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Retirement Plan Consultants Offer Tips for Providers

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A survey of retirement plan consultants conducted by Oculus Partners identified some changes service providers need to make to their businesses in order to grow, including clarifying their value proposition for each prospect, following plan consultants’ agendas and addressing prospects’ needs more efficiently.

The report found when sponsors initiate a new recordkeeper search, the most common reasons are that they are unhappy with the service they are receiving or with fee arrangements.

When the consultants surveyed look for service providers for their clients, they search for two criteria, the report found: experience in the sponsor’s industry and market segment, and expertise in solving the sponsor’s problems. However, the report also found that providers generally struggle to present their value proposition in a way that is clear and relevant to the sponsor’s situation.

Other issues that trip up service providers trying to gain new business are not understanding the prospect before meeting and generally being unprepared for meetings, failing to complete RFP responses, and an inability to “artfully” negotiate fees and sell products.

In the large plan market, integrated defined contribution and nonqualified defined contribution services are critical. At least a third of recordkeeper searches also cited defined contribution and defined benefit integration as critical.

Consultants are also looking for experienced relationship managers who work well with the sponsor and will serve as an advocate. Consequently, service providers should have the relationship manager, rather than a salesperson, conduct presentations with prospects.

The report found that even among service providers who win a sponsor’s business, articulating a clear and relevant value proposition is difficult. Respondents identified four providers that have been able to overcome that particular hurdle. Fidelity was known among respondents for its overall scale, capabilities and reliability. JPMorgan was known for its participant services; New York Life for its plan compliance services; and Prudential for retirement income services.

The report noted that sponsors are “slowly warming up to” the idea of addressing participants’ retirement readiness, even though consultants interpreted sponsors’ primary objectives as creating a secure retirement and competitive benefit program.

The majority of respondents expressed concern that service providers don’t understand how a consultant’s practice works, leading to an ineffective partnership. This could be a problem for service providers as the report noted that “consultants will continue to evolve as leaders in the provider/sponsor relationship, both at the sale and as an ongoing partner in the relationship.”

In larger market, sponsors have historically interacted directly with providers, while consultants typically helped their clients with RFPs and investment manager evaluations, the report found. Today, consultants are becoming more involved in their clients’ plans, providing benchmarking tools and analyzing providers’ capabilities and track records.


Read The Disclosure Paradox: How Much Information Is Too Much? by Michael Finke on AdvisorOne.