I had the pleasure of attending my 20th NAPA 401(k) Summit in April in San Diego. It’s an awesome conference for advisors that wish to learn how to be a great retirement plan advisor. I love every year networking with other advisors to learn what they do to get more business and provide the best possible advice and education to the 401(k) committee and participants.
Ok401k’s goal has always been to focus on the little guy in the many 401(k) plans I serve over the years. These are the great unwashed who are struggling to put in $25 a paycheck and might have $15,000 in their 401(k). I love taking their calls or emails and coaching them on being invested properly and not touching that pot of money till retirement. The balance in their 401(k) is probably the largest amount of cash they have ever seen. My motto can be found on my website (Ok401k.com) where in a one-minute video I state what I believe the sacred duties good 401(k) advisors should be providing to their clients. I call it the Big 4: Increase participation, increase deferrals, improve quality of investing, and most all… the advisor personally signs on as a fiduciary to the plan.
These are measurable outcomes that any plan sponsor can use to evaluate the effectiveness of their advisor. This year I wish to redo the video and add one more “sacred duty” an advisor must provide to their 401(k) plan clients: Talk to the little people in the 401(k) plan.
Unfortunately, over the years I have detected among many advisors I network with a selfish attitude toward the little participant contributing to the plan: They won’t talk to the participant unless they are the owner or executive that hired them. These are your big RIAs who won’t go out the door and talk to an employer unless they have at least $10 million in the 401(k) or your typical Registered Rep who gladly takes on startup plans to use as a back door entry into the owner’s suite to do financial planning.
I have for 20 years heard from many of these very successful advisors who have a hell of a lot more money than I do under management who typically say they won’t talk to the little guy struggling to put in $25 per paycheck. Really? And they call themselves 401(k) advisors?
“For me taking a call from the little guy is a badge of honor.”
It’s a successful concept the fast-food industry takes: VOLUME over quality. Yes, you make a hell of a lot more money in this model as compared to my “boutique” process of being a 401(k) advisor. For me taking a call from the little guy is a badge of honor. No, I won’t make as much money as the big fast food 401(k) model but I feel like I am doing something better.
I saw that in action at NAPA. Every advisor I speak to over the years at NAPA or Matrix or Broadridge Fi360 conferences I always ask, “How do you serve the 401(k) participants in your plans?” Unfortunately, I find many very successful RIAs and Registered Reps more than ever saying they turn everyone over that is not on the 401(k) committee to the toll-free number or website unless they are an owner or executive.
No wonder Brian Graff, CEO of the American Retirement Association and Executive Director of NAPA, at his opening address in San Diego warned about government intervention into the retirement plan business.
The biggest hot-button issue was over the battle over the retirement system, where Graff explained to the packed room of Summit attendees that a well-financed think tank has been pushing a proposal for a federal retirement savings program run by the Treasury Department modeled after the Thrift Savings Plan.
According to Graff, “A big reason incentivizing the interest in a government-run solution is the ongoing coverage gap of 60 million people that exists.” Yes, he is addressing employers that don’t have a retirement plan but I will also submit to you that as investment advisors and educators we are not taking care of the whole body in the delivery of quality 401(k) plans and helping American’s have a successful retirement.
We unfortunately are just focusing on one part of the body and that is not holistic enough to have a healthy 401(k) plan. And, that my friends is the heart of the problem. Are the little people getting the care and advice that the owners and executives are getting these days? I have seen the enemy and it may be us?
SEE ALSO:
• Opinion: Are Oklahoma 401k Plans Helping to Destroy State’s Energy Business?
Terrence Morgan, AIF, CPFA, is President of Ok401k, Inc., in Oklahoma City, Okla.
