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The Advent of the Chief Retirement Officer

The costs and expenses associated with retaining an uninspired workforce go well beyond lost productivity and an inferior work product. Plan sponsors seeking to tackle these issues through effective oversight of their plan now have a new way of doing so, notes industry veteran Steff Chalk: by adding a Chief Retirement Officer (CRO).

The CRO position is still unknown to most organizations, Chalk notes in his regular column in the most recent issue of NAPA Net the Magazine. In fact, it currently exists in only a handful of forward-thinking companies that recognize the benefits associated with preparing participants for an orderly separation of service at normal retirement age.

Chalk outlines two key roles of the CRO:

Negotiator

As negotiator, the CRO is responsible for the prudent oversight of fees, services and all plan related expenses. For example, the presence of a “professional purchaser” — and even a formal, written expense policy — may have saved a lot of time and trouble in the case of Tibble vs. Edison. “The CRO’s negotiator role should be thought of as a strategic one in addition to a functional one,” Chalk says.

Communicator

“The CRO should deliver very specific messages to plan participants, starting with the touchstone messages of Thayler and Bernartzi: ‘Save More Today’ and ‘Save More Tomorrow,’” Chalk recommends. The CRO’s communications role may also include being (or overseeing) an onsite Certified Financial Planner (CFP) or other financial designation holder. This designation holder would not sell securities, of course; rather, this person would be a readily accessible internal resource to which a plan participant could turn for a meaningful answer — at last — to the question, “What should I do?”

Compensation

Chalk offers some ideas for setting the CRO’s pay, including tying it to performance. “Would it make sense to compensate the CRO based upon successfully preparing a workforce for retirement?” he asks. “How about basing the CRO’s compensation on the percentage of a workforce that is on track to retire at or near normal retirement age, or perhaps upon the number of employees who are ready to retire in any given year, or upon income replacement ratios pre-retirement?”

In addition to Chalk’s regular “Inside the Plan Sponsor’s Mind” column, the Fall 2015 issue of NAPA Net the Magazine inaugurates NAPA’s lists of the top women advisors in the industry in four separate categories. Judy Ward also discusses the potential pitfalls of managed accounts, while Nevin Adams debuts his new “Polling Places” column highlighting some readers who shared their experiences with the client firing process. The issue also features insights from contributors Jerry Bramlett, Warren Cormier, David Levine, Brian Graff, Don Trone, Joseph DeNoyior, Jania Stout and Fred Barstein, along with the debut of columnist Lisa Greenwald Schneider.

To view Chalk’s column, click here and select “The Advent of the Chief Retirement Officer.” And to view a pdf of the full 52-page issue, click here.

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