Plan Sponsor Confidential

Did you ever walk out of a meeting with a prospect saying to yourself, “Man, I crushed that!” – only to wonder a week later why they won’t return your calls?

At the NAPA 401(k) Summit, T. Rowe Price’s Joshua Dietch asked that question as he launched a panel discussion featuring three plan sponsors. The plan sponsor panel, which has become a popular fixture at the Summit, provided a rare, in-depth immersion in what plan sponsor clients value, what they think of advisors, what they like and don’t like, and what they looking for in their advisor relationship.

Joining Dietch were:

  • Richard Clegg, Director of Finance and Treasurer at OC Tanner in Salt Lake City;
  • Marjorie Mann, Senior Attorney with Florida Power & Light specializing in employee benefits and exec comp; and
  • Jacob Nichols, Director of Palmer Trucks in Indianapolis.

Here are some of the topics they discussed.

Do You Go to Market with Your 401(k) Plan?

Nichols reported that Palmer had just completed an RFQ, the first since about 10 years ago. “Our current advisor (the winner form 10 years ago) recommended it,” he said, and some interesting things came out of it. For one thing, he said, he was impressed by the detailed, in-depth written answers the incumbent provided, reminding him of many things they had done right in the past and justifying the choice Palmer made in selecting them in the first place. “Two things that it drives me nuts to hear,” he said, “are ‘We’ll take care of that later,’ and ‘Here’s a number, but we can’t back it up right now.’” Palmer’s current advisor doesn’t do that, the RFQ reminded him.

“I’m happy when we end up with the same provider” after going to market, Mann said. “It means that we are not making any assumptions, and that both parties are open to taking a fresh look at the services that are provided.”

NAPA SUMMIT 401(K) 2018 Panel discussion

From left to right: Richard Clegg, Director of Finance and Treasurer at OC Tanner in Salt Lake City; Marjorie Mann, Senior Attorney with Florida Power & Light specializing in employee benefits and exec comp; Jacob Nichols, Director of Palmer Trucks in Indianapolis; Joshua Dietch of T. Rowe Price.

Memorable Missteps in Sales Calls

One of the biggest mistakes advisors make on a sales call is negative selling – “when they disrespect the incumbent,” Clegg noted. For her part, Mann remembered how displeased she was by a respondent to a health plan RFP “showed off”– trying hard to show how smart they were but not providing any explanation of what they were really saying or why it was important. And Nichols listed three pet peeves about sales calls:

  • not taking no for an answer;
  • call services that are trying to set up a call with an advisor; and
  • trying to close him on the phone right then.

Measuring Success

Dietch turned the discussion to how the three execs measure success. “We don’t have a check-the-box process for that,” Clegg reported. Instead, “the committee is constantly asking, ‘Are they still doing what we hired them to do?’ We feel that it’s important to start with participants’ needs, and work backwards from there.”

An advisor “is not expected to have a crystal ball, but you are expected to follow a set process, with a schedule, so the committee knows what’s next and what they need to know to address it,” Mann said.

“Are they providing the data and the services we’re paying for?” said Nichols. “It’s as simple as that.”

Said Clegg, “Performance standards are decided mutually. For example, I may go to our advisor with a concern about plan loans, but they may say, “No, it’s okay, that’s really a standard concern, and you’re right where you should be on that.”

The Importance of the Relationship

Asked about stumbling blocks with their advisor, Mann said that it’s important to review the scope of services periodically. “If adjustments have to be made,” she said. “that’s where the relationship comes in.”

At Palmer, Nichols said, “our advisor challenges us on past decisions, metrics, etc., and comes to us to suggest improvements. Frankly, that’s led to some huge successes that we would not have done on our own. When we allow them to do that, and we see some nice numbers come out of that, it’s been fun, really.”

“Do you ever say no?” Dietch asked. “Yeah, that happens frequently,” Clegg said. “I think they get our culture, but that doesn’t stop them from offering new ideas, new tools to use. We may shoot that down, but we may adopt it down the road.”

“The most successful relationship is where different options are considered,” said Mann. “As long as you document the process and the decision, that is extremely positive.”

“Don’t get disappointed if we shoot you down, Nichols advised. “Just because I can’t say yes now doesn’t mean we won’t consider doing that in the future.”

How Can the Advisor Better Manage the Relationship?

“Honesty and good communication skills are the most important things,” Mann said. The main thing is that you are a good communicator and take feedback. Everything follows from there.”

Clegg’s number one priority: “I want to be able to call my advisor and know they will provide the help I need when I need it. Positive or negative – what ever it is, I know they’ll dig in and get it done.”

“Fix these problems – that’s really what I’m looking for,” said Nichols.

Essential Elements

When Dietch asked the three execs what their advisor does that they can’t live without, here’s what they said:

  • Clegg: “Easy access and availability.”
  • Nichols: “They know what they’re talking about.”
  • Mann: “Acknowledge it when they don’t know something, and follow up without being asked.”

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