Great Expectations

At the end of September, more than 350 senior retirement plan advisers and providers came together in Orlando, Florida, for the first PLANADVISER National Conference. Held at the Ritz-Carlton Grande Lakes, the conference gathered for three days discussing all the hot topics (and acronyms) from the retirement plan world—the Employee Retirement Income Security Act (ERISA), the Pension Protection Act (PPA), qualified default investment alternatives (QDIA), as well as the latest news from broker/dealers and plan providers. 

From the beginning, PLANADVISER aimed to have an interactive format that would be useful to attendees. Panelists were told not to prepare presentations but to come ready to speak about how the topic affected them in their practices and able to share sales or service ideas they have used, or plan to use.  

The proof is in the pudding: The majority of advisers walked away with practice management, sales, or service ideas, including, among others, using “fee disclosure and client accomplishments as a part of client reviews’; “marrying client data (performance/participation rates) with benchmarking studies to demonstrate the value advisers provide’; and a better understanding of the use of ERISA budgets in retirement plans. 

Monday, September 24 

The conference began on Monday, September 24, with an opening panel that included Robert Francis, Chief Operating Officer of National Retirement Partners; Ed O’Connor, Managing Director of UBS Wealth Management; Jim McCarthy, Managing Director, Retirement and Equity Solutions Group of Morgan Stanley; and Fielding Miller, CEO, CAPTRUST Financial Advisors. Each presented a differing opinion on how the adviser proposition will resolve itself in the near future. One thing all panelists did agree on is that the fee scrutiny will continue. Francis told the audience not to wait for the Department of Labor (DoL) to finalize the increased disclosure rules and instead to “get the answer to fee questions right now and decide if your fee structure is something you can defend to your clients.” Although fee transparency sounds scary, O’Connor said, “Clients will always pay a premium for trust.” 

On a panel titled “Plan Sponsor Confidential,” four plan sponsors told the audience of advisers what they like about their current plan adviser relationship and what could be better. Their main complaint: Advisers are not proactive enough. The consensus was that extra phone calls every so often would be nice, as would having an adviser who performs a service without being asked.  

Advisers received a sneak peek at some of the 2007 PLANSPONSOR Defined Contribution Survey data, for which PLANADVISER’s sister publication surveyed more than 5,000 plan sponsors of varying sizes about their plan designs and plan providers during Nevin Adams’ presentation called “Winning Ways.” Adams gave insights about plan behavior, discussed usage of various plan design features, and offered suggestions about how advisers can better serve their clients based on the findings. 

That evening, attendees were invited to a dinner featuring keynote speaker Greg Gumbel, who spoke about his career. Receptions were held both before and after dinner so that attendees had an opportunity to network with other advisers and providers. 

Tuesday, September 25 

Day Two of the conference opened up with “Stayin’ Alive,” during which a panel of advisers discussed about how they are staying relevant in the post-PPA era. While the consensus was that automatic enrollment can have a positive effect on the retirement plan, all advisers agreed that the participant engagement is still important. Steve Wilt, First VP, Senior Financial Adviser, The STAR Group at Merrill Lynch, said his team has implemented a new program called “No Employee Left Behind,” which focuses on ensuring each participant is engaged in the plan and on his way to a successful retirement. 

In “Building Your Deferred Comp Business,” speakers said the nonqualified marketplace and the changing landscape in the post-409A world offers many opportunities for advisers. According to Darrell T. Alford of Alford-Jungers Financial and Insurance Company, an NRP Member Firm, advisers should have “in their bag” a provider using COLI funding, a provider using mutual funds, and a provider for those plans that are unfunded. Alford suggested advisers approach the deferred compensation marketplace as having two tiers: smaller plans with $3 million or less in deferrals and larger or institutional-sized plans. 

Knowing the audience and customizing presentations for specific participant groups are the keys to having an effective participant meeting, according to a panel of industry professionals on the “Powerful Presentations” panel. Chad Larsen, SVP Retirement Services of Moreton Financial Solutions, LLC, an NRP Member Firm, pointed out that he thinks the most important thing is to know what the sponsor is looking for from the presentation. He also suggests segmenting employees into demographic groups and hosting different meetings. Larsen gave as examples that an adviser can focus on what will really matter to, and make a difference for, participants if they are segmented into groups according to whether they are already in the plan or not, or whether they are approaching retirement.  

