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“Advisor at the Elbow” is also Proactive

There are a lot of ways to describe how a financial advisor best serves companies that sponsor a defined contribution (DC) plan like a 401k or 403b but it boils down to two basic themes: be there when needed but also be proactive bringing new ideas. TPSU Adjunct Lecturer for the Memphis Education Zone Walter Grant describes a concept he calls “Advisor@Elbow” (advisor at the elbow).

An 18-year DC plan veteran with 75 clients that represent $600 million of plan assets based in Memphis, Walter’s team wants to be within arm’s reach of the client for anything retirement related from compliance issues to investment monitoring. HR and finance people running their company’s DC plan have many jobs receiving little or no formal training. Even worse, when the previous administrator leaves the company, there may not be a good paper trail. Which is where a good plan advisor comes in who knows the plan, the company and their employees and maintains copies of all needed documents sometimes in a virtual vault.

But beyond being responsive, the best plan advisors are proactive bringing new ideas to their clients. Walter and his team are big proponents of the behavioral finance (BeFi) techniques pioneered by UCLA professor Shlomo Benartzi in his book “Save More Tomorrow” which were highlighted at the TPSU program held at the University of Memphis conducted by Grant. When it comes to helping employees better prepare for retirement, most plan sponsors don’t think beyond education. And while the BeFi theories made famous by Professor Benartzi, which inspired the 2006 Pension Protection Act and the Ideal Plan taught at all TPSU programs, is well known to industry professionals, it is new to many plan sponsors.

Keeping it simple, Grant starts with the 90-10-90 concept which equates to:

  • 90% participation rates
  • 10% saving rates not including the company match
  • 90% of investors using professional managed solutions like target date funds

Most plans start with auto-enrollment and then move to auto-escalation with the stretch match just beginning to be considered.

So the best advisors are there for their clients when needed or advisor@elbow (advisor at the elbow) but are also considered thought leaders bringing new ideas like the Ideal Plan. It’s a simple formula that works but is also hard to find.

Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein

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