It's no surprise that fee disclosure is top of mind for top sales executives at ADP, Great-West and MassMutual. What may be a surprise is that they see it as an opportunity for the best advisors to showcase their value.

Q: What trends are you seeing?

Hugh O'Toole, MassMutual

The two major trends we see are somewhat related. Number one is fee disclosure, which I don't think is news to any of the advisors out in the marketplace. Historically, advisors have done a great job handling fund fees and managing fiduciary responsibility. The issue of fee disclosure is going to make advisors really focus on the value they're bringing to the table. They need to show that they do more than just resolve fund and fiduciary issues. And that's the second trend.

We believe that this is a great pivot point for the best advisors in the country. MassMutual's position is that every single plan we work with needs an advisor. They're out there working to ensure that participants are able to create an income replacement outcome that will allow them to retire on their terms rather than working well into what normally would be retirement age. Regardless of whether advisors influence every single component to create a favorable outcome for the participant, they can enhance their value proposition by positioning themselves as the "general contractor" that pulls all the subcontractors into place. They're bringing together the skills sets and ultimately their fees and their value will be judged based on whether they grew the income replacement ratio for participants.

Chris Augelli, ADP Retirement Services

While fee disclosure is certainly top of mind throughout the industry, I believe there is a broader trend developing as well. There is a significant awakening among plan sponsors to all the areas of risk in offering a qualified plan. Reasonable fees can't be their only area of concern. There is the appropriate selection of investments for the plan, the documentation of their fiduciary decision making processes, the on-going monitoring of their investment performance, and the resulting retirement readiness of their participants. Managing all of these factors together can be a daunting challenge.

This broader awareness of risk factors is driving another trend: the consolidation of retirement plan business among a core of retirement-focused advisors. The specialist advisor is able to bring a different level of service and expertise to the table, and as a result, we find that they're winning the great majority of the business. While that success is good news, it also creates a new set of challenges for these advisors. Their growth means they need to find new efficiencies in managing their practice while expanding their book of business. They also must heavily invest their time in staying on top of rapidly changing issues in the market place to maintain their competitive edge—which can be very difficult and time consuming.

Bill Harmon, Great-West Retirement Services

Fee disclosure is the main event. It's going to drive a lot of busy work for advisors. They will now be required to understand every recordkeeper's fee disclosure document. I just saw one document that is thirty-five pages long, and I've seen some that are two pages long. Great-West's fee disclosure is all in one document with three different layers of detail. So depending on who you're talking to, you may want fees in a summary format or you can get really detailed.

Another important conversation between the plan sponsor and the advisor is how the plan is doing with its goal of retirement readiness for its participants. That is great value-added service that advisors can provide. It's going to change a lot of the conversations they've been having with their clients. I think you're going to see a lot of providers respond by creating tools and services to help advisors have that conversation about retirement readiness

Q: How are you helping advisors take advantage?

Bill Harmon, Great-West Retirement Services

I already mentioned Great-West's comprehensive fee disclosure document. We want to make it as simple as possible, so advisors don't have to chase down multiple documents. We've received a lot of very positive feedback on our approach. Once they're ready to have that conversation with the plan sponsor, the question is, "How can I surround the advisor with the tools they need to show the plan how it's doing in its ultimate goal to ensure its participants are retirement ready?"

We're introducing a new Plan Health report. It provides a snapshot of how the plan is doing today—what percentage of participants are on the right path for retirement readiness, how many are close and how many need a lot of help. We'll work with the advisor to help them implement education campaigns and offer guidance. We'll suggest we run the report again in six months to see how far we've moved the needle. Again, I think that's a great value add that the advisor can provide—ensuring that the plan is working and having the right tools to demonstrate that.

Hugh O'Toole, MassMutual

When it comes to evaluating a plan, the question is did you create a favorable change by using your entire tool set around plan design and participant action techniques to help drive a positive change in outcomes? I guess you could call that a benchmark, but it's benchmarking against yourself and your previous state.
MassMutual is bringing that to life through our PlanSmart Analysis reporting tool. It leverages behavioral finance principles and plan-specific data to let the advisor see and show outcome probabilities for the plan down through income levels, right down to individuals, even by gender. Then in a simple yet prescriptive way, be able to recommend plan designs to promote more successful outcomes.

We work with the advisor to enable implementation of auto-enroll, auto-deferral increase, stretching a match, and so on. We'll show you the projected change in outcome, but a year later, we'll show you the real change in outcome. In April, MassMutual was named "Retirement Leader of the Year"* in large part because retirement plan advisors have been able to leverage our PlanSmart Analysis to achieve and demonstrate positive results.

