Straight from the Source

In our January-February issue, PLANADVISER introduced the finalists for the Retirement Plan Adviser of the Year and Adviser Team of the Year awards (see below). We recently conducted virtual interviews with them, and asked them to share their insights on their businesses, practice management and growth ideas, client service, and what they think of other advisers in the retirement plan marketplace.

PLANADVISER: What are you most passionate about in this business?

Troy Hammond: What I and our entire team are most passionate about is the fact that we are in such a unique business, that we can help people sleep at night: plan sponsors with all of the responsibilities and liabilities they have, individuals in assuring that they have enough money so that they do not outlive their assets, and we can actually run a profitable company at the same time.

Chip Morton: Participants! Everyone deserves the ability to retire with dignity.

Steven Dimitriou: Education. I get the most satisfaction from the participant education that we do. Seeing how we can directly affect people’s lives constantly reminds me of the importance of our roles. The gratitude that these people express is easily the most rewarding part of my job.

Paul D’Aiutolo: My passion is definitely consumed with helping participants retire. Growing up in a blue-collar family, I watched my father and other family members go through the squeeze of corporate downsizing in the early 1990s. I saw the physical and emotional strains humans go through when they realize that they are no longer young and are facing aging without either a job or enough retirement income. It’s not much different today. The fear that participants feel is the same fear that I saw in my father growing up. I realized that most Americans put too much trust in their belief that their company or the government will just take care of their retirement. Americans are loyal, almost to a fault. More needs to be done to ensure that working-class America stays on track to enjoy retirement.

Mark Wetzel: Providing unique “out-of-the box” solutions for plan sponsors. Every client is unique and has a unique workforce and business. It is important to understand the client’s complete picture when advising the plan.

Jon Upham: I am most passionate about providing the necessary resources and education to allow people in this country to be prepared for retirement. We have a generation of Americans that either refuse to save or are in denial regarding the need to save money. We are a spend-first culture and it is an important part of SageView’s culture to work with our clients and their employees to understand how important it is to prepare for their financial future.

PA: What has been your biggest obstacle?

Phillip Steele: The misguided belief of the plan sponsors who still believe that big name and brand are what are important.

Dimitriou: By far the most difficult obstacle I encounter is managing my time among servicing our existing business, helping participants, obtaining new business, and managing my company.

Michael Goss: The biggest obstacle was starting a company from scratch with no clients, no marketing material, and no infrastructure. We had a vision of how a client needed to be serviced and how plans should be structured, and we had to build it from scratch.

D’Aiutolo: What has been my biggest obstacle continues to be my biggest obstacle: getting some corporations to embrace what we advisers do. Too many companies rely too heavily on the recordkeepers alone to meet the needs of their employees. When you break down our fees, it usually ends up being between $50 and $100 per participant on an annual basis—a fraction of the costs of a matching contribution or the other benefits companies provide their employees. Yet, too few companies seem willing or interested in providing their employees the one-on-one counsel that advisers can provide.

Morton: Pushing the concept that participant direction is ridiculous.

Mark Temple: As our practice grows, attempting to determine which accounts are most profitable and which are not. Then, how to turn the less profitable ones into more profitable ones.

Stephen Kelliher: Providing full service that participants both need and require and is available in the complex products and services we offer without exceeding the available margins.

PA: What differences do you find in the sales process among various plan sizes?

Rob Kieckhefer: Some of the smallest plans have a very elaborate sales process and procedure. It could be streamlined by more regulations. I am in favor of having a two-page prequalification form with a number of yes and no answers.

Dimitriou: I think there are two primary variables in sales to various plan sizes: the availability of product and the sophistication of the client. In the smaller end of the market, there just is not the same breadth and depth of quality products. Many products have high and confusing fee structures and limited fund menus compared to the larger end. The sophistication of the average client is also quite variable. Smaller businesses often have more flexibility to adopt various plan designs—New Comparability Profit Sharing, for example—but often do not have the sophistication to fully comprehend the nuances. We encounter a similar problem when it comes to fund menu design and monitoring. The relative inexperience that many smaller plan fiduciaries and sponsors have can be an obstacle, in that they have pre-set notions.

Goss: While every case is unique, in general, smaller clients have thin HR staffs. They generally are more paternalistic when it comes to helping the participants. Because they are small, they know many of the participants personally and may know their spouses, children, etc. Therefore, they focus more on the personal participant experience. Larger companies, while concerned about the participant, realize that the communication must be delivered with a consistent corporate message. In general, they have a greater sense of their fiduciary risk in terms of fees, investments, and plan design. We tailor our presentation and services based on these different needs.

