Advisors: One Size Doesn't Fit All

July 3, 2006 ( - Chicago - The need for financial planning and investment advice may be even more critical for smaller plans, where a plan sponsor must often wear many hats - including many that have little to do with making decisions about participants' retirement savings.

Panelists at PLANSPONSOR’sPlan Designs 2006 conference told attendees that in those situations a plan advisor can take on some of the work – but not the responsibility – from the shoulders of the plan sponsor.

Even if a plan only has a small number of participants and sponsors think that they can go directly to the provider for services needed, “there is an inherent conflict-of-interest if you let the providers do it all,” said Gary Josephs, PRP, Managing Partner at Castner Josephs Retirement Group, maintained at the Plan Designs 2006 conference in Chicago last week in a panel entitled “Does Your Plan Need an Advisor?”.

However, all plan advisors are not a fit for all plans, warned Stig Nybo, Senior Vice President, Transamerica Retirement Services. “Not every advisor qualifies. Some don’t have enough 401(k) experience, and certain plans require expertise that may or may not be present.” Nybo said.

Nybo said plan sponsors must make sure that the advisor is a credible resource on the overall retirement plan industry, investments, and on participant communications. Nybo also said that plan sponsors need to make sure that they have etched out the plan’s design so that the advisor can provide the features the plan requires without tacking on features that a small plan has no use for.

The full fee disclosure trend that has slammed large companies has not yet been felt by small companies with the same potency, making it even more important for small companies to demand a full record of fees and services, warned Josephs.
  Even if sponsors think they are getting fair rate, they may not really know what they are paying. Nybo said the best way to remedy that ambiguity is by demanding extensive reporting of fees and services.

Advisors might also take on the role of educating participants about their plans; however, Nybo suggests the time spent with participants be significant enough to make an impact. “You don’t get people educated about their retirement in one hour. You really have to carve time out to educate them, even if that means sometimes making the meetings mandatory,” Nybo said.