I am always flattered by the request, and always try to
do my best to point them to the resources we have on our
site (our annual
Defined Contribution Survey
and the annual
Recordkeeping Survey
are quite popular).
Still, there is only so much help one can offer without
a fuller understanding of the current needs of the program,
as well as the goals and objectives set for the future.
Furthermore, providers, like plan sponsors, have
"personalities" and, in my experience, sometimes
the chemistry that a good relationship needs to thrive just
is not there, even when the plan's needs are reasonable
and the provider's capabilities are top-notch.
Yes, picking the best provider for a retirement plan is
one of the most important decisions a plan sponsor can
make—both in terms of fulfilling their fiduciary obligation
and in what might affectionately be called job sanity.
That said, many plan sponsors really don't have the
time—or the expertise—to pick the best provider (much less
monitor that performance), and so, the smart ones do what
ERISA requires—they hire the expertise to pick (and
monitor) the best provider.
And that's where the retirement plan adviser comes
in.
The "Right"
Adviser
However, in my experience, it's no less challenging
to find the "right" adviser/consultant than to
find the right provider. In fact, IMHO, it's harder to
find that adviser.
Why?
Well, most of us have some idea as to the features/pricing
we want/are willing to pay for from a provider, but how
much is good counsel worth?
And how do you know it's good counsel?
Here are seven things that I've told plan sponsors that
they should know before they engage an adviser's
services:
(1)
Know what you want to accomplish with the adviser/why you
want an adviser.
Is this for a one-time consultation, or are you looking
for an ongoing relationship?
(2)
Know where the adviser will be.
Do you care if they are geographically proximate, or is a
phone call away close enough?
How often will they visit?
How often will they visit without charging?
(3)
Know what the adviser has done for others.
Get references—in fact, if you can get references first,
and then call the advisers, so much the better.
(4)
Know how the adviser is going to go about doing what they
say they will do. Get that in writing—and hold them
accountable.
(5)
Know where the adviser stands on the issue of being a
fiduciary to your plan.
Know the size and strength of the organization that
stands behind that commitment.
Know that hiring an adviser who will be a fiduciary to
your plan doesn't diminish your responsibility as a
fiduciary.
(6)
Know what kind of background/expertise the adviser has.
What kind of education, honors, and/or designation(s) do
they have?
How do they stay current on market and regulatory
developments—and how will they keep YOU current?
(7)
Know how much—and how—you will be asked to pay for the
adviser.
More importantly, know how much—and how—the adviser is
paid for the services provided to your plan.
Be sure that they aren't compensated in a way that unduly
influences (or could be seen to influence) their
objectivity.
If they won't answer this question, no matter how good
they seem to be, walk—no, run—away.
Of course, ultimately, the choice of the
"right" adviser will be a combination of personal
chemistry, professional acumen, relevant experience,
and—perhaps the most element—trust.
P.S. I'm sure that, in the interests of focus and
brevity, I have overlooked things.
If so—or if you just want to tell me you agree—drop me a
note at
nevin.adams@assetinternational.com