How do you know if you are getting everything out of your plan advisor? At a TPSU program held at Stonehill College, the HR manager at a small RI manufacturer raised that question and came up with some very practical solutions.
The first step in any learning process is to admit that you don’t know what you don’t know. Many HR and finance professionals are thrown into the job of managing their company’s defined contribution (DC) plan like a 401k without adequate training or education – and there’s usually not anyone within the company to help. Though experts can provide assistance, learning from peers is the preferred method of adults who are sometimes skeptical of experts.
The TPSU program opened the RI HR manager’s eyes to what he should be expecting from his plan advisor. Though he learned a lot about what to expect from a good plan advisor at the Stonehill TPSU program lead by advisor Jim Sampson who has over 100 DC clients and $300 million in DC asset under management, the HR manager is going to ask his colleagues through a local SHRM online forum to see what others like him are doing to best leverage their advisor.
Like with CPA auditors, not all financial advisors specialize in helping employers manage their DC plan. In fact, only 1% are considered elite like TPSU lecturer Jim Sampson and only 10% are qualified, leaving many plan sponsors unknowingly using an advisor not competent or equipped to help them manage and maximize their DC plan. One result of the DOL’s pending conflict of interest rule will be to ferret out many inexperienced plan advisors not willing to act as a fiduciary. But just because an advisor is willing to act as a fiduciary does not mean they can adequately help employers run their DC plan.
How can a plan sponsor find out if their plan advisor is competent? The best way is to conduct an advisor RFP which seems daunting because the current advisor cannot help, but there are unbiased third party services available. Get the advisor part right and everything else becomes easier – get it wrong and it’s likely you will waste time and money while putting the company and employees in jeopardy.
