A great retirement plan advisor (RPA) must navigate complex regulations, provide strategic investment guidance, and ensure plan compliance. However, the most essential skill is effective communication.
Strong communication allows RPAs to educate plan sponsors and participants, making complex financial topics easier to understand. Whether explaining investment strategies, fiduciary responsibilities, or regulatory updates, an advisor’s ability to simplify information and build trust leads to better plan outcomes and stronger client relationships.
Fred Barstein, CEO of TPSU and 401kTV, recently interviewed Cory Hoffer of Hermitage Wealth Management after a TPSU program at Randolph-Macon College. Hoffer emphasized that communication is the most critical skill for RPAs, as they must adapt their messaging for both plan committees and individual participants.
Hoffer also highlighted the importance of market knowledge, especially as industry consolidation continues. Advisors must help plan committees evaluate pricing, assess plan effectiveness, and balance financial considerations to improve participant outcomes. He also pointed out that peer-to-peer learning, like what TPSU programs offer, helps plan sponsors gain valuable insights from industry peers.
By combining clear communication, fiduciary expertise, and industry knowledge, RPAs can better serve plan sponsors and participants, ensuring well-managed plans and stronger retirement outcomes.
Read the Full Transcript Here:
Fred Barstein:
This is Fred Barstein with TPSU and 401kTV, and we just completed a TPSU program with our newly minted adjunct lecturer, Kathleen Kelly. Kathleen is one of the leading DC consultants recognized by Barron’s, Pensions and Investments, Plan Advisor, NAPA, and really is the founding partner and managing partner of Compass Financial, based here in North Carolina, but has plans all over the country. So welcome Kathleen.
Kathleen Kelly:
Thank you. Thank you.
Fred Barstein:
Is it okay if we ask you a few questions?
Kathleen Kelly:
Certainly.
Fred Barstein:
So in your lecture today on campus, you talked about the 10 things that plan sponsors, fiduciary things, that they don’t do right and probably do wrong. And we don’t have time for 10. So give us the top three.
Kathleen Kelly:
So I’ll do the consolidated version.
Fred Barstein:
Right, since we only let you do seven anyway.
Kathleen Kelly:
That’s right. So the first was really around foundational governance, having good fiduciary governance processes in place, the basic blocking and tackling, ensuring that the committee had actually been appropriately delegated authority, making sure that there is a planned charter, bylaws, fiduciary acknowledgement letters by committee, understanding that new committee members need to have training around the basics of understanding their fiduciary responsibilities, having ongoing training and really just ensuring that the structure starts off correctly from the beginning. It’s not uncommon for us when we are hired to see that a plan sponsor is unable to put their hands on board resolutions that perhaps appointed the committee or that fact that there is a committee charter. Maybe at some point there was, but who knows? So where is it?
So having just good solid fiduciary structure in place, that also lends itself to doing things like maintaining committee minutes so that decisions can be documented, not only for purposes of identifying the rationale behind decisions that the committee made and the process, but also it’s so helpful when there’s turnover with the committee and new people come on and they want to understand how the committee has made decisions in the past. So that was really the first one.
Fred Barstein:
One of the things. I’m not sure we’re going to get to three. One of the things that you talked about, which I’ve always confused, is the difference between settlor and administrative functions and how the DOL is focused on that.
Kathleen Kelly:
It’s an interesting topic. It’s not one that gets a lot of press, but is starting to get more press because the DOL is more interested in the topic, which is around settlor versus fiduciary activities, and whether or not the committee has been charged with having the authority to just make fiduciary decisions. So things like selecting and monitoring plan investments and carrying out the duties of the plan, versus are they wearing the hat of the business and making business-related decisions around plan amendments, plan design, where there oftentimes is a cost involved to those types of decisions. If a plan is going to do auto-enrollment or change a stated match, become safe harbor, those types of decisions.
Fred Barstein:
And getting advice on that. And the big thing is that settlor functions cannot be paid out of plan assets, which is what the DOL is looking at. Okay. So let’s do two more. What else?
Kathleen Kelly:
Okay, quickly, two more. As much as I don’t like to have to talk about fees, it is certainly something that’s top of mind to plan sponsors. So just having a good understanding of how plan fees work. A couple of the things that we addressed in this session, were not only around benchmarking and using appropriate benchmarks to identify fees, but also looking at fees not solely in a vacuum. Fees commensurate with services. Additionally, things like fee levelizing and revenue sharing, and often the disparity that occurs in a plan if the services are being paid for by revenue sharing to the record keeper. You often see one participant subsidizing another.
Fred Barstein:
Because they’re paying a higher… They don’t even know it.
Kathleen Kelly:
They don’t even know they’re paying a higher revenue sharing and another participant who’s in an index isn’t paying any at all. So we discussed that. We also discussed the per head versus basis point and really evaluating that if plan assets have grown significantly, yet the basis point for the record keeper has stayed the same. The participant is essentially paying more on a per head basis when that’s really a more relevant approach to fee assessment. And then lastly around share class inefficiency, which is just, it’s an unfortunate industry phenomenon that we must live with, which is that just because one share class on a net expense ratio is less than another, it doesn’t mean that after revenue sharing credits are taken into account, that remains true.
Fred Barstein:
Well, I’m dedicated to getting rid of that.
Kathleen Kelly:
I would love to see that be gone as well.
Fred Barstein:
And go to a CIT. Purely institutional.
Kathleen Kelly:
Purely institutional.
Fred Barstein:
Yes.
Kathleen Kelly:
But the CIT is also not necessarily always the cheapest relative to a share class that has revenue sharing.
Fred Barstein:
It does. Is there one more?
Kathleen Kelly:
Oh, one more. The last thing is every company or organization measures results. They want to know the ROI on the decisions that they make. And looking at the 401k plan the same way is sometimes not addressed by plan fiduciaries. In other words, is the plan actually fulfilling the goals and objectives that the plan fiduciaries have set forth? Is it performing? Are your participants in better shape today for retirement than they were three, five, 10 years ago? Are you making progress toward that goal? And if not, what needs to occur for that to happen?
Fred Barstein:
And sometimes because they’re not writing a check, they don’t pay attention to it, but it’s still really critically important.
Kathleen Kelly:
It is.
Fred Barstein:
So final question. This was your first TPSU. What did you think and why did you do it?
Kathleen Kelly:
Oh, it was a lot of fun. I really enjoyed it. We had a full house here at Wake Forest, which happens to be my alma mater. So that was also nice. And I enjoy helping people. I enjoy seeing a light bulb go off when you say something and you can see the wheels turning in someone’s mind about how whatever it was might be applicable to them and their population and their participants. So I really enjoyed it. It was a great group, very engaged. So it was a lot of fun.
Fred Barstein:
Well, thank you.
Kathleen Kelly:
Thank you.
Fred Barstein:
We will see you in six months.
Kathleen Kelly:
That’s right.
Fred Barstein:
We’ll do it again, and this time maybe my flight won’t get canceled and I won’t have to take the train.
Kathleen Kelly:
But you made the extra effort and I appreciate that.
Fred Barstein:
I said if I had to crawl, I’m coming here ’cause I think you would be mortified if I wasn’t here this morning. Right?
Kathleen Kelly:
I may have been.
Fred Barstein:
But I’m glad I could make it.
Kathleen Kelly:
Yes, me too.
Fred Barstein:
Thank you for your participation and your service and thank you for watching 401kTV. Stay tuned.
