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According to Fidelity, 91% of advisors who offer retirement plans are merely “accommodating” the business as part of their other wealth management services, rather than pursuing retirement plan work and developing an expertise in it. [1] That is a frightening statistic, especially when, 92% of Americans fall short on retirement savings,[2] 60% of households have less than $25,000 in total savings and investment,[3] and the company’s retirement plan is the primary accumulation vehicle for most Americans. If there is a need for Professional Retirement Plan Advisors, the time is now.
BUSINESS CASE FOR SPECIALISTS
As a plan sponsor, why should you work with a Professional Retirement Plan Advisor?
Retirement Readiness
Get your employees on-track to retire
One of the primary reasons plan sponsors should work with Professional Retirement Plan Advisors is to prepare their workforce for retirement. Because –the point of a company retirement plan is to provide employees with a method to retire, is it not? Retirement plan advisors will take the initiative to discuss with you, and the plan participants, the state of their retirement preparedness.
Benchmarking and Participant Reporting
More than nine in ten clients (92%) retirement plan professionals provide the plan participants with an indicator of their retirement readiness.[4]
Advice and Actions
Following the receipt of aggregated plan-level reports, 87% of plan sponsors of dedicated retirement plan professionals take action to enhance outcomes after measuring the retirement readiness of their participants.
Results
83% of clients have seen average employee deferral rates improve over the last two years.
Nearly 75% of plans that partner with a Professional Retirement Plan Advisor have experienced participant deferral increases of 4% or more and 1/3 of plan sponsors reported an increase of 6% or more!
60% of plans have implemented automatic enrollment of new employees and as many have changed the employer contribution formula, in the last two years.
Three out of four plan sponsors working with “Professional Retirement Plan Advisors, observe that 50% or more of their participants are on track to achieve a successful retirement.”
Where do you find a Professional Retirement Plan Advisor?
According to FINRA, there are approximately 600,000 registered representatives in the financial services industry.[5] Of those advisors, Cerulli estimates that there are about “13,000 advisors, who receive more than 50 percent of their compensation from DC,”[6] and the recent ICI survey indicates that only 6 percent of RIAs are retirement plan specialists.[7] So, we ask - how do you find a Professional Retirement Plan Advisor?
Finding a professional retirement plan advisor
Step 1: Request for Proposal
As you are going through your RFP process, you should be aware that advisors working exclusively with retirement plans should demonstrate expertise in all areas of retirement plans. This means from implementing the fiduciary process with the plan sponsor, to delivering guidance to participants within the plan.[8] In one study, over 65% of the plan sponsors conducted a formal RFP search for their professional advisor.[9] For a sample RFP questionnaire, take a look at the Retirement Advisor Council Advisor Search RFP Request template.
Step 2: Host a Selection Meeting
The invited Professional Retirement Plan Advisors should come prepared with a presentation, printed (or digital) brochures, and additional written material that speaks of their fiduciary process, retirement readiness approach, and how they would partner with your company. If the advisor team does not have professional materials - that might be a sign they are not committed to the business nor qualified experts.
During the meeting, we suggest that you ask questions. This team of professionals is going to partner with you in an on-going effort. Some sample questions could include:
Is retirement plan consulting an exclusive or primary focus of your business?
Could you provide a scope of services document?
Can you provide me with a written fiduciary services contract?
Could we speak with three of your existing retirement plan clients?
Step 3: Select your Professional Retirement Plan Advisor
Congratulations! You’ve taken the bold step to assess, evaluate, and select a Professional Retirement Plan Advisor. Now, let’s get your plan in tip-top shape! Right now, many “plan sponsors and their advisors appear to be dedicating…more resources to plan design adjustments that boost participation levels and increase contribution levels. Automatic enrollment at higher deferral rates coupled with aggressive automatic deferral increases have become commonplace.”[10] So, the next step is plan evaluation (both plan and participant level). Your retirement plan advisor should discuss plan risk, retirement readiness statistics, and outline a process to improve the overall plan.
Retirement readiness is a journey and it starts with engaged plan sponsors, professional retirement plan advisors, and the desire to help plan participants reach retirement readiness!
If retirement plan risk and participant unpreparedness keeps you up at night – isn’t it time to speak with a professional? The assistance and reassurances that a professional retirement plan advisor provides, can ease your plan management burden and give you peace of mind.
Thanks for reading and Happy Marketing!
About 401(k) Marketing
We believe the retirement plan industry can do better. Our clients are the best professional retirement plan advisors and TPAs in the business. They care deeply about saving America’s retirement future. We are proud to share their voices through industry writings, professionally-designed marketing materials (including websites), and expert content collateral. We lend support by promoting businesses through ongoing awareness campaigns. www.401k-marketing.com
About Retirement Plan Marketing
Retirement Plan Marketing is a product of 401(k) Marketing and is an ongoing turnkey marketing solution for retirement plan advisors. It is an easy-to-follow, consistent marketing program designed to get you noticed in your community and generate new retirement plan sales. When you deliver relevant plan sponsor content, you add value to your conversations and can work your way up to become known as the “go-to” retirement plan advisory office. www.retirementplanmarketinginabox.com
Sources
[1] DEMASTERS, Karen. "Retirement Plan Advice Offers Opportunities.” FA Magazine, 20 Mar. 2014. http://www.fa-mag.com/news/retirement-plan-advice-offers-opportunities-17325.html
[2] Rhee, Nari, PhD. "The Retirement Savings Crisis (2013): Is It Worse Than We Think?" National Institute on Retirement Security. Nari Rhee, PhD, June 2013.
[3] EBRI.org, March 2012. No. 369. The 2012 Retirement Confidence Survey: Job Insecurity, Debt Weigh on Retirement Confidence, Savings. http://www.ebri.org/pdf/surveys/rcs/2012/EBRI_IB_03-2012_No369_RCS.pdf
[4] "The Value of a Professional Retirement Plan Advisor." Professional Development. EACH Enterprise, LLC, 2014. http://www.gatewayadvisory.com/sites/all/files/gateway/Value%20of%20the%20Professional%20Retirement%20Plan%20Advisor%202014.pdf
[5]FINRA. Broker Check. http://www.finra.org/investors/brokercheck-faq
[6] Satter, Marlene. "Advisor share of DC assets growing." BenefitsPro. October 10, 2014. http://www.benefitspro.com/2014/10/10/advisor-share-of-dc-assets-growing
[7] Investment Company Institute, “Retirement Assets Total $21.9 Trillion in Third Quarter 2013,” Jan. 10, 2014, http://www.ici.org/research/stats/retirement/ci.ret_13_q3.print
[8] EACH Enterprise, LLC. The Value of a Professional Retirement Plan Advisor. 2014. http://www.gatewayadvisory.com/sites/all/files/gateway/Value%20of%20the%20Professional%20Retirement%20Plan%20Advisor%202014.pdf
[9] EACH Enterprise, LLC. The Value of a Professional Retirement Plan Advisor. 2014. http://www.gatewayadvisory.com/sites/all/files/gateway/Value%20of%20the%20Professional%20Retirement%20Plan%20Advisor%202014.pdf
[10] EACH Enterprise, LLC. The Value of a Professional Retirement Plan Advisor. 2014. http://www.gatewayadvisory.com/sites/all/files/gateway/Value%20of%20the%20Professional%20Retirement%20Plan%20Advisor%202014.pdf