Advisors: One Size Doesn't Fit All
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.
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