The PLANADVISER Interview: Rita Fiumara, Financial Adviser, UBS

Rita Fiumara has spent her career doing plan advisement with UBS Financial Services Inc., a subsidiary of UBS Group AG.

In that time, she has seen the needs of plan sponsors evolve from straightforward plan design and implementation to more holistic services for both them and their participants.

Today, she says a “bundled service model and expertise is the latest trend” plan sponsors are looking to get from their adviser, a marketplace that raises the bar for plan advisers when responding to a request-for-proposal either from new, or existing clients.

PLANADVISER dug in with Fiumara about what today’s marketplace requires from plan advisers in responding to RFPs or requests for information. Her answers were provided by email.

PLANADVISER:  Our reporting shows that plan sponsors have ramped RFP requests over the past year—either to benchmark against their current adviser or find a new one. What does an adviser or advisory practice need to be competitive?

FIUMARA: First, I would note that lowest cost should not be the determining factor that plan sponsors seek out when conducting an RFP for a retirement plan adviser.

The best retirement advisers in the industry today need to be an ERISA [Employee Retirement Income Security Act] expert in understanding and serving as a fiduciary adviser in reviewing and monitoring 401(k) line-ups that are in compliance with the DOL [Department of Labor] rules; furthermore, they should be credentialed with certifications such as Charted Retirement Plans Specialist, Accredited Investment Fiduciary, as well as being a Certified Investment Management Analyst.

In addition, they should have extensive experience to demonstrate their expertise in serving as an intermediary and in assisting the plan committees in evaluating their record-keeper, asset fund management expense fees; providing financial wellness programs, and employee education as it relates to their retirement plan. A fiduciary advisor should also take the initiative to work with the plan sponsor to consult on the competitiveness of their plan design and operational compliance.

Lastly, serving as their advocate, they should provide fiduciary training in keeping their client informed about existing and new legislative updates and requirements. This bundled service model and expertise is the latest trend for which plan sponsors are seeking on their RFPs in looking to hire a retirement plan adviser.

PLANADVISER: What are some key areas that plan sponsors would like you to show today about your practice? Any trending areas of expertise they like to see?

FIUMARA: Plan sponsors are looking to bundle their retirement recordkeeping and retirement benefits structures and offerings. Today’s retirement plan advisers need to understand their client’s total retirement reward structure and serve as the expert in being able to consult on not only their 401(k) plan, but their HSA [health savings account] program, deferred compensation plan, bonus incentive plan, ESOP plan and stock purchase programs as well. The bundling of corporate services has become essential for HR teams who are looking for one point person and team to help them navigate through the evaluation, execution and communication of their retirement benefit programs.

The downsizing of HR teams has also been a big contributor in starting this trend as more HR team leaders are asking for help from their provider/vendor/advisor relationship to help with all their retirement plan benefits.

PLANADVISER: Fees are of course a big focus for plan sponsors. How do you structure your fees, and/or what are some common fee structures in the market right now?

FIUMARA: Fees can be structured to be as follows: Asset Base fees, Hard Dollar fees, or a combination of both.

It is essential for the plan adviser to know the plan sponsor’s demographic group in terms of employee account and provide a median account balance and average account balance to determine what is fair and equitable especially if the fees are coming out of plan assets.

A per capita fee usually makes sense for large employee groups and pro-rata may make sense if the distribution of assets results in the median account balance being lower than the average.

Asset base fees can be fair and make sense for both the plan sponsor and the advisor since the liability increases with growth the plan assets. A benchmark report should be part of the annual due diligence to confirm the reasonable fee and competitive fee structure set up for each client. For example, if the fees lie within the 50th percentile given the customization of services model provided, the plan sponsor can validate and confirm they are comfortable with their cost model.

PLANADVISER: Any other recommendations on putting one’s best foot forward in the RFP process?

FIUMARA: I would recommend providing a case study that resulted in reaching a goal specific to the employee group. It is important to understand and have affinity with the industry and demographic group for which you can provide synergies that made an impact to your client and their employees.

You can also explain how you will help provide the plan sponsor with market trends especially in working toward enhancing their plan design as it relates to recruiting and retaining employees.

Finally, have an outline that articulates the deliberate planning that will be implemented by documenting a cadence of having set dates planned for throughout the entire plan year, for example:

1) Standing monthly calls with the HR team and their recordkeeper each month.

2) Monthly employee educational meetings and topics set to be implemented and delivered for all employees.

3) Quarterly formalized Retirement Plan Committee meetings with annual fiduciary training planned in meeting all the annual governance and due diligence requirements.