Industry News

How to break into the 401(k) plan adviser scene

The following is an edited transcript of a webcast, “Becoming a 401(k) Plan Adviser.” It was moderated by…

The following is an edited transcript of a webcast, “Becoming a 401(k) Plan Adviser.” It was moderated by Greg Crawford, deputy editor at InvestmentNews, and Darla Mercado, a reporter.

InvestmentNews: We have a top-shelf group of panelists today to discuss this important topic. Our panel includes Michael Kim, senior vice president of business and channel development with AssetMark.; Jania Stout, vice president of the Fiduciary Consulting Group at PSA Financial Services Inc.; and Marcia Wagner, founder of The Wagner Law Group.

To begin with, I want to set the stage for everyone and make sure that we are all on the same page. Jania, what is your sense of the marketplace? Tell us a little bit about what you see in this market for retirement services and for financial advisers, or the intersection there.

Ms. Stout: I believe that right now is the perfect time for advisers to get involved. And I know the term “a perfect storm” is probably overused in many a presentation, but I feel that it’s an adequate term to use here. With fee litigation, fee disclosure going on with the regulations from a few years ago, now is a very important time where plan sponsors are looking for help.

I was in the retirement plan business for about 20 years and spent a good part of it on the provider side, and left that about five years ago to form the team that does independent advisory to plan sponsors, because I saw the increased need that plan sponsors had to have somebody sit at the table with them and help them.

So the landscape is very good for advisers that want to get into this business. And to be honest, I wish there were more hours in the day because our team is very busy, just capitalizing on working — we have more companies that want us to go out there and meet with them and help them. And we can’t hire enough people fast enough to try to keep up with the demand.

InvestmentNews: Michael, how do you see the marketplace for advisers?

Mr. Kim: We think that the opportunity is tremendous here. One of the key things that we’ve learned is really anything that we can do to help advisers grow not only helps the advisers, but certainly we benefit from that, as well. And we’re excited to launch Retirement Connections, which is our turnkey 401(k) program. I think this goes to your question, the timing, and Jania used the term “perfect storm” to describe all the things that are coming together.

In many cases, what we’ve learned is that the advisers are already working with business owners today as their wealth management clients. And so anything that they can do to expand that relationship and bring additional value to those business owners, whether it be through a retirement plan or benefits consulting, that’s additional value that they can bring.

And on top of that is the retirement readiness issue. This is a national issue that we’re all going through, and we believe that the financial advisers are perfectly positioned to bring education and guidance and hand-holding to help the participants of the plans meet their retirement objectives better than these individuals trying to do it on their own.

Given all the regulatory changes and the fiduciary discussions, there just seems to be a massive amount of confusion among the plan sponsors. And so I think this is a wonderful opportunity for the financial advisers to work closely with the sponsors and these business owners to bring clarity to these complex and confusing regulatory and fiduciary issues.

All in all, we believe this is a terrific time, as well as a very important time, for the advisers to get into this space.

InvestmentNews: Michael, if I am an adviser and I want to figure out how I can get into the business of advising to 401(k) plans, what are a couple of key ways to go about doing that?

Specifically, is it cold calling or are there other ways to market to get referrals and to get into this business? Do you have a sense of that?

USE YOUR BASE

Mr. Kim: Yes, absolutely. We do a lot of meetings and a lot of regional presentations, and we talk about two very simple and tactical things that we think are going to make a difference. One is, start with your existing clients. Most of the advisers that we work with today, they have existing clients that are business owners. And so let’s start with those clients where you have the relationship, you have the history, they have the confidence in you, and so let’s leverage the relationship that the advisers have today.

And rather than making a product sale, one of the key things that we’ve done is to work closely with the advisers and provide a four-step guideline to help the advisers engage these business owners in a very consultative type of a manner where we help them understand some of the pain points that the plans may be going through today, whether it be fee issues or investment performance issues or plan design issues. And we take the time to identify the issues that the current plan may be facing relative to its peer groups or industry averages. Then we help the advisers prescribe a solution.

