Students attending TRAU (The Retirement Advisor University) at UCLA have the good fortune of getting access to the Birkman Method, a personality assessment for improving people skills and aligning roles and relationships for maximum productivity and success. UCLA Assistant Dean Kelly Bean takes the class through a half day interactive review of the group’s results. One goal is to increase a person’s awareness and competency.
The levels of competency, with lowest listed first, include:
- Unconsciously incompetent
- Consciously incompetent
- Consciously competent
- Unconsciously competent
Those who don’t know they don’t know are not only ignorant but it’s virtually impossible to convince them they need help. The highest level athletes after over a decade or so of training are usually unconsciously competent.
What does this have to do with defined contribution (DC) plans? A vast majority of the plan sponsors attending a TPSU program inherited their job with little or no training. Someone walked into their office one day and told them that they were now in charge. Usually, the person in charge has already left so there is no continuity. Though good advisors and providers can help, that’s no way to run a railroad. These people openly admit that they are consciously incompetent to run their company’s DC plan.
Beyond the obvious compliance and fiduciary issues, which will only increase with the DOL asking plan fiduciaries what training they have to run the plan, it’s hard for the HR or finance person to keep up with all the industry changes never mind helping employees to improve their chances to retire on their own time. How did we get here?
Companies would never think about putting their DB plan in the hands of people who do not have the proper training or experience because, if they make mistakes, then the company has to write a check to fund the plan. But because senior management thinks that the funding liability has been passed to employees and all they have to do is give them the right tools, it’s not necessary to properly train their DC plan professionals. Except, employers all waking up to the fact that if workers are not able to retire, even if they want to, companies will suffer extra healthcare and disability costs as well as higher absentee rates and salaries not to mention lower productivity.
So until senior management realizes that the liability comes back to them in the form of higher cost and less productive workforces which not only threaten their competitiveness but also their viability, we will leave HR and finance people in charge of the DC plan on their own to figure things out remaining, at best, consciously incompetent.