Plenty of advisers have earned designations; many even put them on their business cards. However, how does one make those useful to their business? During the “Making Your Designation(s) Work” session, advisers said designations should be practical and help the adviser grow business. According to panel member Gregg Andonian of Bayside 401(k) Advisors, an NRP Member Firm, designations should parallel with an adviser’s business model or focus. He said a good designation delivers processes for advisers to use in their businesses. Barnaby Horton, Assistant VP, Merrill Lynch Global Private Client Group, said he incorporates an explanation of his designations in his marketing materials to enlighten his clients to their meaning. 

Why be independent? When going independent, what business model is right for you? Three panelists debated this question during a session titled “Independence Dazed.’ All three had different independent affiliations, but agreed it is clearly a matter of personal preference. Rick Shoff, SVP and District Manager of CAPTRUST Financial Advisors, who joined CAPTRUST in late 2006, said it was an important decision to decide to go from owning his own practice to being a part of a larger firm, which acquired his practice. Contrarily, two-and-a-half years ago, Tom Noble of the Noble Retirement Group, a member firm of NRP, decided to start his own firm. More recently, when deciding to affiliate with NRP, Noble said he found the retirement-centric focus appealing. Michael Goss, Executive Vice President of Fiduciary Investment Advisors, LLC, and many members of his firm had been with a wirehouse previously and decided that, because of their unique consulting arrangements with clients, the best company design for them was an independent registered investment adviser (RIA) practice.  

“Should Retirement Income Be a Part of Your Practice?” A panel attempting to answer that question seemed to settle on the same answer: yes. However, they also agreed that the conversation about retirement income should not be an at-retirement discussion. Consumers want to discuss income planning, the panelists agreed. The advisers on the panel said they have seen the retirement income side of their practices grow in the last few years. Troy Hammond, President of AmeriFlex Financial Services, a member firm of NRP, said that, although he has a retirement income group within his practice that accounts for about 50% of his revenue, he doesn’t do wealth management sales. Instead, he says, his firm focuses on the accumulation and decumulation concepts and helps participants understand whether or not they will have enough money in retirement. 

Although the final regulations were not yet available, advisers on the panel “It’s All Your Default: QDIA Essentials” were ready to talk about the resulting changes to their client service. Barbara Delaney, President of FFoA, an NRP Member Firm, says advisers will have to provide a benchmarking service for those plans that choose asset allocation funds as their QDIAs. Advisers and vendors will need to work out which approaches to benchmarking these funds are best: using a fund-of-funds approach, indexes, or benchmarking each underlying asset in the allocation mix. Panel member Douglas G. Prince, Managing Director of Stifel Nicolaus & Company, reminded conference audience members that investment policy statements and service provider contracts will have to be changed to reflect the new default fund for plans. 

“Preparation is the key’ to a winning finals presentation, according to Steff Chalk, President of CHALK 401(k) Advisory Board, Inc., speaking on the “Acing Your Finals” panel. Other panel members concurred, and suggested that an adviser know where the plan stands, the previous experiences of the decisionmakers, what is important to the sponsor, and why a company is searching for a new solution. In addition to preparation, an adviser should think, “How can my firm be the most attractive decision,” offered panel member Peggy Whitmore, Managing Director of 401(k) Advisors. 

Partners can make or break your relationship with clients—something every adviser needs to be conscious of when choosing with whom to work. Advisers on “How to Get the Most from Your Provider” discussed how they increase their value proposition by leveraging the provider’s capabilities. “How do we manage a relationship so it is a win-win-win relationship? The stage needs to be set by us,” said Kurt Hettel, Managing Director of RSI Financial Services. When deciding with whom to work, an adviser needs to find the best group of providers, and stick with them; it is not important or necessary to work with the most, Hettel commented. It is important to make supportive relationships with providers that are as strong as those you have with your clients, he explained. Panelists agreed it is important to ensure that they are kept in the loop of all provider and plan sponsor communications to ensure that everyone is meeting expectations and so that the adviser and his team can keep up with what is going on with the client. 