The first step is, let’s start with an existing base of business owner clients, and the second step is, let’s help you differentiate yourselves from the rest of that pack. And what we mean by that is, as everybody knows, this is a very crowded marketplace, with hundreds, if not thousands, of other advisers and hundreds of other institutions coming into this space. And so our belief is that if we could help the financial advisers differentiate themselves from the rest of the pack, whether it be through sophisticated investment options that we offer or 338 fiduciary service that is a core part of our program, we believe that that’s an opportunity for the advisers to break into this space.

InvestmentNews: Jania, I am wondering, if I don’t have any business clients right now, how can I find them? Do I look to centers of influence that we hear people talk about in the area of referrals? How can you help people start from scratch?

Ms. Stout: Well, on our team, we actually hired somebody. I have a couple of ideas here.

One, which may not be an option for everybody, but instead of paying for appointments, we hired an individual who all he does is cold calling. And I’ve had this discussion with many advisers who think that cold calling maybe doesn’t work anymore, but we actually have had a lot of success with it. But in order to be successful in cold calling, you actually have to know what you’re calling about.

So I think the first step, too, is to educate yourself about the industry and about the different hot topics that are going on. Another very good influence center is working with [certified public accountants] or auditors. In this case, we tend to work with more midsize to large companies. So we’re working with accountants that audit plans that have over 100 eligible employees.

AUDITOR NETWORK

We pick three auditing firms that we feel that we can have a good relationship with that we believe in so that we can reciprocate. If you go these auditors and you start asking for them to refer you in, they’re going to want to be referred in, as well. So my philosophy is, you don’t want to spread yourself so thin, so pick three firms that you feel comfortable with so if you have a client that says, “Hey, I might need a new auditor,” you give them those three names. That way, the lead sharing can be reciprocated.

So I think auditors are a good one. Also [Employee Retirement Income Security Act] attorneys. I know we have Marcia Wagner on the call here, too. But I work with some local ERISA attorneys in the D.C./Baltimore area. And just expand your network so that you don’t have to do as much cold calling. And then I also am very involved in the Society of Human Resource Management. I’m involved in the board level, so I get involved in local SHRM chapters. And you’ll meet lots of HR directors there who are making decisions on hiring a financial adviser.

If you don’t like cold calling, and I haven’t met many people that do, there are lots of other ways to do some networking to expand your opportunities.

Mr. Kim: Obviously, cold calling, it’s not the easiest thing to do. So what we try to do in working with advisers that are open to making the calls is, we work with them to develop a very targeted calling strategy. And so we help them identify the ideal plans that meet the various different size and the industry and profile dimensions that they’re looking for. We give them not only the list of the plans, but we also share a lot of other public data with them from, say, Form 5500, just so that when they’re actually calling ABC Company, they actually have a lot of intelligence and insight before they even pick up the phone.

InvestmentNews: In our pre-webcast call, one of the things that John mentioned was the idea of educating yourself and really knowing the business.

A key part of that, I think, is around the regulatory environment and regulation. Marcia, where do things stand today, and what are the key issues that advisers need to know when they’re addressing this marketplace?

Ms. Wagner: What you financial adviser/broker/registered rep types really need to know with respect to getting into the retirement system is that it is transforming. The very landscape of the tax-qualified retirement plan system is changing. Now change can be accomplished by legislation, like the Pension Protection Act of 2006, which left a quite sizable footprint in the retirement marketplace.

AGENCY ACTION

But change can also be achieved through agency action. And that really frankly is what is happening in 2012 and 2013. Last year was a really big one for the U.S. Department of Labor, as several of its new rulings went into effect. Covered providers were required to deliver 408(b)(2) fee disclosures to their plan clients for the first time in July of 2012. And plan sponsors and their record keepers began furnishing new participant-level fee disclosures on Aug. 30, 2012.

Now, in addition to launching its final rules, the DOL is moving ahead with proposed rule making. A lot of people are talking about the DOL’s announcement that it will be re-proposing its new “fiduciary” definition, which in 2013 was renamed the Proposal on Conflicts of Interest. These rules were expected to be released in the second half of this year, but this deadline may, and frankly probably, will be missed.

And after issuing tips for fiduciaries regarding the selection of Target Date Funds in early 2013, the DOL is also expected to finalize its current proposals for these investments, as well as default investments.