D’Aiutolo: Smaller plans still tend to be product or (hard dollar) fee sales. Also, smaller plan sponsors still tend to commingle the plan’s relationship with their personal wealth management. Small plan sponsors still aren’t quite up to speed on transparency and how to make prudent decisions for their plan. With larger plans, it’s more and more about transparency and measurability; it used to be about basic knowledge and tools. Nowadays, there are plenty of good advisers, and some tools also have become a commodity. Larger plan sponsors are looking for depth beyond basic investment reviews. Larger plan sponsors are looking for a meaningful partner who can assist both the Finance and HR staffs with their tasks, with not just basic service but proactive, meaningful advice to change participant behavior. With the shift to 401(k)s, larger plan sponsors finally are realizing the risks associated with the “k’ plan. The risk with “k’ plans is carrying aging or unproductive employees who have not saved enough to retire, who may be expensive from a payroll and benefits standpoint. Large plan sponsors are looking for advisers that understand this and have the measurable processes to effect change.

Hammond: Smaller plans tend to need more basic levels of education, mid-size plans are more focused on details, and large plans are much more custom-oriented. We offer the same services and processes; we just deliver them in a different format.

Steele: This is an area that has changed dramatically over the last three to five years. Years ago, many smaller plans did not even have committees, much less use an IPS or other tools to manage the plan. Now, many of even the smallest plans will have a committee and take a great deal of interest in having a strong process in place. This has, in many instances, lengthened the sales cycle greatly.

PA: If you were to speak to a qualified plan sponsor prospect today, what one question would you ask to initiate the opportunity?

Janet Ganong: When did your participants last see your adviser?

Ryan Gardner: Is your plan competitive from a design, investment, and fee standpoint?

D’Aiutolo: How many of your employees are on track to retire with dignity?

Temple: What do you like dislike about your current solution?

Upham: What do you think your biggest risk is in offering this plan to your employees?

PA: What do you expect from your plan sponsor clients? What do you expect from your 401(k) plan providers?

Dimitriou: I expect the same thing from both plan sponsors and providers: responsiveness. We tell our clients up front that we expect them to hold up their end of the bargain by responding to administrator requests and getting us involved when any issue arises. At the same time, we let our vendors know that we will not accept second-rate service and apathetic dealings with our clients.

Morton: My biggest expectation is that they adhere to my investment advice. As a fiduciary, I cannot tolerate a plan sponsor that is “wishy-washy’ about making fund changes once my due diligence proves it necessary. This puts me at risk. Providers must offer advice programs as part of their recordkeeping platform.

D’Aiutolo: With my plan sponsor clients, the only thing that I expect is that, if we meet their expectations, they will be willing to be a reference for our group. We can’t grow our business unless our prospects have someone to benchmark our services. Advisory relationships are built on trust. New prospects have to feel they can trust what you are suggesting is true, and the only way to verify that truthfulness is to check with our existing clients. The same is true for 401(k) plan providers, with one additional caveat, that they absolutely communicate with us everything pertinent to our mutual clients. Communication is key between the adviser and the recordkeeper.

Joseph McLaughlin: We expect our plan sponsor clients, up to the most senior members of the organization, to have a genuine interest in the success of their workplace retirement programs and to be engaged in the process. Our experience has shown that the more intense the employer commitment and follow-through, the deeper the impact and results we are able to achieve. From providers, we expect them to hold themselves to the same standard of excellence as we hold ourselves. This spirit of cooperation leads to a better experience for the plan sponsors and the participants. We also expect our vendor partners to be very open to suggestions and responsive to our clients’ needs and feedback.

Hammond: We expect our clients to take the time, and put forth the energy, required to maintain their qualified plan properly, as well as do their part in meeting the fiduciary obligations that are inherent when offering a retirement plan. In our providers, we expect that they will strive continually to offer the best possible products and services to our clients, and that they will charge a reasonable fee, disclose that fee clearly, and adjust it when necessary.

PA: What’s the hardest lesson you had to learn about working with retirement plans—and how did you learn it?

Temple: Unfortunately, showing a client or prospect the most prudent direction doesn’t mean they elect to follow that path.

