I know what youre thinking, It took a lot of time to find this person. He/she better be the right fit! The reality is that monitoring your service providers is an essential component to fulfilling your fiduciary duty as an employer. The tangible tasks that you must take on, such as, reviewing performance, monitoring fees charged, and educating participants, are easily executed. The confusion lies in the intangibles, and they need to be considered too. How can you tell if your adviser is the right fit?
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In my work overseeing countless adviser RFPs, Ive found its easiest to breakdown this loaded question into five targeted questions that Ive listed below. The questions cover experience, retirement readiness, vendor due diligence, fee transparency and committee relations.
Does your adviser work with other retirement plans similar in the size and the complexity of your plan?
Its important to ensure your adviser possesses the professional knowledge to work with your particular plan and committee, not with retirement plans in general. Similar to a brain or knee surgeon, advisers have specialties, and you need to make sure that you found the right specialist. If your plan is $100 million and your adviser works most often with plans under $10 million, they may lack the resources to service your plan appropriately.
Has your adviser made a meaningful impact on your employees retirement readiness?
When answering this question make sure that you focus on the impact your adviser has had on your employees, not the actions he or she has taken. Countless advisers conduct participant education; you need an adviser that moves the needle. In addition to inquiring with your employees, I encourage you to track participation rates and look to see if they have increased over the past three years. You should also review your average deferral percentage as well as the number of employees that are maximizing the company match now versus when you hired the adviser. Your adviser and recordkeeper will have access to this information.
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Has your adviser conducted a formal RFP for your recordkeeper in the last five years?
Your adviser must conduct a formal RFP for any new recordkeeper hire or replacement with no exceptions. Recently, larger plans, in particular, have started to benchmark annually and then complete a formal RFP every three to five years. It is also becoming more common for advisers to recommend that their clients RFP their advisory role every three to five years so that the committee can properly document their due diligence. My point is that RFPs and benchmarking are the industry standard, and your adviser must be executing or recommending them as well.
Does your adviser offer an easy to understand and transparent fee model?
To fulfill your fiduciary duty, you must assess that the fees charged to a plan are reasonable for the services provided. In order to evaluate if a fee is reasonable, you need to be able to understand the fee model easily. If your adviser has not helped you to understand his or her fee structure or the structure is just too confusing, your adviser isnt the right fit and is also a liability to your committee.
Is your adviser still the right fit for your committee?
Committee members, goals, and needs, change over time, as do advisory teams and resources. An adviser and a committee that were a perfect fit five years ago, could easily not be perfect today. I promise you that the culture of your committee will change with time. It is your duty to assess where you are today and to ask yourself if your selected adviser is still standing next to you. Sometimes you cant even put your finger on it its not the service or the fees; its a question of fit, and its okay. In the end, always keep in mind that its fair to say, Its not you; its us and our committee would like to reevaluate what else is out there. Your participants and your committee deserve the best fit.
Ariana Amplo is the co-founder of