In addition, the [Internal Revenue Service] and the DOL are expected to further develop their proposals to encourage annuitization of 401(k) account balances as a means of ensuring their retirees don’t run out of money.

Now, it should be noted that the Department of Labor is continuing to work closely with the White House and the White House’s Middle Class Task Force. Given the unprecedented involvement of this White House in the development of DOL regulations under ERISA, it’s very important to bear in mind that these rules are designed to make what the White House thinks are strategic improvements in the 401(k) plan arena. And they are not being issued haphazardly or in isolation of one another.

Moreover, the administration is keen to implement the Supreme Court’s ruling in favor of same-sex marriage and will issue guidance that integrates this concept with rules that protect spouses of plan participants.

In sum, the DOL, IRS and the Obama administration itself are targeting six areas. And they are: fee disclosures to participants, 408(b)(2) disclosure to service providers, a broader “fiduciary” definition, default investments, lifetime-income options and reversing [Defense of Marriage Act] prohibitions.

InvestmentNews: How does one keep up to speed with these changes? I know that coming out of Washington, speed is maybe an oxymoron to some degree, but these folks need to know so that when they are talking to a plan sponsor, they know more than the plan sponsor.

Marcia, would you say the DOL is the key agency?

Ms. Wagner: Well, the real agencies are clearly the DOL for Title I of ERISA, which is fiduciary-responsibility issues. The IRS on plan qualification, and I think more likely the annuitization issues. And the [Pension Benefit Guaranty Corp.], as people care about defined-benefit issues. And of course the SEC. There are others, but those would be the top four.

How do you keep on this? I think it’s important to partner with platform providers at your broker-dealer or your [registered investment adviser] that can help provide tools that will assist you. And I think that it’s very important to know good ERISA counsel, to make sure that your contracts are good, that if you encounter issues of qualification or disqualification of plans, you know how to appropriately rectify them. Or if there are 5500 issues or audited financial issues for 5500s with more than 100 participants, you know what to do.

Having good partnerships with your provider platforms and your broker is important. And having and knowing of ERISA counsel that you can bounce things off of if there are issues is actually quite important, as well.

Who you partner with, I think, will define how successful you are.

InvestmentNews: One more question from the audience. Marcia, when will the Labor Department get the Securities and Exchange Commission to submit its own “fiduciary” definition to come up with an industry standard?

Ms. Wagner: I do think the DOL and the SEC will be harmonizing their regulatory initiatives pursuant to, and as a direct result of, the directive of Dodd-Frank.

And it’s more likely than not we will have some type of notice of proposed rule making in 2014.

InvestmentNews: I just wanted to take a half step back, and Jania, perhaps you could start us here. We were talking about getting into the business if you don’t have a book of business. And one of the things that you mentioned was cold calling and ways not to do cold calling.

But a couple of questions from the audience came out of that bit of our discussion. If you have to make a cold call, how do you get information about a plan if you are going to approach a plan to present your skills, your abilities, your credentials that you want to do this for them?

So two components there. What do you say in a cold call to get the door open before you can even get your foot in the door? And then how do you get information about plans that you think might potentially be clients?

Ms. Stout: Well, we have different people on our team that focus on different segments of the market, so we have a small-market group, we have a midmarket group and a large-market group. And our business development person cold calls in each segment. And what’s interesting is, if you use the word “fiduciary” in the small-plan market as kind of a door opener, a lot of those business owners don’t really even understand what it is. So it really wasn’t getting us anywhere.

So we kind of change our script depending on the market size that we’re going after. But one thing that is common amongst all the levels, whether it’s small, medium or large — and kind of to Marcia’s point, this whole fee disclosure and 408(b)(2), everything about fees, it really brings up the next logical question, which is, if your fees are now disclosed — which they should be because of the fee regulations — are our fees reasonable?

SETTING THE BAR

And as plan sponsors, they need to know this. And the only way to know that — or one of the ways to know that, I should say — is to benchmark their plan. So there are a lot of good fee benchmarking options out there. We happen to use fiduciary benchmarks. So what we do is, we cold call around doing a benchmark.