Chris Augelli, ADP Retirement Services

Advisors really need someone to work with them who recognizes their unique challenges and takes care of the administrative side of the equation. We've developed a service called Chairman's Circle. Advisors that sell either 20 plans or have at least $20 million in AUM with ADP are granted access to Chairman's Circle and are supported by a dedicated client service manager, who works hand in glove with the advisor. The advisor knows when they call ADP they're going to be talking to the same client service manager every single time. Chairman's Circle service managers focus on building a true personal relationship with the advisor and their teams to understand their short-term goals, their long-term strategies and their current challenges. That's invaluable. It's all really about creating a structure that allows the advisor to increase their client base without being crushed by it.

Q: What else is on your mind that advisors should know?

Chris Augelli, ADP Retirement Services

An article in the Baltimore Sun pointed out 65% of all qualified plans that the IRS audits are out of compliance due to employers' actions or inactions. Being out of compliance can lead to time-consuming remediation processes, fees and penalties, or even the wholesale disqualification of the plan. To help avoid such situations, ADP offers a smart, automated tool called Task Tracker. It's an online virtual assistant that stays on top of all the plan milestones and necessary actions throughout the course of the qualified plan year. Task Tracker notifies the sponsor and advisor through an email that action is required on critical upcoming events. The program is a huge help in keeping plans in compliance.

Hugh O'Toole, MassMutual

The state and federal governments see what a huge dilemma it is if we don't build up income replacement ratios through employer-sponsored retirement plan accounts. If people are in need, it's going to eventually fall to the government to take care of them. I think it's imperative for this entire industry to understand that replacement income for participants is what we have to all be about. We have to make sure that accumulation can occur as efficiently as possible and that truly objective income replacement levels are created.

Bill Harmon, Great-West Retirement Services

We have a lot of opportunities to help plan sponsors improve their plans. For example, we often see plans that have an average account balance of $50,000, and we know this is not close to being a sufficient balance for someone approaching retirement. We have an opportunity as industry professionals to leave a great legacy in that we helped build the way for better retirement outcomes for Americans.

Q: What tools do you offer to make enhancements, optimize plans and help with the changing disclosure landscape?

Mike Shamburger, The Hartford

Today, we have more than 85 sales professionals, 80 education professionals and 30 retention specialists in the field to support our core distribution partners. We also offer a team of four institutional retirement plan specialists who support our regional sales directors and advisors on larger, more complicated plans in the $5M–$100M plan space. Our in-field retention team's focus is on helping advisors retain plans with assets of between $5M and $1B. 408(b)(2) is going to shine a light on fees, and it's going to force plan sponsors and advisors to make sure the recordkeepers are providing the right level of value. We believe we can provide the right level of support regardless of plan size or level of retirement plan experience.

Jason Crane, Transamerica

Our focus is on the under $20M market. No matter whether the advisor is a generalist or an expert in that space, we offer our Total Plan Management Program, which is broken out into plan, operations and education management. Under plan management is our Annual Retirement Plan Review (AR PR) benchmarking tool provided annually to plan sponsors to help advisors conduct really stellar annual reviews for their clients. The ARPR provides a deep dive on plan design, investment choices and performance, plan administration and capabilities, compliance testing and fees and expenses, because, of course, it's incumbent upon providers and advisors to demonstrate exactly what clients are getting for the fees they are paying in a very transparent fashion.

Our Plan Administration Service Support (PASS) is a unique offering which allows the plan sponsor to outsource to us many of the routine, mundane and perhaps difficult day-to-day responsibilities associated with operating the plan. Last, we have a robust education platform in the form of world class websites, on-site and in-person education seminars, customized materials—all with metrics back to plan sponsors to track the success of their plan.

Joe Masterson, Diversified

We're unique because retirement plans are our primary business—we do one thing, and we do it very well. We focus on the specialized retirement plan advisor and look for ways to help them identify growing market opportunities for increased revenue. Today, DB and DC plans are being shopped together as a total retirement outsourcing approach. For those specialists looking to broaden their business and almost double their prospects, Diversified's approachable experts can help with the DB administrative services side so advisors can do an RFP for both the DC and DB plan. Then, we also help with the transition. We have the expertise to take those DB programs from multi-vendor to single-vendor. We have the people who we can put on-site or on a phone bank to deal with the participants one at a time, to move the assets.

Tim Minard, The Principal

Advisors are looking for service providers that are flexible enough to help them demonstrate their value to their clients but that also provide a great deal of back office support. We offer an enhanced platform of tools, services and pricing that gives our advisors choice and flexibility, including unique ideas around participant outcomes, retirement plan governance and integrated retirement benefits as part of our Total Retirement Solutions (TRS). As advisors also increasingly move from commission-based to fee-based models, our infrastructure has been expanded to assist with conversions and to provide the flexibility needed to facilitate fee payments in a timely and efficient manner. We make it easy for advisors to access critical plan level information through our online service site called Dashboard. And, we offer a program called Retire Secure, which provides one-on-one education meetings for plan participants at no extra charge, with the goal to increase participation and deferrals. At retirement or benefit event, we automatically notify advisors when a participant is leaving the plan. Because it may be impossible to serve all the leads, advisors are able to ask us to refer only those participants with higher account balances.

*as of December 2012

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