Key Questions for Your Retirement Plan Provider, Part Two

Retirement plan providers are not all the same. When choosing a financial advisor for the company’s retirement plan, plan sponsors should consider the candidates’ qualifications and experience. You’ll find six key questions about qualifications and credentials in this article. Other key screening questions are covered in “Key Questions for Your Retirement Plan Provider, including the F-Word.”

CFP, AIF, and AIFA as key certifications

Question 1
What training have you undergone and what professional certifications do you have?

This question will start to reveal whether you are speaking with an advisor who understands the special needs of retirement plans.

Smart Investor suggests that you focus on candidates who, at a minimum, hold the CFP designation. The AIF and AIFA designations are even better because they show your advisor is committed to acting as a fiduciary. Plus, the advisor truly understands the meaning of “fiduciary.”

The CFP—certified financial planner—credential establishes that your candidate has been trained in the basics of financial planning. This is a good foundation on which to build more specialized expertise.

The AIF—Accredited Investment Fiduciary—designation requires training in prudent practices for investment fiduciaries.

The AIFA –Accredited Investment Fiduciary Analyst—designation is a more advanced fiduciary designation, as we explained in “The AIFA Credential and Successful Retirement.”

Retirement Advisor Experience with Companies Like Yours

Corporate retirement plan advisors who have experience with plans like yours are more likely to understand the challenges you and your plan participants face. So ask the following questions:

Question 2
How long have you been advising retirement plans and how many retirement plans do you work with?

Question 3
What are the average age range and economic situation of the participants in the retirement plans you work with?

Be careful. A long history as an advisor doesn’t necessarily mean the advisor does much retirement business.

Even an advisor with plenty of plan sponsors as clients may not have experience serving plan participants with demographics similar to your plan participants. Experience can help in identifying plans that work for your participants and management.

Avoid Ethics Violators

Retirement plan advisors with financial ethics violations usually don’t volunteer that information. You need to ask. A serious violation should disqualify the candidate.

Question 4
Do you have any financial ethics violations?

Errors and Omissions Insurance for ERISA plans

Question 5
Do you have errors and omissions insurance?

When your retirement plan advisor carries the right kind of errors and omissions insurance it ensures that the advisor can compensate you for the negative impact on your plan of certain kinds of errors. Make sure you ask about the details of the errors and omissions insurance because many financial advisors’ exclude or are vague about ERISA retirement plan coverage.)

Ask if the insurance covers the advisor’s work with ERISA retirement plans? Also ask:

  • What are the coverage limits?
  • Will you give us written confirmation of your insurance coverage?
Open-ended Screening Questions Pack a Punch

Once you’ve asked the essential questions about credentials and experience, try an open-ended question. The answers can be very revealing about your potential provider’s values and capabilities.

Question 6
What are your strengths and weaknesses as an advisor to retirement plans?

Best Screening Questions for Choosing a Retirement Plan Advisor

Smart Investor discussed other key questions in our post on “Key Questions for Your Retirement Plan Provider, including the F-Word.”

Plus, we will cover more in the future.

Looking for a registered investment advisor serving Sacramento, Roseville, and Stockton, CA? Smart Investor serves all three cities from our base in Rocklin, CA. Contact us at 916-435-2100.

The AIFA Credential and Successful Retirement

AIFA® stands for Accredited Investment Fiduciary Analyst™ and it’s a sign that your financial advisor pursues the highest possible standards of fiduciary excellence. Retirement plan sponsors who want to do right by their employees should seek a financial advisor who holds the AIFA designation.

AIFA® and Your Company’s Retirement Plan

Your employees have a better chance of retiring with dignity if your defined contribution retirement plan is overseen by a holder of the AIFA. Why? Because if your plan is managed properly, there’s a higher likelihood that the plan will deliver good results.

AIFA designees apply the rigorous best practices for 401(k) plans that have been developed by the Centre for Fiduciary Excellence (CEFEX). CEFEX has put these best practices into an easy-to-use format to ensure consistency and improve the overall retirement plan fiduciary decision-making process.

You may be familiar with ISO standards for ensuring manufacturing excellence. AIFA credential holders bring the same high standards to systematically and efficiently reviewing your 401(k). It’s important to be systematic so we don’t miss any problems. Efficiency helps us keep costs low.

AIFA Designee Strengths and Fiduciary Standards

Here’s how fi360, which provides training for the AIFA designation , sums up the AIFA designee’s strengths:

AIFA designees’ primary function is to perform, or assist in, assessments of an Investment Steward’s, Advisor’s, or Manager’s conformance to a Global Fiduciary Standard of Excellence using fi360’s ISO-like procedure of assessment. AIFA designees possess the ability and knowledge to advise clients of deficiencies in investment processes. It is also the required mark to perform a CEFEX Fiduciary Certification, the independent recognition of a fiduciary’s conformity to all fiduciary Practices and Criteria.

Not just anyone can become an AIFA designee. They must:

  • Satisfy educational and work experience prerequisites, including earning the AIF designation
  • Complete specialized training and pass a comprehensive examination
  • Annually complete 10 hours of continuing education
  • Abide by a code of ethics

Your retirement plan can benefit from this deep expertise.

Looking for an AIFA designee serving Sacramento, Roseville, and Stockton, CA? Smart Investor serves all three cities from our base in Rocklin, CA. Contact us at 916-435-2100.