Skip to main content

You are here

Advertisement

Q&A: Michael M. Kane, 401(k) Advisor Leadership Award Finalist

Editor’s Note: This is the last of three in-depth interviews with the finalists for the 2013 401(k) Advisor Leadership Award. Sponsored by NAPA and ASPPA, the award reflects the multi-faceted efforts of advisors to serve their clients (both plan sponsors and participants), act as a mentor, maintain high ethical standards, and consistently improve their practices and services in the retirement industry. One of the three finalists will receive this year’s award at the 2013 NAPA/ASPPA 401(k) Summit, March 4 in Las Vegas.

Michael M. Kane, AIFA®, ChFC®, is the founder and managing director of Plan Sponsor Consultants. He has more than 25 years of industry experience and is widely quoted on industry issues and has published extensively on retirement topics. Before founding Plan Sponsor Consultants, Kane was the director of employee and executive benefit strategies and managing partner at New England Financial. He’s a frequent industry speaker on retirement plan topics as part of his commitment to education. Kane is a member of the Center for Fiduciary Studies (FI360) and serves as an analyst for the Centre for Fiduciary Excellence (CEFEX).

Founded in 2008, Plan Sponsor Consultants — formerly Michael M. Kane & Associates — is a full-service independent retirement plan consulting firm. Plan Sponsor Consultants is a member firm of the National Retirement Partners Group (RPG) of LPL Financial, an independent consulting firm dedicated primarily to the retirement plan market. PSC assists plan sponsors in bringing retirement plans into line with the highest fiduciary standards, then monitor and manage them to maintain these standards. In addition to retirement plan consulting, Plan Sponsor Consultants provides its private wealth management clients with a robust suite of wealth management and financial planning strategies. Plan Sponsor Consultants were finalists for the PLANSPONSOR Retirement Plan Adviser Team of the Year Award in 2010.

NAPA Net spoke with Kane about his career, his business philosophy, and the practices that have made him a finalist for the NAPA and ASPPA 401(k) Advisor Leadership Award.

Q: In terms of skills, insight, and services performed, how would you describe the arc of your career in the retirement planning business, from your first job to your current one?

Kane: As the managing partner for New England Financial in the ‘80s and ‘90s, I had pension support in the design, sales, and service for retirement plans. By the early ‘90s, I had developed the skills to design and sell cases, both qualified and non-qualified. At the end of 1999, I sold everything but my retirement plan business to MetLife and continued to service my existing clients, also adding new ones.

During the new millennium, I added new skills such as Accredited Investment Fiduciary Analyst (in 2007) and Certified Behavioral Finance Analyst (in 2012) to my list of designations, which had previously included Chartered Life Underwriter and Chartered Financial Consultant. I developed a proprietary RFP, the most recent version of which has been reviewed by Marcia Wagner of the Wagner Law Group in Boston.

In 2007, I began conducting fiduciary assessments of retirement plans, and in 2008, I joined the elite National Retirement Partners. NRP developed a proprietary tool suite which, with enhancements, we use today at Retirement Partners Group of LPL. In 2008, I developed a transferrable sales process.

If you’re going to be an elite advisor, you’ve got to get away from insurance companies, stock brokerages, and wire houses. Historically, they have not permitted advisors to take fiduciary responsibility for the investments in a plan and they generally provide no toolbox or services.

Q: Recipients of the 401(k) Advisor Leadership Award are judged on how they use their expertise to help Americans prepare for their retirement future. What are the three top things an advisor should do to help clients retire with dignity?

Kane: Increase plan participation rates to 90%, increase participant deferral rates to 10%, and work toward getting 90% of the participants into a one-stop professional managed investment portfolio, such as a target date fund or managed accounts. Most people don’t have the time or education to be able to manage their investments. When we’re asleep, the Asian markets are open. A managed account is actively managed. All things being equal, managed accounts take allow for more customized participant input are better than target date funds.

Second, make sure that client is conforming to the 22 prudent fiduciary practices based on legislation, case law, and regulatory opinion letters, including the three that relate to the reasonableness of fees. As an Investment Fiduciary Analyst, or AIFA, accredited by the Center for Fiduciary Studies at the University of Pittsburgh, I’m qualified to conduct fiduciary assessments of those prudent fiduciary practices. The process has three levels: a self-assessment of fiduciary excellence, a review of documents and our consultants’ assessment of fiduciary excellence — CAFE — and an independent review of the CAFE.

In addition, as a Certified Behavioral Finance Analyst, I have access to a behavioral audit, separate from the fiduciary audit, that results in a report to the plan sponsor called “Plan Success.” It offers practical, behavioral-finance solutions to improve plan health and participant outcomes.

Q: What do you consider the most innovative idea that you’ve implemented in your own business?

Kane: First is the development of a proprietary RFP. Our proprietary RFP is unique in the industry because it examines recordkeeping technology and we look at how well a record keeper assists the plan sponsor in meeting its fiduciary responsibilities. We examine how record keepers assist plan sponsors in meeting 404(c) requirements, which helps minimize a sponsor’s fiduciary liability for the investments, and we conduct due diligence on stable value, target date funds, and guaranteed income products.

Second, the development of a transferrable integrated sales process. Having been a managing partner in several sales organizations, I think you need a transferrable sales process, even if the people advising a plan have experience. The sales process has a number of different parts. If you don’t follow the process, you can’t analyze what went wrong if you don’t make the sale. With our process, you can reflect back on any part of the process and figure out what went wrong. Most successful people can’t tell you why they’re successful. That’s what I call unconscious competence. But our sales process fosters conscious competence. We can analyze and tell you why you’re successful or unsuccessful and we can be specific about it.

Applied learning theory says that no one learns something until you see someone do it. If I’m teaching my team a sales process, I don’t know if they can do it until I go out and watch them in the field. That’s what mentoring and what we call transfer training is all about. Transfer training is out of the classroom and into the field. To me the missing ingredient in most 401(k) training is having someone out there during the interviewing process demonstrating how to do it, and then later on observing to make sure the transfer of knowledge has taken place.

Q: Speaking as a mentor, what practical steps can other advisors take if they aspire to competing for the 401(k) Advisor Leadership award themselves?

Kane: Commit exclusively to the sale and service of retirement plans and find an organization that will provide you the toolkit and support that you need to excel. In the same context, it would be more than helpful to have a mentor in that organization, who will help you develop the sales skills and process to be successful.

The analytical tools we have were developed by National Retirement Partners. LPL has improved and enhanced that toolkit. Included in our toolkit a proprietary investment policy statement that’s tied to a monitoring tool and an expense analyzer to determine of expenses are reasonable, among others.

Advertisement