Upham: The hardest lesson we have had to learn is how best to work in a setting where all decisions are made by a committee. The ability to listen to all parties and assist plan sponsors to come to an agreeable solution can be a challenge. Many advisers’ natural inclination is to make the decision and move to the next item of discussion.

Kieckhefer: Patience is a virtue and endurance wins out.

Hammond: Sometimes, people are more concerned about keeping their golfing buddy happy than doing the right thing for the plan.

Morton: You cannot save everyone. However, it is extremely discouraging to see elderly employees without enough money to retire even though they worked very hard for their employer. This is why advice programs are necessary, if for no other reason than to prepare participants with a dose of reality before it is too late.

Steele: That not everyone is going to get or agree with what we believe to be the important aspects of how a plan is designed and managed. I learned this the hard way by conducting many presentations to blank faces of people who really couldn’t care less about what we think!

PA: Where are the biggest opportunities for business expansion in the future?

Ganong: There are a lot of opportunities in the nonqualified deferred compensation area. Three areas make sense for an NQDC plan. First, companies are looking for ways to hold on to their cash, and still be able to compensate their key people. Second, with the potential changes in the tax structure, highly compensated individuals are looking for ways to defer taxes. Finally, firms are looking for a way to retain and reward key people and not affect their balance sheet. A nonqualified plan can do that for them.

Upham: SageView believes there will continue to be significant opportunities in the 403(b) and 457 marketplaces, as well as the need by plan sponsors to hire advisers to build and manage investment portfolios for plan participants.

Morton: Fiduciary adviser and rollover continuation programs.

PA: What are the most important issues that your plan sponsors face with their company retirement plans, and what specific actions do you take to assist them in overcoming those issues?

Temple: Managing liabilities; in today’s litigious society, if sponsors are not taking their fiduciary liabilities seriously, they will be shortly. Let’s face it, employees are not saving enough and, unfortunately, this fact has been exacerbated by the market correction. In today’s society, someone is going to be held responsible for this dilemma. We manage this liability for our clients.

Hammond: The biggest is probably education. Our business is so difficult to understand—from the legislation, to the differing products, to the fees and where and to whom those fees are going. We spend a lot of time educating our plan sponsors so they can make informed decisions.

McLaughlin: While the most important issue varies from one client to another, the common themes are: a) optimizing the benefit to employees per dollar spent on their plan—this is even truer in today’s tough environment than at any time during the past several decades; and b) making sure their employees fully appreciate and utilize the benefits. Toward these ends, we feel it is imperative to maintain open dialogue with our clients with respect to their goals for their plans and what resources they are willing to commit. We then leverage our experience, vendor relationships, and processes to achieve the desired outcomes. Our ultimate goal is that we keep things in perspective for them, encourage changes where necessary, and avoid short-sighted, emotional reactions.

PA: How do you continue to grow your business and maintain the high service standards that have made you successful?

Wetzel: Hiring and training the next generation of advisers in anticipation of future growth is critical. We have a career path for our analysts to become advisers after years of learning the business. Investing in technology and people is important to maintaining high service standards.

Temple: The million dollar question! Fine balance of managed growth with clients that match our profile of size, locations, and expectations—and hiring the right type of professional.

Kieckhefer: We have added a partner and support while demanding higher standards from our suppliers.

Steele: By surrounding myself with extremely talented and committed associates, who understand that hard work is just that—hard, but worth it.

McLaughlin: Our existing clients always come first, even if at the expense of a large prospective client. However, we do strive to maintain a consistent level of growth for our practice. The nice thing is that our team is structured so that certain individuals are focused exclusively on developing opportunities while others are focused on delivering service to our clients. Everyone has a concentration, and is focused on his or her skillset. Our team is engaged regularly in forward-looking discussion and we will adjust the structure of our team as needed to continue to deliver exceptional service. Whether it is a temporary “pitching in” or hiring additional team members, we are free to adapt and grow. That is how we grew to the 15-member team we have today. Additionally, we periodically and formally survey our clients to ensure their experience is what we set out to deliver. The feedback they provide helps us to grow and adjust accordingly.

PA: From your experience, what common mistakes do advisers make in building their practices?

Upham: In our opinion, many advisers grow too fast and do not build an adequate ongoing service structure in order to meet their clients’ needs. Plan sponsors are looking for long-term partners and, in many cases, advisers are not able to deliver on the promised services for extended periods of time. SageView has been hired by plan sponsors who have told us that the sales presentation from their previous adviser was very good, but the service deliverables were not there in the long run.

