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The Tighter The Bond, The Better The Results



The closer the relationship between financial advisor and retirement plan participant, the higher the retirement plan balance and the greater the chances of better investment outcomes for the participant years down the road.

Though no mathematical proof of this axiom exists, the more you stop to think about it, the more it makes sense.

Clients sit down with advisors and engage in a “fireside” chat of sorts, where advisors have the time to absorb the nuances of their clients, learn about near- and long-term goals, and delve more deeply into clients’ aspirations.

Robert L. Hill, financial advisor, principal and district advisor with First Command Financial Services in Arlington, Va., said he accepts the notion that the deeper the relationship, the higher the retirement plan balance and the better the long-term outcome for a client.

The more comfortable clients become, the more assets they steer the advisor’s way. “I’d second that,” said Hill in an interview with InsuranceNewsNet. “Their confidence level has increased because they’ve developed a financial plan with their advisor.”

Hill, a retired Air Force colonel, advises clients with regard to the Thrift Savings Plan (TSP), the federal government’s equivalent to the 401(k) defined contribution retirement plan widely used by the private sector to help employees prepare for retirement.

TSP is part of a client’s overall retirement plan that requires integration along with life insurance and other generous government benefits offered to employees who choose to dedicate their lives to public service.

The connection between the depth of the relationship and the account balance may also help explain the recent growth in the number of “managed accounts” through employer-sponsored retirement plans, along with the increase in the assets held within those accounts.

The Fidelity Portfolio Advisory Service at Work, Fidelity’s managed accounts for workplace retirement accounts, increased by 784 new plan sponsors in 2013, according to Fidelity Investments in February.

The 740,000 newly eligible workers to the platform represent a 78 percent increase in new sales over 2012, Fidelity said. Total eligible assets for all Portfolio Advisory Service at Work reached $180 billion last year, an increase of 65 percent over 2012, the company also said.

Sangeeta Moorjani, senior vice president of Fidelity’s Professional Services Group, said more workers are willing to turn to professional advice within their employer-sponsored plan to help them adjust to specific risk levels and “changing financial circumstances.”

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A managed account offered through the workplace “can be a valuable choice for investors who want a professionally managed option that is tailored to their individual needs and retirement goals,” she added.

Employer-sponsored retirement plans that work with a professional retirement plan advisor report that they have higher contribution levels than plans that do not, according to a recent industry-sponsored survey by the Retirement Advisor Council, an advocacy group for employer retirement plan advice.

The survey, conducted by the research firm EACH Enterprise on behalf of the council, queried 407 plan sponsors between Sept. 11 and Sept. 24. It was sponsored by retirement companies including Fidelity Investment and Principal Financial Group.

More than four of five plans – 83 percent – that enter into a partnership with a specialist retirement advisor have seen deferral rates improve in the past two years compared with only 65 percent of respondents who reported an improvement in deferral rates with all other advisors, the survey found.

“More plan sponsors retain the services of an advisor specialized in retirement plans than ever before,” James D. Robison, an advisor with White Oak Advisors, said in a statement issued along with the survey results.

Not just advisors and employees but plan sponsors that retain the services of a dedicated retirement advisor “reap tremendous benefits from the partnership,” the council also said in the report.

Employers, for example, receive higher levels of service around the fiduciary process, investment option reviews, plan design recommendations, education and retirement plan material and due diligence, the council said.

“By boosting retirement plan capabilities, financial professionals can more readily demonstrate their value with a track record of successful retirement savings outcomes,” Tim Minard, senior vice president of the Principal Financial Group, said in a statement.

Retirement advisors offer specialties of all stripes. Some prefer serving the 401(k) for-profit plan market. Other advisors gravitate toward the intricacies of the 403(b) nonprofit market or even the 457 market for state and local employees, for example.

Advisors cut along the size of the business too, with many preferring to work with small or midsize business retirement plans. Others tilt toward retirement plans for multinational companies with thousands of employees around the world.

Whatever segment of the burgeoning retirement plan market the advisor prefers, the deeper and closer the client relationship, the higher the retirement plan balance and the better the final outcome of that relationship for all sides -- the employee, the employer and the advisor.

is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at

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