It’s kind of like, “Well, have you benchmarked your plan in the last few years? And if you haven’t, we’d love to do this for you.” And then we always follow up with an e-mail. We use Salesforce.com as our customer relationship management. And we send out an e-mail afterwards with a link to a sample of the fee benchmarking.

And what’s interesting is, we get a lot of responses via e-mail. But you’ve got to do both. You’ve got to cold call and then follow up with an e-mail with something that can catch their eye, that they can click on. And we use another system called Marketo, which we can actually tell when somebody clicks on one of our links. And so then we know if that prospect actually had enough interest to at least look at what we sent them.

InvestmentNews: Now, when you are cold calling — and I would guess that this depends on the size of the target — are you calling the chief executive? The chief financial officer? A few small employers, I would think, have a person who is completely dedicated to the retirement plan side of things. Whom do you actually call?

Ms. Stout: We’re usually calling on companies 100 employees and above, so at that level, we’re calling on the CFO, director of finance, the controller. We do try to start on the financial side of the house. And then if they don’t have the time or don’t want to, they might push us off to the HR director.

But that’s OK. I always think it’s better to start as high up as you can. A CEO for a larger company, sometimes they’re too removed from this. So it really won’t get you anywhere. Or in larger companies, we call legal counsel. So we’ll call their counsel that’s on staff, because sometimes they will listen to the word “fiduciary” a little bit more than some HR directors will.

InvestmentNews: I wanted to turn to you, Michael, and talk a little bit about some of the practical issues that advisers are likely to face when they are getting into this market. What are some of the common pitfalls or stumbling blocks that you find advisers falling into that you have to help them get around?

Mr. Kim: Just by way of context, our focus is really working with, again, the emerging retirement plan advisers, or the dabblers, if you will. And so this type of discussion in terms of common pitfalls or stumbling blocks is a key part of our engagement model, and really sharing it, educating the advisers about what to watch out for and avoid.

When dealing with small- business owners, one of the key things that we heard from the actual business owners themselves is, they want simplicity. They want the sophisticated solutions, but they want that proverbial Easy Button experience. And they want to know that everything is taken care of. They want to know that the investment options and the administration and the record keeping and all of the other facets of the plan management are being taken care of, but really in an easy manner.

One of the key issues that we share is, how do we help the advisers bring those sophisticated solutions and not confuse the client in a very simple, turnkey solution set?

The other thing that comes up quite a bit, in terms of stumbling blocks or issues for the advisers, is this massive confusion that’s out there among the business owners and plan sponsors, but I think there’s also a high degree of confusion even among advisers. Marcia alluded to this notion of transformation of the regulatory environment that’s governing this industry. And so it’s complicated. And it seems to change on a very regular basis.

And so really that’s where — rather than the advisers’ trying to figure out how to interpret certain regulations or what have you — they should partner with different subject matter experts or third-party partner firms where they are in the business of interpreting these rules.

And so, again, our observation is, keep it simple and also partner with subject matter experts that can help them avoid some of these pitfalls.

InvestmentNews: Marcia, you are one of those subject matter experts, and I’m going to ask you to tell us what you hear most often from that legal and regulatory standpoint. But there is a question from the audience that I’d like to ask you first, and that is, what exactly are legal duties to the employer and the participants as the adviser on a plan? And are there things that we as the advisers should not be doing?

FIDUCIARY STANDARD

Ms. Wagner: Oh my gracious. It depends. The way to answer that question correctly is, first and foremost, are you or are you not a fiduciary to the plan? If you are a fiduciary to the plan within the meaning of ERISA, then you have certain standards of behavior that you have to adhere to. And you need to do so and you need to know how to do so.

Regardless as to whether you’re a fiduciary or not, there are certain protocols you need to implement. And I would say, make sure the plan is tax-qualified. I often see prototype plans that are fill-in-the-blank documents that haven’t been amended for years. You should have an intake process to know that that is probably a disqualified plan and to bring it to counsel.

You should also probably have a basic understanding as to filing of requirements, the 5500. If it has more than 100 people in it, in general, it needs to be audited. If not, there’s a rectification process you need to tell your clients about.

