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Reader Poll: Are ‘Good’ and ‘Bad’ Advisor Hire Criteria Different?

There are lots of reasons to get hired to work with a retirement plan – most good, though some not-as-good. This week we asked NAPA Net readers to weigh in.

Looking to the subject of why advisors get hired (good or bad), there were four key reasons affirmed by this week’s respondents:


  • Better services

  • Industry knowledge and expertise

  • Education and credentials

  • Plan design recommendations


Less commonly cited were better fees, firm brand/name, relationships, and prompt follow-up on an opportunity. Investments weren’t mentioned at all, and their stance as a fiduciary was noted by fewer than one in five respondents.

Why Good Advisors Get Hired

As it turned out, the list of reasons why good advisors got hired wasn’t much different. Better services, industry knowledge and expertise and plan design recommendations remained strong factors (a bit stronger, actually). Somewhat ironically, education and credentials slipped a bit in deemed importance.

Stance as a fiduciary was cited about twice as often here (though still far less than the other factors), and firm brand/name slipped a bit in the rankings as well. One reader noted, “Having great people on the team and demonstrating a clear growth and improvement vision to the potential client.” Another cited the importance of “compliance expertise and assistance.” What did no one cite? Investment options – or better fees.

Hired ‘Powers’?

Indeed, asked about the last time they were hired, every single respondent cited the criteria they had associated with “good” advisor hires: better services, industry knowledge and expertise and plan design recommendations. Education and credentials moved up a bit (cited by 67%), and stance as a fiduciary was noted by a third. Better fees finally showed up, albeit cited by a mere 17%. Among the other reasons:


  • “We connected personally with the key decision makers.”

  • “Communication of a clear vision for where we were going to take their plan and how we were going to execute.”

  • “They knew me from a prior plan.”


Service ‘Stanchions’

When asked to cite the primary reason why they were hired, most (88%) said “better services,” with industry knowledge a distant second, although one reader cited their “personal fit and relentless follow-up.”

While fees were barely a factor in getting hired, when respondents were asked to explore the reasons they weren’t hired, fees (33%) and ignorance about better fees (17%) were the primary responses. “The incumbent cut their retained fees in half and their CFO couldn’t justify the extra $15k they would pay us,” explained one reader. For another, it was the “promise by competition to meet with each participant and give advice.”

As one reader noted, “some people avoid candor and just say ‘fees’ when we figure there is more to the story. We also have experienced ‘infighting’ between HR and Finance over fee deltas of less than $10k.”

Another explained that “no matter how much research and prep goes into a presentation, no matter the credentials, experience and knowledge, sometimes the decision still comes down to client comfort with the advisor and the belief that operations will be better under new leadership... How well we convey that determines the outcome.”

Thanks to everyone who participated in this week’s NAPA Net reader poll!

For more insights on the topic, be sure to check out Workshop #9, “What Plan Sponsors Really Want from Their Advisors” at the NAPA 401(k) Summit, as industry leaders Nevin Adams, Fred Barstein and Warren Cormier discuss insights from a brand new NAPA/TPSU plan sponsor survey! And you won’t want to miss our “Plan Sponsor Confidential” general session, as Ann Schleck talks about the issues, challenges and opportunities of today’s retirement plans with a panel of plan sponsors.

You’ll find more information about this year’s Summit at http://napasummit.org.

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