Due diligence requires that fiduciaries monitor the performance and suitability of their plan providers on a regular basis. A panel of industry professionals speaking in a session called “Search Me” shared best practices in how to keep the process moving. David Katz, Partner of Rocaton Investment Advisors, noted that it is sometimes hard to differentiate the services offered by different providers when performing benchmarking. He suggested that, when benchmarking, advisers focus on: QDIAs, specifically whether a recordkeeper has the capability to handle a particular default option; the number of investment choices offered; and fees, especially looking at separating recordkeeping costs from investment costs. 

Wednesday, September 26 

Although there will always be a market for the wirehouse adviser, particularly due to brand recognition, the changing retirement landscape calls for some tweaking of the wirehouse model, commented panelists on “The Future of the Wirehouse Adviser.” “This business is clearly moving in the direction of consulting,” noted Patrick Rieck, First VP, National Sales Director 401(k) Products at Smith Barney. Rieck said a challenge for wirehouses is to help advisers transition to a consulting business model. Kerry Sain, SVP, Director of Sales at Wachovia Retirement Services, said advisers come to a wirehouse for the brand recognition and for buying leverage, so the home office has a duty to advisers to continue to reinvest in the business and provide tools for the advisers. To be competitive and win business, Pat Oberlander, Director, Qualified Plans at UBS Retirement Consulting Services, suggested wirehouse advisers should articulate to clients and prospects the advantages of using a wirehouse, such as a known brand and additional regulations that protect the public, which both will give sponsor’s plan participants a certain comfort level. 

According to representatives from LPL, National Retirement Partners, and Raymond James, taking part in the panel “The Future of the Independent Adviser,” retirement plan advisers working in the independent channel will have many ways to broaden their businesses in the future. The Pension Protection Act (PPA), especially the fiduciary adviser safe harbor, allows for many opportunities for advisers. Both Dick Darian, Chief Marketing Officer of National Retirement Partners (NRP), and John MacGregor, Senior Vice President of Retirement Services at LPL Financial, said they are making the DALBAR Fiduciary Adviser Network program available to advisers. Although he thinks it probably is not going to be embraced by the masses of participants, it will allow advisers to work more with the high-net-worth folks, MacGregor said. Another area for advisers to focus on is the rollover market, all three representatives agreed. Bo Bohanan, Director of Retirement Plan Consulting of Raymond James & Associates, said that rollovers will require the advisers to get access to some type of comprehensive planning, including marketing support materials and intellectual capital. 

Scrutiny of fees has never been more intense. During “Revenue Sharing: Getting Your Fair Share,” a panel of advisers discussed how they are responding to the environment while protecting their bottom line. Fee disclosure in general is a good thing, all panel members agreed. According to Mark Wetzel, President of Fiduciary Investment Advisors, LLC, fee disclosure can help an adviser find ways to add value to a plan, and sharing that with a client or prospect is a good marketing tool. Advisers must be sure to include information on revenue they are getting from funds themselves in fee disclosures to participants, pointed out panel member Andrew H. Prevost, President, Retirement Plan Division of Meltzer. He added that advisers will then need to justify what they are doing to earn that revenue. As a result, honest discussion is vital, he said.  

Main Sponsors 

• Fidelity Investments 
• JennisonDryden 
• JPMorgan Asset Management 
• Lipper 
• Morgan Stanley 
• National Retirement Partners 
• Nationwide 
• Prudential 
• Thornburg Investment 

Exhibitors 

• AllianceBernstein 
• Calamos 
• Claymore Securities 
• Columbia Management 
• CPI Qualified Plan Consultants, Inc. 
• DailyAccess Corporation 
• Diversified Investment Advisors 
• Eaton Vance 
• The Hartford 
• ING 
• John Hancock Retirement Plan Services 
• Legg Mason 
• LPL Financial Svcs. 
• M&I Retirement Plan Services 
• MassMutual Financial Group 
• MG Advisory Services 
• Morningstar 
• The Newport Group 
• New York Life Investment Management LLC 
• OneAmerica 
• Pacific Life 
• Phoenix 
• Principal Financial Group 
• RiverSource Investments 
• Russell 
• Seligman Investments 
• Sentinel Investments 
• Transamerica Retirement Services 
• Wachovia