You need to know the basics of when elective deferrals should be made, that it has to be done as soon as practicable, usually before a seven-day time frame has elapsed. You should have a very basic knowledge of the operation of the plan and whether the plan and the Summary Plan Description comport to their terms.

You should make sure you understand the basics of the investment. Is this a 404(c) plan? Does it have a qualified default investment alternative? Should it? What are the fees? Are the fees reasonable? How do you determine they’re reasonable? How do you assist the plan sponsor and getting its appropriate protocol for an administrative or an investment committee? Do you have an investment policy statement? Is it updated? Is it referred back to? Do you have a fee policy statement? Do you have a fiduciary manual? Do you know what to do and how to advise your clients vis-à-vis the various forms of distribution, both following employment and during employment? Are you in service? And those are just a few things off the top of my head.

InvestmentNews: And that is something that people ought to know regardless of whether they are fiduciaries to the plan. This is when you decide to have the relationship with the plan sponsor, correct?

Ms. Wagner: Absolutely. In fact, that is what I said. I think the first question is, are you or are you not a fiduciary, and if you are, you have a higher degree of care you must take, at least under ERISA. Regardless, if you are a fiduciary, it’s a higher level — the bar is heightened.

InvestmentNews: Marcia, is there room for advisers — I guess I mean registered representatives who can’t behave as fiduciaries — is there still room for them within this market? And if so, how can they interact with plan sponsors?

Ms. Wagner: Absolutely there’s room for registered reps or broker-dealers. In fact, I think they will. They are. They were — they are. And they will continue to be, I think, very important, especially in the small marketplace, and maybe even up to the midsize marketplace, for pension plans.

How do they interact? They interact as prudently and as reasonably practicable. Understanding the subject in general under the SEC rules to the suitability standard and of the fiduciary standard. And making sure the disclosures to that effect are adequate. So there’s guesswork. So they’re fiduciaries. They should be looking at the contracts and making sure that is very, very clear.

And they need to be extraordinarily clear that they don’t step over the line and become what’s known as a functional fiduciary under ERISA. So they should know the limitations, etc. They should partner with platform providers and counsel that have answers to these distinctions and can lead them in the appropriate manner.

But absolutely, people that work for and with and on behalf of wirehouses, broker-dealers, can do and will continue to have, I think, a very significant role in the market for 401(k), for other types of defined-contribution, for defined-benefit and of course for [individual retirement account] rollovers.

Mr. Kim: I think it’s a huge marketplace where the advisers are either registered representatives of a broker-dealer or investment adviser representatives of, say, the broker-dealer’s corporate RIA.

To Marcia’s point, we see that area as a huge opportunity, and that’s really sort of the core profile of the advisers that we support.

One of the key challenges that this group faces that’s different than, say, an RIA is that there is this huge gray area in terms of what is permissible and what is not permissible. And one of the key findings for us during our research as we were developing our product was how many advisers were going after the 401(k) business to get the IRA rollover business, and Marcia can certainly speak to this a lot better than any one of us can here. But there are certain prohibited transactions that take place if that adviser is serving as a functional fiduciary or an explicit fiduciary.

InvestmentNews: I guess this question can go to either Michael or Marcia, but is there a way for a functional fiduciary or even an outright fiduciary to handle this matter of rollovers?

Ms. Wagner: That’s a very complex area, but in general, if a person is a functional fiduciary to a pension plan, then he needs to be extraordinarily careful and not become a fiduciary when rendering information to the plan participant who is leaving and wants to roll over his assets.

So this particular financial adviser needs to be extraordinarily careful to render information about the availability, not the advisability, of rollovers. So general educational information. And this particular financial adviser is going to have to understand quite clearly when talking about rollovers to the plan participant the difference between investment education and investment advice. But there are clearly demarcations that can be made. There are practicalities as to how this can be accomplished. And it’s doable. You just have to partner with people that know how to do it and can advise you plainly.

InvestmentNews: Jania, what is your perspective on the question of stumbling blocks or the common resistance that you get? There are practical issues that the audience may run into over and over again. What are some ways that they can avoid those types of things?

