As target-date funds grow in popularity, plan advisors need to focus on educating plan sponsors about much more than basic fiduciary duties, Don Trone believes.
In his Spring 2015 column in NAPA Net the Magazine, Trone writes that TDFs are taking off for precisely the reasons that should concern many the industry: At least in theory, they require less outside management from an advisor after the point of sale.
But instead of stepping back, Trone writes, advisors need to help plan sponsors identify leaders within a client’s workforce, and help them create trust among plan participants that they will always put their interests first.
With 60% of employees saying they don’t trust their employer, Trone says, plan participants need to know that the people managing their retirement funds actually have their best interests at heart. He suggests that advisors create models that they can give to plan sponsors that focus more on how fiduciaries can effectively communicate with employees both above and below them on the organizational chart, including project management structures and specified standards of fiduciary due diligence.
In addition, Trone says, advisors might find that sponsors are actually more interested in listening to tips on how to be a good leader and not just a good fiduciary, because those kinds of concepts are transferrable to many more aspects of a typical administrative job.
“When you begin to talk about leadership and stewardship … others will want to learn more about it,” Trone writes. “When was the last time someone asked you to talk more about fiduciary responsibility?”
To view Trone’s full column, click here and then on “How TDFs May Change the Role of the Retirement Advisor.” To view the full 78-page Spring issue of NAPA Net the Magazine, click here.
