PLANSPONSOR - August - September 2022 - 21

PROVIDER RELATIONSHIPS |COVER STORY
at Dimensional Fund Advisors in Austin, Texas. Plan sponsors
might use the selection process to screen for advisers who
have experience working with companies in their industry that
are roughly the same size and that have similar demographics,
Roche says.
Large-plan sponsors may hire individual plan advisers to
each handle a specific aspect of the plan, such as plan design or
employee communications, while smaller plans tend to work with
a single adviser who can offer multiple services, Schmidt says.
A key question that the sponsor should ask itself when evaluating
plan adviser candidates is: " What does success look like? "
Roche says. With a sponsor knowing its goals, the adviser can aid
in determining the metrics to help it measure success, and create
a strategy to reach each goal, whether this is increasing employee
engagement, revamping the investment lineup or bringing an outof-compliance
plan into compliance. If the focus is on employee
financial wellness, sponsors should ask specific questions about
how the adviser will connect and communicate with participants.
In some cases, plan sponsors might choose to hire an adviser
temporarily to handle a specific project or aspect of their plan. For
instance, a company that recently acquired a competitor might
bring in a plan adviser with expertise in mergers and acquisitions.
" You may have a consultant that you're happy with and have
done business with for 20 years, " Holgate says, " but if they don't
have strength in M&A, why not bring in someone for 180 days to
help with that, and then go back to your core adviser. "
Choose the Right Adviser
Plan sponsors have a responsibility to recognize any potential
conflicts of interest an adviser might bring and to steer away
from candidates who charge unreasonable fees, Kohn says.
Selecting the right adviser goes beyond that, however.
Given how much plan sponsors may rely on their adviser, a
close relationship is key, so it is vital for the sponsor to learn in
advance how communication will be handled, Roche says.
The sponsor should ask who its primary source of contact
will be at the advisory firm and how often that person will be
in touch.
It should also to weigh whether the two businesses' cultures
will complement each other, Roche says. " When it's successful,
the plan sponsor-adviser relationship is symbiotic, where there's
an understanding and a common goal they're trying to achieve.
It's important to really look at the individual they're hiring to run
their plan and not to rush into it. "
Credico concurs. " The most important thing when you're
meeting with an adviser is whether you're comfortable with that
person. It becomes a partnership, so you want to meet with the
person you'll be working with, maybe get some references from
others who have worked with that adviser. "
Setting goals and expectations upfront on both sides of the
relationship can also help it function smoothly over time. Kohn
Prospects for Retirement
Of plans with a dedicated financial adviser, 85%
report that most or all of their eligible employees
are on track for retirement readiness. Plans with no
adviser report a lack of insight into the concept.
Has a financial adviser n Has no adviser
All employees
on track
Most employees
on track
Most employees
not on track
No employees
on track
Don't know
14%
Source: Morgan Stanley at Work, " The Value of Financial Advisors "
advises that sponsors make sure the people they are considering
outline their responsibilities, fees and fiduciary status in writing.
" All aspects of plan administration should be in writing and
reviewed frequently, " Kohn says. " Sometimes, retirement plans
are being charged for services they don't fully use or understand,
and that's a fiduciary liability. "
A successful plan sponsor-adviser relationship requires
dedication and buy-in on the plan sponsor end, as well. The more
transparent plan sponsors can be with their adviser, the better.
Credico says plan sponsors should be as forthcoming as
possible about any known issues or roadblocks preventing the
plan from meetings its goals. She also recommends scheduling
periodic check-ins with the adviser for any updates from either
side, beyond regular investment committee meetings.
As they would with any provider relationship, plan sponsors
should also periodically benchmark their adviser against others
in the market to confirm that this individual remains the best
vendor for meeting their needs.
Whether to use an adviser, and who, " is one of the most
important decisions a plan has to make, " Kohn says. " It should
be done periodically to ensure the plan is getting the full value
for [the person's] services. " -Beth Braverman
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