7 Signs You Have a Good Retirement Plan Advisor

Retirement Plans continue to evolve. Is your advisor keeping up? Matt Gnabasik offers 7 signs of a good retirement plan advisor.

7 Signs You Have a Good Retirement Plan Advisor

When 401 (k) plans first hit the scene in the early to mid-80s, financial advisors focused primarily on investment lineups, and that was OK with plan sponsors. However, as assets grew and the shift from defined benefit to defined contribution plans accelerated, employers began to realize they needed more help in this fast-changing retirement landscape. They needed an advisor who was a dedicated retirement specialist with the time and resources to help them manage their plans effectively.

The Importance of Choosing the Right Advisor

The best of today’s Employee Retirement Income Security Act {ERISA)­focused advisors think holistically and are knowledgeable about all aspects of retirement plans, not just investments. They understand that strategic plan design, fees, financial wellness, and issues of fiduciary risk are equally important. They also understand that the ultimate purpose of a participant-directed defined contribution plan is to put employees on track for a secure retirement while minimizing the employer’s risk profile.

Advisors who aren’t versed in best practices across all these elements, and who don’t understand this purpose, can easily undermine a plan’s long­term success and diminish employees’ retirement prospects. That’s why it’s vital to make sure the advisor you’re considering is keeping abreast of developments in the retirement plan industry.

So, How Do You Know if Your Retirement Advisor Is a Good One?

The short answer is that good advisors drive overall plan success. They make plans demonstrably better by focusing on the five critical components of effective retirement plans: design, vendor management, retirement readiness, fiduciary risk, and investments. They also measure plans regularly and use data provided by recordkeepers to identify opportunities for improvement.

Additionally, good advisors typically possess these seven characteristics:

• Fiduciary, fee-based firm
• Experience
• Relevant scope of services and focus
• Well-defined client service delivery protocols
• Competitive fees
• Proprietary reports
• Right fit and a focus on making the plan better