If electronic methods have robbed the search process of some of its personal feel, the search for an advisor nonetheless requires a good deal of research – a process made easier by databases of advisors and providers, claims Tony Franchimone, PRP, Managing Partner, DFI Advisors, National Retirement Partners. He added that by using databases to narrow down the list of providers, plan sponsors create a process that can be documented, fulfilling due diligence requirements.
Fellow panelist Paul Powell, PRP, SVP at CapSouth Partners urged plan sponsors to map out goals and objectives for the plan before going to advisors. He likened the tendency of some plan sponsors to go in blindly to getting into a taxi cab and saying drive, not giving an address – and then being surprised when they wind up in a place they didn’t desire. Each year, the plan sponsors need to see if their established goals have been met, and perhaps shift those goals around, if appropriate, he added.
Picking the Committee
When a company chooses a committee to oversee the provider search process and come up with objectives for the plan, they should choose people “on a sophisticated level,” said Fred Reish, Managing Director, Reish Luftman Reicher & Cohen. Reish said that simply appointing people to these committees that have no management experience and no sense of financial investments is not prudent.
Reish said that if a company’s fiduciary decisions are in question in court, plaintiffs’ lawyers might zero in on the fact that a committee appointee has no credentials or apparent reason to be on the committee. He warned to steer clear of appointing people in the company to the committee to have a representation from the rank-and-file.
Reish added that large companies should also have a general counsel to speak on legal implications of decisions, but the counsel should not be on the committee, just in the room.
Putting together a committee comprised of employees savvy enough to hold up to an ERISA court’s standards is not an easy task for a small company, where there are only a few top level managers that would pass muster, admitted Reish.