March 18, 2013
- Chief Executive Officer, Pension Resource Institute
“This is a guest post contributed by Jason C. Roberts, CEO, Pension Resource Institute, LLC and Partner, Roberts Elliott, LLP. Jason conducted a session at the TD Ameritrade Institutional National Conference.”
When competing for retirement plans, historically RIAs may have had an edge because of their ability to render investment advice, as compared to registered representatives and insurance agents who generally are unable to claim that they are held to the fiduciary standard. Today, however, with the proliferation of third-party managers available on record-keeping platforms capable of providing “remote” fiduciary services, this value proposition, standing alone, may not have the impact it once did.
In addition, the sweeping regulatory reforms recently finalized by the Department of Labor have raised the bar on employers, and many are reexamining their relationship with their plan advisor. One of the primary themes we see is that many employers are looking for more holistic support across all aspects of the plan. Less emphasis is being placed on investment-related credentials and the selection criteria are focusing on the advisor’s ability to contribute to the overall success of the plan.
RIAs are Enhancing Their Value Propositions
The combination of new competitors entering the space, regulatory reform, and increased client expectations is forcing many advisors to re-evaluate how they acquire and retain clients.
Proactive plan advisors are now incorporating the following strategies:
From a compliance or governance perspective, the retirement plan should have consistent and repeatable procedures to make, implement and monitor fiduciary decisions regarding investments, service providers, and plan administration.
With regard to outcomes, the retirement plan should have a strategy for engaging participants in a meaningful way to increase participation and deferrals. The likelihood of meeting retirement goals (“retirement readiness”) should be measured periodically, on an individual basis (by employee) and on a collective basis (plan-wide).
Changing the Conversation
The most successful advisors are talking to employers about streamlining the process and saving time versus striving to be the low cost provider. This is the message that resonates most with employers today and can set advisors apart. For example, proactive advisors are introducing systematic processes to plan governance through procedures that highlight their role in facilitating information gathering, analysis and documentation. Recommendations are funneled-up to the voting committee members and fiduciary decision making is simplified and well-supported.
Time saved can be used to work with plan sponsors to help identify opportunities to increase participants’ ability to maximize benefits under the plan and increase the likelihood of a timely and dignified retirement. Employers can also allocate time to slicing and dicing trends, demographics and readiness metrics. This approach can help to refine communications, optimize matching formulas, target education, etc.
As you compete for retirement plan business, position yourself for success in a post-fee disclosure world with a time management value proposition. This will help you differentiate yourself from the competition in the new retirement plan marketplace.
Jason C. Roberts is a guest contributor for TD Ameritrade Institutional.
TD Ameritrade Institutional and Pension Resource Institute, LLC are separate, unaffiliated companies and not responsible for one another’s products or services.