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Why Plan Sponsors are embracing the due diligence process to find the best advisory firm for their plan and their employees
10 Topics to Explore When Considering a New Plan Advisory Firm
A high quality retirement plan advisory firm can offer outstanding investment and retirement plan expertise.
Plan Sponsors are looking for more from their advisors than ever before.
Many want a more knowledgeable and specialized retirement advisor.
Companies see the value in engaging their employee education program and need firms with dedicated, qualified educators.
Companies that use a
qualified Retirement Plan
Advisory Firm can
experience greater
satisfaction with their plans
through improved plan
performance, a better
understanding of their
fiduciary responsibilities,
and better support for
participants.
All advisors are not fiduciaries.In the last 7 years, fiduciary concerns have nearly tripled. Find out if your advisor is ready to take on the co-fiduciary role. Often, we will find some investment plan committee members who think their plan vendors will automatically assume the company's fiduciary liability. Beware, do not assume that your broker is a fiduciary, because in many cases they are not.
If your advisor is qualified to serve as a co-fiduciary, get it in writing.
Advisors are either specialists or generalists.According to the Retirement Advisor Council, 75% of plans between $5 million to $500 million do not use an advisor who specializes in retirement plans. Some of these plans do not have an advisor at all and the rest are using generalists. A retirement plan specialist can round out the needs of the investment committee. They can provide the committee with ideas on Best Practices, can alert the committee to trends and ideas, and even offer influence with your plan vendor for handling special requests or pricing that you would like to have.
We have found that regardless of plan size, the committee members value the retirement expertise that a specialist can bring to the table and increasingly demand these skills.
Learn where potential conflicts of
interest lie. Does the advisor get special
bonuses based on how much business they place
with certain firms or funds? Does the firm have
preferred vendors because they receive
additional compensation? Does the firm have a
policy on receiving gifts of any kind from the
vendors and companies they do business with?
Ask questions. Know what to ask.
Make sure all fees are reasonable--
including the plan advisor's fees. If the
advisors' fees are taken from plan assets, you
need to be sure that the fees are reasonable in
context of the services provided. Surveys can be
a good starting point. However, there is no
substitute for a periodic structured process to
determine the best price for the best services.
Just as you do a periodic review of your plan
vendor's fees, it is a Best Practice to
benchmark your advisor’s services and fees
every three to five years.
Understand how the plan pays fees.New, more stringent retirement plan fee
disclosure rules make attention to this detail
mandatory.
Advisors may charge a percentage of assets or a
flat fee through an ERISA expense budget or as
a separate invoice for service.
Question advisory firms about capacity
and resources. Your advisor may work for a
firm with thousands of employees. This doesn't
mean the firm has the professionals your plan
requires. Ask how many professionals are
exclusively Retirement Plan Specialists for plans
of your size. How many are dedicated to your
plan?
It is important to take a close look at the actual
team (and their credentials) that will be
servicing your plan. Is the advisory firm
growing and how will they manage that growth?
Find out if your advisor has influence.Top advisors have significant influence with
service vendors and may help you get the best
pricing and service for your plan.
Advisory firms that are growing can often help
the plan sponsor when negotiating fees and
services on their behalf.
Choose candidates who talk to you.Some plan advisors may talk at you or over your
head. The world's most knowledgeable advisor
should still communicate to you in plain English.
The people who serve on investment committees
are not necessarily professionals with an
expertise in investments.
The advisors you rely on need to be able to
communicate complex financial matters in
understandable terms to help you make
informed decisions about the plan.
Check their insurance.A detailed review of the advisors' fiduciary
liability insurance and Errors and Omissions
coverage is critical in determining their
suitability for your plan and your company.
Be weary of any advisor who does not readily
offer proof of insurance.
Check all candidates' background,
professional credentials and experience.A thorough review includes a background check
on the advisors who will work on your plan. That
includes getting details on their credentials,
experience, ADV filing, bankruptcies, criminal
charges, liens and more.
Know who you are working with.
Source:
http://www.401khelpcenter.com/401k/brambley_advisor_due_diligence.html#.Vx_fYGMbNIE
Grinkmeyer Leonard Financial would welcome the opportunity to review your retirement plan and discuss ways we can offer a benefit to your company and your employees.
Grinkmeyer Leonard FinancialToll-Free: 866.695.5162 / Office 205.970.9088
Birmingham: 1950 Stonegate Drive / Suite 275 / Birmingham, AL 35242
www.grinkmeyerleonard.com
Jamie KertisStrategic Retirement Plan Specialist
__________________________
Toll-Free: 866.695.5162
www.grinkmeyerleonard.com
Follow my blog:
http://401kbizresource.grinkmeyerleonard.com
Trent Grinkmeyer, Valerie Leonard, Jamie Kertis and Caleb Bagwell are Registered
Representatives and Investment Adviser Representatives with/and offer securities and
advisory services through Commonwealth Financial Network, Member FINRA/SIPC, a
Registered Investment Adviser. Fixed insurance products and services offered through
Grinkmeyer Leonard Financial, Grinkmeyer Leonard Benefits Group, or CES Insurance
Agency. Grinkmeyer Leonard Benefits Group and their leadership consulting services
are separate and unrelated to Commonwealth. This communication is not intended to
replace the advice of a qualified tax advisor or attorney.
