At ASPPA, Top Retirement Advisors Realize ‘Fiduciary Is a Verb’

A panel of top advisors took to the stage during the afternoon keynote at ASPPA’s 401(k) Summit on Sunday, all of whom were nominated for the 2012 401(k) Advisor Leadership Award sponsored by Morningstar Inc. Prior to the announcement of the winner, the advisors discussed major trends affecting advisors in the 401(k) space.

The nominees were Plan Sponsor Advisors from Chicago; Greenspring Wealth Management of Towson, Md., and Retirement Resources Investment Corp. of Peabody, Mass. The finalists were selected from more than 80 nominations submitted by peers and colleagues in the retirement plan industry. Plan Sponsor Advisors won the Leadership Award.

The panel was hosted by Will Marquis, defined contribution and retirement plan manager with Morningstar.

“It’s an interesting time in the advisory business; there’s opportunity, but that opportunity can also be scary,” said Josh Itzoe, managing director of Greenspring. “Plan sponsors are realizing fiduciary is a verb, rather than just a noun. Simply calling yourself a fiduciary is not a sustainable differentiator. You must act like one through tenured experience, thought leadership, and training and continuing education.”

There is an increasing focus on fees, which is leveling the playing field for clients, he added. Accountability for the level of service advisors provide will also be an area of increased focus.

“Plan sponsors want to focus on running a business, and they’ll increasingly look to advisors to help them do it,” Itzoe said. “The investment process is commoditized and is something we spend only about 25% of our time on. What we do the rest of the time involves back-end issues like governance, documentation and benchmarking. These aren’t as forward-facing as the investment process portion, but we see these as the real factors that keep clients happy.”

Patrick McGinn and Jim Phillips of Retirement Resources Investment Corp. then took over. Phillips said there is greater recognition among clients that they’ll have to provide for their own retirement, driven by solvency concerns over Social Security

McGinn said contribution percentages are becoming more realistic, and 10% is now the baseline. McGinn also rhetorically asked how a company match can be used to affect employee investment behavior.

Phillips noted the firm’s recent success with postcard campaigns that make it simple to increase contributions.