Focus less on fluff, more on stuff

A veteran of the retirement plan space has started a new company that will offer registered investment advisory services, along with ERISA fiduciary services as well. The website looks nice, the fees look reasonable (20 basis points), and the advisor has an advisory board of names you know in the industry even those board members have no pay and have no say. It all looks nice for the plan sponsors so interested in hiring such a professional with over 25 years in the industry.

It all looks good, just too good. Well usually, if it looks too good, it often is. So if a plan sponsor would Google this advisor’s name, they would find some un-pleasantries about this advisor, namely this advisor was accused of many of the same issues regarding excessive fees that he is trying now to protect plan sponsors from.  Even an article denoting his return, mentioned this issue. Sort of like the fox guarding the henhouse. However, I believe in the power of redemption and if this advisor has decided to turn into a good retirement plan industry citizen, I’m all for it.

The point really here is that as a financial advisor and also working with other retirement plan providers, you should concentrate less on the fluff and more on the stuff.  Just because something about retirement plans is nicely done by an advisor, a third party administrator, or even an ERISA attorney, doesn’t mean that they actually have the experience or skill set to accomplish the services they are promising to plan sponsors.

So as a retirement plan provider or referring one to your plan sponsor clients, concentrate on those that are competent, rather than those who have flashy websites, or vague promises that their TPA services integrate with payroll.  Maybe a daily valued TPA doesn’t have a participant website that is eye candy, but maybe their fees are reasonable and their service is incomparable.

There is nothing wrong with nice websites and fancy brochures, it’s just that you have to have the background to fit the claims and services touted in your marketing materials as well as making sure that the providers you have aligned with can actually do the job that they have promised to do.

Too often, plan sponsors and retirement plan providers get burned by buying the “fluff”, hiring a provider just based on the materials and claims without digging to find out if the provider is any good. We all know too well  (for some of us, too well) of the fiduciary who was a great advocate for plan sponsors and participants because he said he was, but this fiduciary had no clothes or is accused of stealing some clothes. That being said, you have to have the background to support your claims, you have to make sure that the providers your work with are competent and aren’t known for being a lousy plan provider.

Sizzle is nice; just make sure you have the steak to go with it.

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