Inside Knowledge: An Advisor’s Take on What Makes A Great Retirement Plan Advisor

Three out of four plan sponsors hire the services of an advisor for their plan, according to the Retirement Advisor Council. And they’re looking for more from their advisor than ever before.

What makes an advisor stand out?

Mark Davis, Senior Vice President of CAPTRUST Financial Advisors, offers his insight in a column published in the Summer issue of the Journal of Pension Benefits.

We picked out some key excerpts, below.

On plan design:

Going forward, in many states, we may well see a growth in usage of state-sponsored plans or mandatory IRA solutions for the smallest of employers. In order to justify the cost of using a company-sponsored plan, advisors will need to know the details of sophisticated plan designs or partner with TPAs who do. Advisors who want to serve larger plans need to show their ability to think strategically and recommend that their clients act tactically to accomplish plan goals.

On participant engagement:

It is the advisor’s job to help make sure the benefit is attractive to and valued by participants. I think it is a plan advisor’s job to help sponsors to leverage every bit of participant support they can get from their plan’s primary retirement services vendors. What is the sponsor, or more importantly, the participant already paying for as part of their fees? Can the advisor help the sponsor strategically use services like auto-enrollment, managed accounts, or advice services? It takes a lot of experience and access to volumes of data to be able to answer these questions. For example, most of the major vendors in the marketplace offer only one choice of managed account alternative and, in some cases, it is a proprietary solution. How can a fiduciary make a prudent choice to select an investment alternative from a universe of one choice?

On investment management:

An advisor’s investment process also needs to be different—and better—than what plan sponsors can do on their own. Gone are the days when a mass produced report from Morningstar, Fi360, or another vendor can just be used to paper a file.


Advisors need to have a thorough understanding of the various types of investments used by defined contribution plans, and how they can be mixed and matched in menus. They need to understand the basics of behavioral finance—especially the risk of “choice overload” and its potential impact on participation and participant actions.

Advisors need to be able to understand the broad range of qualified default investment alternatives available in the marketplace and be fluent in the differences, particularly between target date funds.

Leaders on my investment team count over 80 distinct target date solutions today, each with their own assumptions, approaches, strengths, and weaknesses.

An advisor needs to be equally comfortable with risk and age-based solutions. Advisors should be able to demonstrate that they have no agenda in the active versus passive investment debate.

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