TERMINOLOGY TROUBLE

Ms. Stout: Some of the stumbling blocks are really about this whole fiduciary topic. But when you’re calling on plan sponsors, especially in the smaller end of the market, many of them don’t even understand what relationship they already have. I think Chatham Partners actually did a study last year that showed of the plan sponsors they surveyed, when they asked them if the adviser/broker was a fiduciary on their plan, many didn’t know. And if they did know, they weren’t really sure what type of fiduciary.

The people that advisers are calling on to try to get that business, there’s still a lot of gray area. I mean, those are the stumbling blocks, so the more that they can educate themselves, the better. And I think that there are still a lot of plans out there that don’t understand fee disclosure. And maybe the providers are providing the participant fee disclosure, but I’m still seeing a lot of plans that weren’t given the 408(b)(2) notice, which is the notice that goes to the plan sponsor that if they had a broker that maybe wasn’t disclosing their fees.

Again, those big topics, actually how Marcia laid out the six bullet points, I mean, those are spot-on. If you want to get into this business, I think if you can look at those six and try to understand each of them, it will make your job a lot easier.

InvestmentNews: Speaking of the issue of fees, there have been several questions from our audience regarding the fees that advisers can charge and how do you come up with a fee structure for yourself.

Jania, do you handle that with some of the folks you work with?

Ms. Stout: Yes. Actually, that’s a really good question. We benchmark plans out there. Today we’ve got some great benchmarking companies to see if the providers are charging a reasonable fee. So then plan sponsors, they need to know also, how is your fee? And a lot of advisers are trying to figure out what is a reasonable fee for us to charge.

I think you need to break down what type of services you’re going to provide. For instance, our team, we do a lot on education. We happen to be a specialist in this area. We’re a 12-person team — we do all of the basic investment monitoring and the investment policy statement and all of those things. But we also do a ton on employee education.

And so we should be paid for the work that we do. We have put together a fee structure based on asset level. Our fee is a flat fee, so we don’t do a basis point. We put a flat fee in at time of hire. And then we write into our contract that in two years, we actually recalculate that fee and go back out to the client and give them a stewardship report which basically breaks down everything we’ve done for them, whether it’s compliance, investments, education, and then we recalculate based on the new asset total after two years and ask for a fee increase, or I guess in theory, it could be a fee decrease. But knock on wood, it’s always been an increase.

That way, because some of the feedback we as an industry, as advisers, you know, when you go in with a flat fee, that’s great, but what happens when you do all this work and a client acquires another business and it’s doubled in size? An uncomfortable discussion is, how do you raise your fee? So if you build it in from the beginning, then that way, it’s not uncomfortable. It’s expected and you just go back in in two years. I know this discussion is about how to become a 401(k) adviser, and those of you who are listening that decide to go into this business, two years from now, after you’ve gotten a few clients, one thing that’s very important is, you need to make sure you tell your client everything you’ve done for them.

And that’s probably in any business you’re in. So creating a stewardship report will be key to retention.

InvestmentNews: Michael, do you face this when you’re working with advisers, namely, how much you should charge a potential client?

Mr. Kim: Absolutely. The fee discussion, especially in this industry — there is a lot of commoditization in this industry, and so if the relationship isn’t managed properly, the discussion that the adviser will have with the plan sponsor or a prospective client will automatically pivot into a fee discussion.

And so, you know, from our standpoint, we certainly do all the things that Jania mentioned as well in terms of benchmarking and comparison to different peer groups and industry averages. And I think that’s a core part.

At the same time, we look at it from an overall value equation. And what we try to do really in working closely with our advisers is to help them bring maximum value to the relationship. And so what we mean by that is innovative, sophisticated managed-account options, or really low-cost ETF options. We talked about our fiduciary services. We believe that the fee is always going to be an issue, but to the extent that the adviser can really differentiate themselves by bringing a very unique and innovative suite of products and solutions, and competitively price, we believe that that’s going to really help that adviser enjoy a lot of success in this industry.

InvestmentNews: We have had a lot of discussion around the fiduciary issue, and we have gotten a lot of questions from our audience, so clearly, this is an area where advisers are looking for some guidance. Marcia, you identified six key areas, but do you have practical guidance in terms of what advisers need to know and how to get the information they need?