Morton: Some folks just do not focus on the reason we are here: to provide retirements for those in our care. Often, other advisers focus on management and give the average participant a back seat.

Hammond: Most common mistake I have seen is not building the proper infrastructure to support the practice as it grows.

Bennett White: The common mistakes we see typically fall into one of two categories. The first is the excitement of prospecting a retirement plan opportunity as a way to add to assets under management. Advisers with little or no experience advising plans will partner with their wholesaler of choice and rely on it to win the business. The prospective client sees through this lack of depth when they perhaps question the adviser’s role and, more importantly, their experience working with plans such as theirs. The second mistake is the advisers who seek to build a practice in this space by calling on just about every small and start-up retirement plan they can find, to cut their teeth, so to speak. Unfortunately, they end up winning many of these plans and suddenly realize the overwhelming service requirements and low margins on these plans. At this point, they face the difficult decision of either making the commitment required to build a devoted practice, or moving on to a different business model, often resulting in “orphaned” plans.

PA: What’s the one thing you hope your competition never figures out?

White: We hope they never figure out how to execute as comprehensively on all of the areas of concentration we deliver to our clients. Furthermore, we believe that very few competitors have the intestinal fortitude and patience to spend the many lean years required to build a bona fide business in the retirement plan space. It’s a long, slow, and winding road.

Dimitriou: That greed is not good in retirement plans. The more my competition continues to overprice themselves, the better it is for me.

Temple: That sincerity and honestly can be the cornerstones of a successful practice.

Ganong: The one thing would be to keep the emphasis on the participant. Continually being available to participants, and the touch points. If the participant is happy, then the plan sponsor will be happy, too.

Steele: In the short run, that what we do actually does produce better results and sponsors are beginning to figure that out. In the long run, I hope they figure everything we do out, so the industry as a whole can get on with producing better results for plan sponsors and their participants.

PA: What do you want to be known for?

Dimitriou: Integrity. When our clients think of me and our firm, I want them to feel they have received a fair deal and a caring touch. I want plan participants to feel a sense of trust when they speak with us and I want my peers to respect me, not for my success, but for the way in which we achieved it.

Wetzel: We want to be known as the premier institutional retirement plan adviser group in the country. If we give the highest level of service to our clients, our practice will grow because of the solid reputation we build. In turn, we hope to be considered an employer of choice—known for creating career opportunities for our employees.

D’Aiutolo: I want to be known for being a leader to my clients and for being responsible for helping thousands of employees retire with dignity. In order to be a leader to others, you first have to lead yourself. I have always put high degrees of emphasis on continually training and benchmarking my practice with the industry’s best practices. From there, I am always trying to fulfill my goal of helping employees achieve adequate retirement income and retire with dignity. Leading is the perfect combination of knowledge and results. I want to be known for both.

Upham: SageView has been fortunate to have built an excellent team of qualified people that value client relationships and will go the extra mile to make sure their needs are being met. SageView desires to have a reputation as a firm that provides first-tier advisory services to our clients and operates with the highest level of integrity.

Steele: Being strong in my convictions about what is best for sponsors and their employees; being innovative even if the price is less distribution of our model; working hard, being honest, and truly caring about other people’s future.

Paul D’Aiutolo, UBS, Rochester, New York

Steven Dimitriou, Mayflower Advisors, LLC, Boston, Massachusetts

Claiborne B. “Chip’ Morton, III, Corporate Advisors Group, a Member Firm of NRP, Destin, Florida

Philip Steele, Pension Architects, a Member Firm of NRP, Malibu, California

Mark Temple, O’Hanlon Michener & Douglas, a Member Firm of NRP, Slingerlands, New York

Retirement Plan Adviser Team of the Year finalists*

Fiduciary Investment Advisors (Mark Wetzel, Michael Goss, Karen Paulson, Ryan Gardner), Windsor, Connecticut

Kelliher Group at Morgan Stanley (Stephen Kelliher, Joseph McLaughlin, Bennett White), Norwell, Massachusetts

Pensionmark Retirement Group (Troy Hammond), Santa Barbara, California

SageView Advisory Group (Jon Upham), Irvine, California

The Kieckhefer Group, RBC Wealth Management (Rob Kieckhefer, Janet Ganong), Milwaukee, Wisconsin

* Those from each team who participated in the roundtable