Creating true partnership between retirement advisers and plan sponsors

While I was on LinkedIn today, I noted that I have 256 first-level connections who call themselves advisers. That’s a lot — and there are plenty more who  I haven’t connected with or don’t know. What does that mean? There’s a lot of competition out there. 

There are also an awful lot of qualified retirement plans and, therefore, plan sponsors — most of whom use advisers of one sort or another to assist them with some of their fiduciary duties. In some cases, those sponsors view their advisers as business partners; in other cases, they are, at best, a necessary evil.

So how do we marry the two of them? How do advisers make themselves a business partner for their clients, and how do plan sponsors find an adviser who will serve as a business partner? There’s not really a single tried-and-true method to doing this, but I think every really successful relationship can be boiled down to a few key elements:

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First, advisers can’t expose a client to liability. This is the worst kind of mistake. Being a fiduciary under ERISA carries with it perhaps the highest standard of prudence under the law. There is no substitute for quality work — ever.

Advisers must also understand their craft. They need to be able to plot a suitable investment policy consistent with their client’s needs and desires. They need to have familiarity with the funds available to satisfy that policy.

And, understanding plan design should be basic. To the extent that there are elements advisers are uncomfortable with, they should have resources available to them that can fill those gaps.

Those are the elements simply needed to play, but they don’t make advisers a business partner. That can happen by asking the right questions: What is their client trying to achieve with their retirement program? Is it in place simply because they have to have one in order to attract employees, or does the sponsor truly want to provide a meaningful retirement benefit? What are the impediments to doing that? What business challenges is the client facing? Does the retirement program fit into a solution? 

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The challenge that comes with asking these questions is, you’re going to get answers. What you do with them is how you can differentiate yourself. 

Oftentimes, your questions will cause your client to really think about their answers. Without realizing it, you’re pushing them to help themselves to understand whether all about their program is right, and in doing so, they are telling you what needs more attention. Focusing the discussion on them and on their needs has brought you from an advisory level to a business-partner level. Advisers may come and go, but partners tend to stay.

So, retirement plan sponsors shouldn’t settle for someone who is making decisions for them. Rather, they’ll need to look for someone who is involving them in getting to the right answers. And, as that adviser, you can stand out from the pack by being the business partner. It takes more work, but it gets you significantly more reward.