Key Questions for Your Retirement Plan Provider, Part Three: Key Personnel’s Continuity

Retirement plan sponsors, have you ever developed a relationship with a business provider only to have that person drop out of sight? If so, then you know how painful it can be. To minimize these unpleasant surprises, you should ask about key personnel’s turnover and back-up plans when you’re evaluating potential 401(k), 403(b), or 457 plan providers.

Retirement Plan Provider’s Key Personnel Plans

Start by asking your key contact, “How long do you personally plan to be in this business with this company?” Don’t simply assume the registered investment advisor or other professional with whom you develop rapport will always be there. Some firms experience a steady flow of staff departures and arrivals. Ask about that overall turnover rate.

Unexpected things happen. So even if your key contact gives a convincing answer about long-term plans, ask about back-up. Who can fill in if that person becomes unavailable for any reason? Check the back-up staffer’s qualifications and experience, too. Just because the firm gives you a name, doesn’t mean the new person can fill the shoes of your original contact.

Retirement Plan Provider’s Organizational Breadth and Depth

One person can’t meet all of your needs as a plan sponsor. It isn’t practical. Ask who else at the firm will work with you, and in what capacity. Again, find out their qualifications and experience.

Another way to address this issue is to ask for an overview of the firm and its retirement plan operations.

More Questions for Savvy Plan Sponsors Evaluating New Providers

If you missed the earlier posts in this series on assessing plan providers, check them out now:

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.

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.