If you talk to any marketing consultant, one of the top things they bring up is having a value proposition. This is commonly known as your "elevator pitch." Basically, if you're at a cocktail party, how do you describe what you do to people? A lot of these pitches highlight the particular solution you bring to people.
Retirement plan advisers' most frequent value proposition centers around the investment review process. But there's a big issue with that: It isn't really what plan sponsors value or why they hire an adviser.
According to a recent
poll of 1,106 plan sponsors conducted by Fidelity Investments, the top reasons plan sponsors hire a retirement plan adviser (and their relative importance) are:
• Concerned about fiduciary duties (37%).
• Company growth has led to a more complicated plan (27%).
• Need help with plan investments (27%).
• Want a better understanding of how well the plan is working for employees (7%).
The most valued adviser services are:
• Retirement plan expertise (34%).
• Ability to understand the needs of the plan sponsor's company and employees (18%).
• Investment expertise (17%).
• Help the plan sponsor comply with fiduciary requirements (15%).
It's easy to see what marks a valued retirement plan adviser: Someone (or a team) viewed as an expert, who can help with fiduciary responsibilities and work with the plan sponsor to construct a retirement plan that meets the needs, and measures the progress of, the employees. A value proposition that doesn't hit a combination of those points is likely off the mark.
What's not at the top of those concerns or valued services? Investment expertise. I believe plan sponsors see having a rigorous investment review process as table stakes. Our industry has put a heavy focus on it with plan sponsors, so many employers assume their retirement plan adviser will be competent in this area.
While investment expertise is still valued, it's not the end-all-be-all it once was. The industry is moving toward educating plan sponsors on their fiduciary duties and establishing programs to help employees become more prepared for retirement, and measuring that change.
Concerns about fiduciary responsibilities are driving this change. Many of the retirement-plan news stories that get shared in human-resources circles have focused on 401(k) lawsuits, which have
targeted plan sponsors in increasing numbers. That heightened awareness has driven many plan sponsors to seek out additional education on what their responsibilities are and how they can conduct them correctly.
Additionally, plan sponsors know their employees are behind on retirement preparedness. They are seeking out retirement plan advisers who can help them improve their employees' retirement preparations, beyond automatic enrollment — hence the uptick in advisers
implementing financial wellness programs and building out specific education plans with client goals attached.
Aaron Pottichen is the retirement services president at CLS Partners, an Austin, Texas-based financial advisory firm.
