Retirement plan advisors have a “once in a career opportunity” to earn and serve retirement plan clients—especially in the age of fiduciary. Todd Timmerman, the founder of Charlotte, North Carolina-based Retirement Plan Analytics, leads a retirement plan consulting firm that has grown to over $15 billion in assets in just five years.
How did he and the firm get so far, so fast?
Timmerman shares five keys to building, growing and serving a retirement plan practice.
No. 1: Team
Hire talented people with subject matter expertise and then build a team around them.
“I was a wholesaler at a major 401(k) recordkeeper for 27 years, and I built a great team,” Timmerman says. “It was focused on winning and serving plans with assets from $100 million to $3 billion. In the large market, I had a ‘front row’ in terms of observing great advisors with great teams, but also star advisors with poorly performing teams.”
The star system created inconsistent client service that limited growth, something Timmerman was determined to avoid.
It was the reason he made the immediate commitment to hiring top talent for governance/operations, investment consulting, client services and participant education in the first year.
“I fully understood that it would take two to three years to be profitable, although I also knew we’d have sustained growth based on great client service,” he adds. “We have a mixture of extremely experienced staff as the foundation, as well as younger, talented and ambitious employees who have a service mindset.”
Client service teams are broken out to include experienced employees with newer hires so mentees can participate with, observe and learn from their mentors. This mentor/mentee model has allowed RPA to build a team with seven of the 11 team members consulting on plans and conducting committee meetings. And the teams are empowered and able to act autonomously, with Timmerman the lead consultant with just a handful of clients.
Another key, he says, is taking on large plan project work.
“Whether it’s assisting with an RFP process, fiduciary training for committees or a host of other consulting services separate from managing the actual retirement plan, projects are important for a few reasons.
First, we earn a lot of ongoing engagements once a company or committee sees the difference that a specialist with a great team provides. We execute on the project so competently that they then want us for other initiatives. Second, projects are a great way to train newer employees—they see how our processes and systems can impact plan performance.”
Lastly, happy project clients are intentional about introducing RPA to other companies. In fact, one project engagement on a $200 million plan three years ago led to 10 new client relationships.
No. 2: Create the Solution
“Once we had the right team members in place, we created the prototype of how we wanted to serve clients,” Timmerman explains. “I wanted to create a company that could serve ‘sequoias and saplings,’ or very large plans and smaller, entrepreneurial companies.”
It meant staring with a question, “What type of offering do we need to win large retirement plans?”
“Before anything can be scaled, you have to design and test the service with clients. We made the decision early on that our service plan deliverables would be the same for every client. The consultant might differ, but the deliverables and value proposition would be the same. The solutions include fiduciary governance, investment consulting, plan management, participant education and expense/RFP management.”
No. 3: Create Consistent and Repeatable Processes
“Most of our clients hire us as a 3(38)-investment fiduciary,” Timmerman notes. “We have consistent deliverables and a documentation process that supports our clients’ fiduciary governance. We have one prep process for new client/committee meetings. Having consistent processes allows our team to think. It avoids what we call (and too often see with others) ‘parking lot prep,’ where the consultant is so busy preparing reports that they neglect the real preparation until 10 minutes before the meeting.”
RPA clients expect solid preparation and personalized guidance.
“It’s my experience that strong systems make good people look great, while poor systems make great people look bad. We are fortunate to have great systems and great people.”
One critically important process for RPA is to conduct fiduciary governance training for all committee members.
“I believe that retirement plan committee members want to do the right thing. At the same time, most committee members are among the brightest and busiest at their organization.”
Timmerman recalls speaking at a large employer benefits conference recently to retirement plan committee members. He asked attendees that had received fiduciary governance training to raise their hands. As expected, only a few did so.”
“I’ve seen a big difference in how committee members conduct themselves once they understand that ERISA subjects them to personal fiduciary liability. They need to have prudent processes in place to make (and document) decisions in the best interest of plan participants.”
One valuable RPA investment was the creation of a fiduciary vault for each client that contains insight from legal counsel, auditors, expert witnesses, and a former DOL employee.
“RPA clients range from organizations with 120,000 employees to entrepreneurial companies with 10 employees. One of our client goals, regardless of their size, is that they view our processes as the most organized of the service providers with whom they work.
We know that fiduciary governance creates a strong foundation for plan success.”
It’s the reason why, he says, he created the vault, which includes items such as signed client agreements, signed investment policy statements (IPS), “our E&O policy, quarterly monitoring reports, plan reviews, expense benchmarks, RFP documentation and certificates for committee members who attend fiduciary governance training.”
No. 4: Focus on Service for Referrals to Attract New Clients
“We have a great advisory board at the firm, and some of the best advice it gave us was to focus on client service first and growth will come. We receive all of our new business from client and advisor referrals, and when they ask us to speak at events to share our best-practices with their employers.”
Timmerman recalls an important moment in his career when a mentor who explained “spontaneous versus strategic” growth.
“Spontaneous growth is the result of being obedient and a steward of the clients we serve. Strategic growth is the result of our marketing efforts. I believe 95% of our engagements are the result of being good stewards of the client relationships we serve.”
Importantly, RPA assigns a point-person plan consultant at the beginning of the prospect engagement process, rather than having a salesperson take the lead only to disappear once the deal is done.
“I believe clients want consistency, and to work with the person that manages the RFP process. I’ve always felt it was disingenuous to have a salesperson earn the new client relationship and then immediately transfer it to a consultant whom the client doesn’t know.
All our consultants are great communicators, and clients appreciate that they work with the same person. It also allows me, as the leader, to focus on processes and mentoring. I might attend the meeting, but I want the consultant to handle the presentation.”
No. 5: Once You Have Proof of Concept, Scale It
“In 2015, we assisted a large, national RIA firm with 15 offices. The firm had great advisors with loads of integrity that were operating in the top 1% of the industry (serving high-net-worth individuals with asset management, financial planning and giving strategies).”
They also had solid client relationships but were not retirement plan specialists. Timmerman and his team created a solution in which RPA acted as a sort of back office to support fiduciary services.
“The result was the RIA more than doubled its clients and we learned how to be a great back office. As I said, we don’t want (or need) need to be the star—we simply want to help advisors and clients be better stewards, so their employees achieve better outcomes. Near the end of last year, we formalized the program and created ‘partnering 2.0’ to impact more advisors, plans and participants. This next step in the evolution of fiduciary solutions is providing a scalable solution that includes taking our 3(38) services, adding a 3(16) fiduciary partner and pooling our clients for collective pricing efficiencies. We believe that this will provide a simplified solution that the market has been demanding.”
Timmerman concludes by quoting friend and former colleague—and past 401(k) Specialist cover subject—Hugh O’Toole, CEO of data-driven insight provider Innovu, who sits on RPA’s advisory board.
“At our first RPA advisory meeting, he offered the following insight, ‘Get it right by building the right prototype, get it tight with great systems and processes, and blow it out by favorably impacting more organizations and plan participants.’”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
