HALL OF FAME - Adviser Teams of the Year
The STAR Group at Merrill Lynch (now part of CAPTRUST Akron), 2007 PLANSPONSOR Retirement Plan Adviser Team of the Year; FFoA (now part of StoneStreet Equity), 2008 PLANSPONSOR Retirement Plan Adviser Team of the Year; Fiduciary Investment Advisers, 2009 PLANSPONSOR Retirement Plan Adviser Team of the Year; and The Prince Group at Stifel Nicolaus, 2010 PLANSPONSOR Retirement Plan Adviser Team of the Year
Stephen Wilt – 2007 PLANSPONSOR Retirement Plan Adviser Team of the Year
Stephen Wilt is Senior Vice President at CAPTRUST Financial Advisors (far right in photo). In 2009, he left the STAR Group at Merrill Lynch, the winner of the 2007 Retirement Plan Adviser Team of the Year, to join CAPTRUST, creating the company’s Akron, Ohio, office.
What do you think are the most significant changes in the retirement plan industry over the past five years?
Fee compression: We are currently in one of the most competitive provider fee markets we have ever experienced. Plan sponsors now must consider cost in terms of how their plan has changed in composition and whether, as a result, the plan is competitively priced. When combined with the pending participant disclosure, plan sponsors will be more vulnerable to litigation if they cannot demonstrate documentation for periodic benchmarking and appropriately negotiated fees
Fee disclosure: For the last 10 years, I have worked with plan sponsors and providers to ensure full fee disclosure and have educated plan committees regarding its impact on provider fee negotiations and investment menu selection. We help provide transparency to sponsors who believe their providers are not collecting fees for services. Our practice requires all providers to declare their needed service fee separate from revenue-sharing agreements.
Automation: Auto plans have become the norm over the last five years and for good reason. We are seeing true results by combining auto-enrollment (with deferral increases), independent investment recommendations, and great education. Moving the needle is not difficult with an engaged plan sponsor, thoughtful plan design, and a little hard work.
What have been some of the most significant changes in your business/practice over the past five years?
Five years ago, I began a quest to achieve a level of independence in relationships and compensation that would raise the standard of care I could provide my clients and plan participants. After 18 months of research, I elected to move my practice from a wirehouse to CAPTRUST Financial Advisors. My goals were to have access to independent investment and plan research and comprehensive benchmarking capabilities, to serve as a co-fiduciary, and work with like-minded institutional advisers focused on the retirement industry. In our third year, my practice has grown significantly and the quality and depth of consulting we deliver have expanded our market focus and reputation both in our community and the industry. We have also moved from a national focus to a regional one. More than 90% of our clients are within an hour’s drive from our office.
What one piece of advice/information/caution would you offer to regulators/legislators?
Retirement is broken. It will become more of a front burner issue as the workforce gets older.
Real solutions are possible, but getting there will require an unprecedented level of collaboration between government and the private sector.
What one piece of advice/information/caution would you offer to plan sponsors?
There is significant value in partnering with a retirement-focused, independent consultant who can demonstrate the ability to solve for retirement success across a growing continuum of needs.
What one piece of advice/information/caution would you offer to other advisers?
Don’t go it alone. Being a retirement adviser is a heavy and laborious business. You will need the right support system that can deliver resources beyond you and your team.
Five years from now, what do you think will have changed the most in retirement plan designs?
Retirement advice, integrated as more front and center. In five years, I hope to see the continued implementation and integration of automated programs and savings and investment programs. Throughout one’s working life—from age 20 to age 70 and into retirement—retirement success will depend on features such as automatic enrollment, auto annual savings rate increases, professionally managed allocation solutions, portfolio risk management, and retirement income options. In my best outlook, every American will have access to, and engage in, basic financial health education.
What has being named a PLANSPONSOR Retirement Plan Adviser Team of the Year meant to your business?
Demonstrative credibility and referable clients have been the mainstay of my practice growth and reputation. Recognition through PLANSPONSOR provides me the ability to demonstrate, to prospects and clients alike, industry recognition for my careerlong focus on plan sponsor and plan participant initiatives.
