plan adviser intermediaries and all of the resources and support services they offer to that audience. Most commonly, recordkeepers equip retirement plan advisers with education, enrollment support, legislative updates, plan benchmarking and design, rollover assistance, lead generation and access to Employee Retirement Income Security Act (ERISA) counsel. So, if you aren’t looking to your recordkeepers for help in those areas, perhaps you should be.

Are you involved in helping plan sponsors craft the messaging to their retiring participants? What education do you give to those Baby Boomers preparing to leave the work force? “The ‘At Retirement’ Conversation,” addresses what is one of both the most promising and the most problematic discussions you can have with participants from a regulatory standpoint. Participants have many questions about how to manage their money in retirement and what financial services they will need—and retirement plan advisers may be well-equipped to answer these questions. However, as the advisers and attorneys we spoke with point out, they must do so carefully and in broad strokes. Essentially, retirement plan advisers, as plan fiduciaries, cannot steer investors to any one product but must educate participants about their choices. If this is done properly, advisers can still win their business.

Since the financial crisis of 2008, alternative investments have become increasingly popular in defined contribution (DC) plans, as we note in “The Alternatives Route.” Are you discussing these with clients yet? The most popular alternatives in defined contribution plans appear to be real estate investment trust (REIT) funds and Treasury inflation-protected securities (TIPS). Some target-date fund (TDF) families are also starting to invest a portion of their portfolios in alternatives, including emerging market debt and equity. Many experts say this is probably the safest approach to offering alternatives in defined contribution plans, as these are professionally managed portfolios. Alternative strategy mutual funds are gaining ground as well.

We hope you enjoy the issue and look forward to seeing you at the PLANADVISER National Conference in Orlando, September 15 through 17.

‘Tremendously Useful’

Congratulations on producing what may be the best ever issue of PLANADVISER magazine! Each and every single article of information in your May–June issue is tremendously useful and on-point for today’s plan adviser. Bravo—keep up the great work. This is an indispensable resource for professionals in our business.

David B. Cole, President
Retirement Income Resources