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Retirement Planning > Retirement Investing

6 Tips for Year-End Reviews of Retirement Plans: ING

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ING on Tuesday held a webinar to suggest ways for retirement plan advisors to improve their year-end reviews with their plan sponsor clients.

Bob Kaplan, ING U.S.’s national retirement consultant, described three broad goals of the year-end review.

“The year-end is a good time for advisors to manage expectations,” Kaplan said. Sponsors may not be entirely clear on what services their advisors are willing to provide for them. “Don’t assume clients know everything you do for them,” he said.

It’s also a good time to point out the successes advisors have had with their plans. “Go over the good, but address the bad as well,” Kaplan said.

Finally, advisors should make sure they address their sponsor clients’ concerns regarding the plan.

Kaplan gave six suggestions for advisors preparing for their year-end reviews. First, they should know their audience. He gave the example of a comedian preparing for a show; knowing what the audience wants to hear will help a performer put on the best show. Similarly, knowing what information is important to their clients is important to conducting a useful review. “Sponsors could have different measures of success” depending on what they do in their company, Kaplan said. For example, a CFO may be more interested in the numbers of a plan while an HR manager is most concerned about keeping employees happy. Regardless of who you’re talking to, “the relationship always starts with ‘What’s in it for me?’” Kaplan noted.

Kaplan’s second suggestion was for advisors to obtain feedback about the plan so far. “Perception is reality,” he said. Advisors should look at the number of loans taken, contribution rules and investment options to identify dissatisfaction among the plan participants, as well as noting major changes at their clients’ firms, such as layoffs, hirings and changing demographics of participants.

An important element of any review is participant success. Kaplan recommended advisors look at how participation and contribution rates have improved to show success in the plan. These factors indicate that participant education programs are working, he said, adding, “Use data to highlight successes and address shortfalls.”

Fourth, advisors should help sponsors determine if the fees on their plans are reasonable. “Plan sponsors know it’s up to them to show fees are reasonable. They don’t have to be the cheapest, but they have to show their value,” Kaplan said. Benchmarking and providing a statement of services (because, again, sponsors don’t always know what their advisors do for them) should help in this goal. Advisors should always document why they’re making fiduciary changes.

Kaplan’s fifth suggestion was to manage participant fee disclosure. He noted that this is a work in progress, though. Following the implementation of fee disclosure rules in August, “we did not see a lot of pushback,” Kaplan said, because the mailed statements show what “might happen” when fees are charged to a plan, a reality that’s difficult for many participants to grasp. “Most organizations don’t charge fees that appear on their third-quarter statements,” Kaplan said, ”so we have yet to see admin fees” on those statements. He urged advisors to “maintain their focus on managing participant fee expectations, because they may be more concerned in January.”

Finally, advisors should document any changes made in the plan. “Ask about changes made in the past year,” Kaplan said. “Did they update the plan document? What did they tell employees?” If amendments are required, even if they’re not under advisors’ purview or the services they offer, it’s still worth mentioning to clients. “If something goes wrong,” Kaplan acknowledged, “don’t they blame everyone?”


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