PSNC 2017: Offering Participant Advice—Advisers, Third-Party Solutions

Panelists discuss education and advice, and walking the line between the two.

The 2017 PLANSPONSOR National Conference panel “Offering Participant Advice—Advisers, Third-Party Solutions” distinguished the difference between information to educate and advice provided by retirement plan advisers.

The panel’s live polling questions found that 50% of plan sponsors have participants pay for investment advice—included in the plan’s investment expenses—while 17% of employers pay the fee. Thirty-three percent share the cost with their workers.

When asked how their plan’s investment advice is delivered, 10% of plan sponsors answered “through one-on-one counseling”; 20% said, “via the internet”—more specifically, by answers to online asset-allocation model questions. Additionally, 5% provide webinars, while another 5% offer none of the options. The highest percentage—60% of employers—supply a combination of these options, and 0% of the plan sponsors offer a telephone hotline.

Throughout the session, panelists discussed methods to ensure that plan sponsors can differentiate what is purely education from personalized advice. Garin Danner, human resources (HR) director for The SSI Group LLC, introduced an advice module for his company’s plan, along with Charles Schwab, the plan provider. Schwab would support participants by supplying plan modeling via web, call-in and personalized features. “Every quarter, [Schwab advisers] come into our offices and meet one-on-one with our employees to determine their retirement goals and what they need to do to get there,” Danner said.

Considering that SSI Group, a supplier of cycle management solutions and services for health care providers, is paternalistic toward its participants, Danner said, the firm polls its workers to help ensure its plan’s success and to verify workers are content and satisfied.

Jenny Kiffmeyer, director of educational content for the Retirement Learning Center, commented on the shift in plan sponsors’ attitude toward education, as, she said, more are noticing how beneficial tools can be for participants. However, in light of the new fiduciary rule—effective as of June 9—she recommended that sponsors particularly focus on any practices related to giving advice. “The type of fiduciary is very important, and we’ve got several layers of fiduciaries,” she said, citing how anticipation of the rule’s enactment has motivated some advisers to transform themselves into 3(21), 3(38) and 408(g) investment managers.

To best monitor the work of plan fiduciaries, Kiffmeyer said, employers might implement extra fiduciary liability insurance. Every adviser firm has its own approach to servicing a plan, so when a sponsor embarks on the process of hiring an adviser, she recommends that it ask each candidate to clarify what type of fiduciary services he provides and what his plan checklist entails.

Concluding, Kiffmeyer warned how, especially with much of the fiduciary rule now active, no plan sponsor is safeguarded from litigation. “You become a fiduciary by your actions; it’s what you do, and you’ll be held to that standard,” she said. “A plan sponsor can never fully remove itself from being a fiduciary.”