Obviously, partnering with an ERISA attorney who is well-versed on these subjects is great advice, but what other pointers could you offer an adviser who is starting out and trying to build a base of knowledge?

“EMINENTLY DOABLE’

Ms. Wagner: Well, I would say if you’re just starting out, your biggest enemy is fear. Don’t be afraid. This is not rocket science. It’s eminently doable. It’s eminently learnable. Be brave. Partner with good people. Understand who your target audience is. Figure out their needs and create your niche.

The only real advice anyone can give to a small-business owner, which is what financial advisers are in the end, is to not be afraid. Having started my own business, I know of what I speak. The worst thing that you can do is think that you can’t learn it, you can’t do it. So keep your head held high, and don’t fear this.

The jargon that we ERISA folks use is just jargon. You can figure it out. If you need to, create a lexicon of decoding. But this is eminently doable with good faith and hard work, as is practically anything in this world. That is my advice.

FOUR STEPS

InvestmentNews: Michael, you mentioned that you guys have a four-step engagement process, and I wondered if you could walk us through that and give advisers on the call an idea of how you work with clients in approaching this business?

Mr. Kim: Sure, absolutely. First, I want to say, I’m inspired by Marcia’s comments and advice there. I think those are great, great thoughts.

I think the other side of the equation in terms of helping advisers really enjoy success in this industry is to have a disciplined process to engage these opportunities. And certainly, cold calling, as we talked about earlier today — I think that’s one way of engaging. Our view is that to the extent that we can help the advisers really play that consultative role in engaging the plan sponsors, we believe that’s huge value.

And so what we mean by that in plain English is, No. 1, we help the advisers find an evaluate the opportunity. So whether it’s an existing business owner client that they have today or a prospective client, we have access to different databases that can help them get the intelligence and the insights before they even pick up a call or have a first dialogue with that plan sponsor.

Second is to help the adviser benchmark and compare how that plan is doing today with the peer groups and industry averages. Again, we talked a lot about the fee implications today. Again, let’s help the adviser understand what the issues are for that particular plan before they even set foot into that meeting. So that’s the second step.

And the third step is comparing the current plan scenario to a proposed solution from Genworth.

And then the fourth is a comprehensive proposal that outlines everything in writing, including our fiduciary services. Of course all the fees, and really positioning the adviser as the relationship owner for that opportunity.

So identify, benchmark, compare and propose is a proven four-step process. And what’s really neat is for the advisers to really embrace and adopt this as their framework of engaging plan sponsors, and we’ve seen a lot of success. So we’re excited to share this process with the rest of our adviser base.

InvestmentNews: We have one other question from the audience that, again, is a very practical question. And I will ask you, Jania. If a company wants to hire someone to be a retirement plan adviser, what qualifications should such a professional have?

Ms. Stout: Oh, that’s a really good question. We’re a growing team, and I’m always looking for somebody to join our team. And it’s hard.

We’ve looked at a couple different areas. You can look at the platform providers, so the wholesalers that are out there that are calling on your firms trying to sell a product. At least they have some background in the 401(k) industry. They may not necessarily be as good at opening doors or cold calling, but they at least have some industry speak, so there won’t be that uphill battle of just teaching them what a 401(k) is.

But I also think that hiring an adviser that maybe has been in the business for a few years and doesn’t necessarily want to do just personal wealth management, maybe they like the corporate B2B side of the business.

And I know that we’ve talked a lot about a lot of scary things with fiduciary and all these things that you have to learn, but I also just want to mention that there’s a huge need for advisers in this business, especially on the participant education side. And we are seeing a shift, I think, because of the way the markets have gone. We’ve now seen plan sponsors realize that they need to bring people in to come talk to their participants. And so back when the markets were, you know, back before 2008, I think people didn’t think education was important. I do see a shift changing right now and I think education is going to become more important than ever.

So having somebody that has an educational background. So to your question, I think if it’s not an adviser or platform person, maybe a teacher. Because somebody that feels comfortable with speaking to groups of people will be beneficial to put on your team.