Barbara Delaney – 2008 PLANSPONSOR Retirement Plan Adviser Team of the Year
Barbara Delaney is Principal of StoneStreet Equity. In 2008, FFoA, the 2008 PLANSPONSOR Retirement Plan Adviser Team of the Year, of which Delaney was President, partnered with Avenir Equity to form StoneStreet Equity.
What do you think are the most significant changes in the retirement plan industry over the past five years?
The most obvious is the attention paid to fees and understanding the pricing models. This continues to be a common theme. I also think that, since the market correction, more attention is being paid to outcomes. We have yet to see a generation of participants retire from 401(k) plans and I think this will start to be paid more attention to.
What have been some of the most significant changes in your business/practice over the past five years?
Our firm has spent considerable time and capital on automating our analytics and benchmarking systems. This has helped us grow more efficiently. I also think the focus on educating committees as well as participants has completely changed with auto-enrollment.
What one piece of advice/information/caution would you offer to regulators/legislators?
Small plans need to have some safe harbors and ease with the complexity of the law. My concern is that fewer Americans will be covered due to the increasing complexity of administering a plan.
What one piece of advice/information/caution would you offer to plan sponsors?
Have a process and follow it. Document every decision. Understand your plan document and make sure all your support staff understand it as well. Too often, we see mistakes in payroll when there is a lack of understanding of what the document says. Finally, and of course I would say this, seek outside help.
What one piece of advice/information/caution would you offer to other advisers?
Understand what it means to be a fiduciary. You have a duty to do what is right and if you see something is wrong, you have a duty to report that.
Five years from now, what do you think will have changed the most in retirement plan designs?
What do you think won’t have changed, despite efforts to change it?
I think we will see a full circle as the number of employees default into various target-date or asset-allocation funds. These funds will be run like a defined benefit plan, which is good, in my opinion. More products will be developed to pay an income stream at institutional pricing.
What has being named a PLANSPONSOR Retirement Plan Adviser Team of the Year meant to your business?
It has given our firm real credibility with our clients and prospects. They read why we won the award. Ironically, some were concerned we would get too big, but we work harder than ever for our clients, and demand for transparency grows, and participant outcome is a big focus.
What advice would you have for advisers who want to achieve that recognition?
Work hard for your clients, respect the work the vendors do, and allow them to have a say in how their systems work to support plan design. Plan sponsors need to understand that you are always looking out for their best interest. Finally, work hard with the plan sponsor’s counsel and auditors; they all will appreciate a great team approach to plan management.
Fiduciary Investment Advisers – 2009 PLANSPONSOR Retirement Plan Adviser of the Year
Michael Goss (second from left in photo) is Executive Vice President of Fiduciary Investment Advisors in Windsor, Connecticut.
What do you think are the most significant changes in the retirement plan industry over the past five years?
The biggest change in the retirement plan industry has related to the fee disclosure regulations. This will not only be beneficial to participants, but it will accelerate the specialization of advisers and force the broker/dealers to change their business model. At the same time, it will create potential near-term confusion to participants, and increased costs to administer plans.
What have been some of the most significant changes in your business/practice over the past five years?
The biggest change we have seen in FIA’s practice is that very large plans that historically have not used advisers are now using advisers/consultants to assist them in all aspects of plan fiduciary governance. This is due to the complex regulatory environment for retirement plans, both DB and DC, and the fact that DC plans are becoming a much larger focus of employees in their overall benefit practice. Large plans have similar needs as mid-size plans but need to be serviced differently due to more robust internal corporate structures.
What one piece of advice/information/caution would you offer to regulators/legislators?
Regulators need to understand that too much regulation ultimately leads to higher fee structures to participants, as it becomes more costly to service, administer, and recordkeep plans. Costs have to be passed through to the consumer, which in this industry is the participant.
What one piece of advice/information/caution would you offer to plan sponsors?
Plan sponsors need to become more educated about best practices in the industry and affiliate with advisers/consultants that only focus in this area.
What one piece of advice/information/caution would you offer to other advisers?
Advisers really need to focus on documenting internal processes. Ultimately, if the client gets in trouble, the adviser’s process for making recommendations will be scrutinized. Relying on a software package to analyze funds may not be good enough due diligence.
Five years from now, what do you think will have changed the most in retirement plan designs? What do you think won’t have changed, despite efforts to change it?
