Is your 401k or 403b plan advisor getting stale? That’s a question that a 100 person manufacturing company plan sponsor asked at a TPSU program held at LaSalle University. Employee tenure averages 14 years and the advisor has been with the plan for over 20 years.
The plan sponsor is concerned that their advisor is not reaching employees educating and advising them to improve outcomes in their 401k plan. She finds that employees are not engaged or interactive at enrollment meetings. After hearing from peers at TPSU, she thinks that it may be time to find a new advisor.
Which leads to serious questions that many plan sponsors can struggle with. Even if you know it might be time to move on, how do you find a new advisor? The most common method is through an RFP (request for proposal) according to the 2017 TPSU/NAPA Plan Sponsor Survey but that can be a daunting and difficult process. The same survey showed that industry education and training is important to 91% of plan sponsors when hiring a new advisor.
(TRAU, a sister company of TPSU and 401kTV, certifies and trains retirement plan advisor through a collaboration with UCLA Anderson – a directory of C(k)P (Certified 401(k) Professionals who must have minimal experience requirements to qualify can be found here.)
But plan sponsors might consider deploying a simple, common sense standard to evaluate their current or new advisor called the ELI rating which stands for:
Ethics is a black and white standard under which there can be no exceptions. Beyond lying, cheating or stealing, has the advisor in the last 10 years had criminal or regulatory issues?
Leadership means that the advisor is bringing plan sponsors new ideas without prompting – proactive not reactive.
The third leg to the ELI rating is impact. If the ideas and the actions of the advisor do not have an impact on the company’s retirement plan and improves the health of workers’ retirement outcomes then what’s the point?
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