Tips On Selecting a Retirement Plan Adviser When You Can’t Meet Them in Person

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Over the past several months, we have seen a number of public agency clients struggle through the process of evaluating and selecting a retirement plan adviser based only on generic questionnaires, a few phone calls, and an occasional video conference. It’s hard to choose a “trusted adviser” without meeting them face to face.

Based on feedback we have received from agency staff who have had to make such selections and from advisers who are trying to make the best impression under the circumstances, we came up with a number of ideas and suggestions:

  • If possible, start with a manageable, pre-screened group of candidates. Too often agencies conduct full-blown RFPs in their search for a 457(b) or 401(a) plan investment adviser. We think this process can be overkill and wasteful. There are significant differences between investment advisers who focus on ERISA – private sector 401(k) plans and the like and those who primarily advise governmental 457(b) or 401(a) plans that are governed by California law and special Internal Revenue Code sections. Usually, your outside labor, employment, or benefits counsel can provide you with a short list of knowledgeable, experienced and reputable investment advisers with a significant degree of public sector experience. Like buying a new car, it’s a lot easier to narrow the field and make a choice if you start out with 3 to 6 “qualified” candidates, rather than 25 respondents to an RFP (who may not all be qualified).
  • The identification of appropriate pre-screened candidates will be even easier if you decide in advance whether or not you are looking for an adviser who has experience acting as a “3(38)” adviser to governmental plans. If you want an experienced “3(38)” adviser for your governmental plan, the universe of candidates will be significantly reduced.
  • Assuming that you are screening only candidates with appropriate California and governmental plan knowledge and experience, you should be able to focus more of your time and efforts on determining whether the adviser will be a “good fit” for your organization, your plans, and your participants. How do you determine which adviser will be the best “fit” for you? In our view, the most important quality beyond knowledge, experience, and reputation is “relatability” – the quality of being easy to understand and to be on the same page with the client. If your plan fiduciaries and plan participants can really “relate” to the adviser you select, you will all feel more comfortable and confident in following the adviser’s recommendations and guidance. This level of comfort and connection may be based on things that have little to do with your plan. For example, you (or other plan fiduciaries) may find it much easier to “relate” to: a dog lover, a person with a large family, a football fan, a jazz lover, etc. We also describe this process to clients as figuring out who you have “chemistry” with. If you do this, you will be more focused on how you will interact with the adviser in the future and less swayed by their marketing claims (number of plans, assets under management, number of participants, etc.). If you will be working with a team of advisers, make sure that they all are relatable – at least the ones you must deal with on a regular basis.

Finally, you should always check references. But, not just for the purpose of verifying their background and credentials. You should use this opportunity to find out from other clients how they “relate” to the adviser, what they like most about them, and if there is anything they find disappointing about the adviser.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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