We think some of the PPA provisions will not be optional. We may see that all plans must do auto-enrollment. There may be a mandated vesting schedule or a mandated employer contribution. Plans will have less flexibility as the government tries to address retirement security while at the same time being under tremendous pressure to cut entitlements. The employer and the participant will be required to “fund” the gap lost by Social Security.
What has being named a PLANSPONSOR Retirement Plan Adviser Team of the Year meant to your business? What advice would you have for advisers who want to achieve that recognition?
We won the award only three years into our existence, so it validated our firm and our client experience process. It did help us build brand name recognition in the marketplace. We already had a great reputation within the industry with advisers, investment firms, and recordkeepers, but it helped get the word out to plan sponsors. We would recommend to advisers that want to win the award to continue to reinvent themselves, as the industry changes constantly. The process and services that helped you win the award will not be good enough in the future if they do not evolve to meet the plan sponsors’ ever-changing needs.
The Prince Group – 2010 PLANSPONSOR Retirement Plan Adviser Team of the Year
Douglas Prince is Managing Director of The Prince Group of Stifel Nicolaus in Indianapolis, Indiana.
What do you think are the most significant changes in the retirement plan industry over the past five years?
Though not fiduciaries, the retirement plan adviser has moved from being hired to be the investment adviser to becoming the overall quarterback for the fiduciary process. Clients want someone to help them to follow a prudent investment process, not just watch their investments.
What have been some of the most significant changes in your business/practice over the past five years?
Over the past several years, we have had to find ways to do more each year for clients at the same or lower costs.
What one piece of advice/information/caution would you offer to regulators/legislators?
Remember the employer-sponsored retirement system is voluntary. At some point, too much regulation/legislation and risk to the employer could cause some plan sponsors to just give cash to employees and let them fend for themselves. Without the employer-sponsored retirement program, most American workers would not have any money saved.
What one piece of advice/information/caution would you offer to plan sponsors?
Don’t just accept recommendations from your advisers. Ask why, what are other options, and who stands to benefit from the recommendation? The plan sponsor knows the employees better than any of their advisers and, by asking questions, it can help clarify whether the recommendations apply to your employees.
What one piece of advice/information/caution would you offer to other advisers?
You have to be committed to be in this business. Commitment to me means: you have a passion for working with plan sponsors and participants; you do this and only this; you have an independent and objective business model free of conflicts.
Five years from now, what do you think will have changed the most in retirement plan designs? What do you think won’t have changed, despite efforts to change it?
What probably won’t change: Automatic enrollment and increase will be the standard for most plans and target-date funds will gain more and more of the plan assets.
What might change:
• The standard investment lineup may be only managed funds (target-date, lifestyle, managed accounts) and the plan could have a brokerage window to allow participants to create their own lineup if they want to buy other investments.
• Provider fees (both recordkeeping and investment advisory) likely will go down over the next few years as much more transparency in fees takes hold. Then, fees likely will increase as the number of competitors decreases.
• Retirement income products might not be mainstream, but new innovation likely will take hold and a trend toward communicating to participants may evolve into how much each additional percentage of pay increase in the contributions could equate to in potential monthly income at retirement.
• There likely will be much more automatic-type plan design: automatic beneficiary, automatic default payout into some vehicle that provides for monthly payments at retirement age, etc.
• The standard retirement age in plan documents likely will increase to the high 60s or even 70.
• Employers could be struggling with the question: Do we change plan design to encourage either an earlier retirement, phased retirement, or delayed retirement? Different types of industries will do different things.
• I think there may be more of a bucketing approach to the retirement accounts and a coordination with health-care benefits. The 401(k) plan will give participants the ability to segregate their accounts into different buckets (basic retirement income, health care, discretionary retirement income, etc.). These account segregations can help the participants look to annuitize (or purchase some retirement income product) just a part of the account to cover minimum expenses and leave the rest in a lump sum.
What has being named a PLANSPONSOR Retirement Plan Adviser Team of the Year meant to your business? What advice would you have for advisers who want to achieve that recognition?
The award has inspired our group to continue to think of better ways to help participants save for retirement.
The advice we would give: Develop processes. Document, continually improve, and be able to show the value you add through your processes.