“If it ain’t broke, don’t fix it."
"Let sleeping dogs lie.”
“Leave well enough alone.”
These old kernels of wisdom may sound harmless enough, but they’re 100% the wrong approach to take when discussing retirement plan fees with your clients. We understand why you might not want to broach the subject unless absolutely necessary. After all, you’ve got so much to do. There’s hardly enough time to service existing clients — much less find new ones to grow your book. And then add to that, discussing fees in the off years between your requisite 3-5 year live-bid benchmarking process? There just aren’t enough hours in the day.
Guess Who’s Talking … About Plan Fees?
Unfortunately, this kind of thinking can be detrimental to your client relationship at best; and worst case, it can lead to a lost client. The truth is that if you’re not talking to your clients regularly about their retirement plan fees, chances are someone else is — or will soon.
You’re not the only one who’s busy. So are plan sponsors — they’re busy making profits, running their organizations, managing employees and putting out fires on a daily basis. Recalling details about their plan fees from the last time you put their plan out to bid can easily get buried in the minutia of daily business operations. Depending on their level of experience with retirement plans, fees may become lost in a sea of numbers they have to deal with every quarter.
What Sponsors Don’t Know Can Hurt YOU
Although plan fees remain a top concern for sponsors, there still can be blind spots. For example, according to the Callan 2019 Defined Contribution Trends Survey, 42% of sponsors don’t evaluate indirect revenue when benchmarking fees — which can be a significant amount.
Any lack of awareness about fees can undermine the confidence a sponsor has in his or her advisor. And it leaves the door open for competitors to start a conversation around the subject. This may particularly work against you if your plan sponsor is among the almost one in five (18%) the 2019 Fidelity Plan Sponsor Attitudes survey found to be actively looking to switch retirement plan advisors.
Bottom line: Don’t assume that just because you have a friendly professional relationship, and your sponsor isn’t talking about their fees, that you shouldn’t be.
A Better Way to Benchmark
Having a simple, easy, convenient and highly accurate fee benchmarking tool that you can use each year can help shore up your relationship, safeguard your client and plan participants, and help meet your fiduciary duty to ensure retirement plan fees are reasonable. PlanFees will provide you with a personally brandable, professionally designed report that you can create in just minutes by simply scanning a fee disclosure document right from your smartphone. Your clients will clearly see how their fees stack up against similar retirement plans. By providing this additional touch point and discussion, both you and your client can be more confident of their understanding of investment, recordkeeping, administration and advisory fees.
Benchmarking annually can help keep your professional relationship on solid ground and less susceptible to advisor shopping and poaching, help meet your important fiduciary obligations — and mitigate risk for sponsors. Contact us, and we’ll prepare a free benchmarking report for one of your clients. Discover a better way to benchmark with PlanFees.