3 ways to add value to the retirement plans you serve

By Paul Feldman

By Haley Tolitsky

If you currently work with retirement plans in your practice or are considering doing so in the future, it is important to review your service package often to ensure you are providing the value that your plans want and need.

Managing 401(k) and other retirement plans allows you to own the entire financial relationship with your business owner clients and are a great additional revenue stream, since participants are adding money consistently with each paycheck.

According to Fidelity’s 2021 plan sponsor attitudes survey, 34% of plan sponsors said they are actively looking to switch advisors, compared with just 16% in 2020, and are seeking more employee education, lower fees and better investment options. Now is a great time to ask yourself, how can you differentiate yourself in the plan advisor market and keep your current plans ecstatic with your service?

Revist the plan provisions

The best place to start is sitting down with the plan sponsor and retirement plan committee to address what they like and do not like about the current plan and its offerings. The company’s needs and desires may have changed since implementing the plan. Do the eligibility requirements, vesting schedule and investment line-up still meet the company’s goals?

Should additional plan provisions, such as adding auto-enrollment and auto-escalation, be considered to increase employee participation? Also, conduct a review of the current recordkeeper, custodian and/or TPA to see if any changes need to be evaluated due to lack of service, fees or outdated technology.

Although it can be difficult, you should consistently be asking the plan sponsor for feedback. It is challenging to add value when you do not understand fully what they are looking for. Many future headaches can be saved by communicating with the plan sponsor upfront. Here are some questions to ask:

• What is your desired participation rate? How can we help get employees enrolled to reach that rate?
• Do you understand your fiduciary responsibilities as the plan sponsor? Would it be helpful to schedule a fiduciary training session?
• Do you and your employees prefer to meet in-person or virtually? How often would you like our team to reach out to your employees and in what method(s)?
• Are you comfortable with the current company contribution? Do you feel the plan is effectively helping you save for your retirement?

Increase participant education

Providing participant education is one of my favorite parts of being a plan advisor because you have the opportunity to make a difference directly in people’s lives. By helping participants understand the importance of saving for retirement, you are not only changing their lives, but also helping close the retirement gap.

Research by the Federal Reserve found that the median retirement account balance in the U.S. is a just $65,000, which doesn’t include the nearly half of individuals that do not have a retirement account at all. These employees need our help! Often, the education you provide is their only source of information and guidance, as many do not have the ability to work with a financial advisor.

There are many ways you can increase participant education and engagement: one-on-one meetings during open enrollment, personal finance live sessions or webinars and direct access to someone on your team when they have questions, instead of an 800 number.

You will need to determine what works best for the employees of that specific plan, as education levels will vary. Stay consistent with your messaging and get employer encouragement to help improve participant outcomes. Knowing you are there to support not only the employer, but also each employee individually, creates massive value.

Streamline your practice

Overseeing a company’s retirement plan goes way beyond just implementing the plan and checking-in annually, so you need to ensure you have the right team and processes in place. How can you be the most efficient, while still providing great value to your plans? Having a few select recordkeepers and custodians that you work can be helpful, as you will better understand their processes, website and have stronger contacts versus managing plans at many different places.

Knowing when to delegate is also crucial. Do you have a team member that can manage the onboarding and/or enrollment process for you? Do you have defined workflows in place when it comes to these processes? The more you document and delegate, the more time you have to spend on these value-add activities and growing your business.

There are an endless number of ways to serve retirement plans as an advisor. The key is to figure out what works best for you, your team and your clients. Our future state of retirement starts with you!

Haley Tolitsky, CFP® is a Financial Planner with Cooke Capital in Wilmington, NC. She is the NexGen PR Coordinator for the Financial Planning Association (FPA) and serves as the communications director and women’s initiative director for the Financial Planning Association of the Triangle. Securities offered through The Strategic Financial Alliance, Inc. (SFA), Member FINRA, SIPC. Advisory services offered through Allegiance Financial Group Advisory Services, LLC (AFGAS). SFA, AFGAS, and Cooke Capital, Inc. are not affiliated.

FPA NexGen, a community of the Financial Planning Association® (FPA®), aims to provide support and collaboration for those professionals new to the financial planning profession. With more than 2,500 like-minded young professionals, members of FPA NexGen are ready to share their experiences and further the future of the financial planning profession. Learn more about our engaged community and join the conversation on Twitter.

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