There is school of thought that the best fighters are not even in in the ring yet in the qualified plan advisory business. One thing we know for sure is we have room for more to serve the 600,000 + plans out there. All the training you need is right here. You have to do the roadwork though.
Do you enjoy committee work or participant facing activity? Pick one and GO! Are you a composer or a conductor? Pick one and GO!
Check your Broker/Dealer agreements with plan sponsors. What do they allow you to do? Pick one and GO!
If they don’t have clear agreements then you really gotta GO!
How fast do you go on the highway? The speed limit or 9 miles per hour over the speed limit. If you are in North Jersey you can’t go the speed limit safely can you? The actual and practical speed limits probably vary by region and population. I recently saw speed limit signs in Utah posted at 80 mph. Going over 80 mph is hard for most.
The growing school of thought in the qualified plan business involves a defined speed limit for compensation and related services. While we won’t make an attempt to define the speed limit, we ask you to be mindful as compensation and services are paired. Be clear, Be reasonable and Be informed. Use the tools available from your vendors, your DCIO partners and your digital destinations. http://www.the401kstudygroup.com has a unique group assembled to build around as do other industry stakeholders.
By the way, it is a great time to have those conversations with plan sponsors, especially if you are new to the industry or considering entry. You have a clear message that resonates deeply with decision makers and fiduciaries and no old habits to unlearn.
Oh yeah and just drive 55. The rest of the story is for another day.
According to a July 2013 GAO study, only 12% of the 4.8MM US Employers with more than one but less than 25 employees offers a workplace retirement plan. (401(k) / SIMPLE / SEP). This leaves millions of Americans without “coverage,” and is exacerbating the problem of funding Americans’ retirement. It’s also a problem that, given the right products, Advisors are best-suited to address.
Tired of waiting for private-enterprise to better this statistic, a handful of states are examining a political response. California and Connecticut are two examples, each studying “Feasibility” of laws that would require business with a minimum number of Employees (10 in CA, 5 in CT) who do not offer a retirement plan to participate in a “Payroll Deduction” IRA programs managed by these states.
This is in addition to H.R 2035 (Sponsored by Richard Neal D-MA) at the Federal level, which would require business with more than 10 employees to either offer a workplace savings plan, or facilitate employee deferrals into IRAs.
Obviously, there’s a big difference between bills / feasibility studies and law. But, if private enterprise alone won’t improve the statistics above, then government is obliged to try.
As an organization who specializes in delivering 401(k)s and Payroll Deduction IRAs to the small-business segment (1-25 Employees), www.theonline401k.com believes this an opportunity for advisors to engage their small-business customers on the benefits of tax privileged retirement savings. We can help Advisors easily, inexpensively, and profitably set-up workplace savings plans – so that these various governmental mandates won’t apply.
I have been quoted as saying that “cake is a delivery system for frosting” (or icing depending on which word you prefer).
Two of the most watched shows in my home are The Cake Boss and DC Cupcakes. Not because we are confection junkies but because my kids like to watch the inner workings of any businesses. They also have a knack for asking for the most complicated and realistic designs for their birthday treat.
What is notable here though is how parents get frustrated after seeing how much cake & frosting are left after the party. In the final analysis we have found that cupcakes give us more variety and portion control, and yes, waste reduction.
What does this have to do with retirement plans you ask? When we speak with many Advisors the questions we normally get focus on the debate of cake vs. cupcakes. Should it be a feature rich platform with loads of bells and whistles or should it be skinnier and more individualized? Will extra features actually be utilized or will they be the leftover frosting, wasted and perhaps expensive? Is the success of the participant outcome dependent on the platform or the Advisor?
Do plan sponsors often buy cake with extra frosting but later find out their participants really needed cupcakes?
Image courtesy of -Marcus- at FreeDigitalPhotos.net
A guest post by John Marion from Howard Capital Management
Howard Capital Management started on the journey to achieving Computer Model Certification 5 months ago. We started down the road because we wanted an independent third party to review our methods for compliance with ERISA and we wanted the certification to show it.
There are very few companies that are approved by the Department of Labor to certify computer models under ERISA. DALBAR is one of the best know of these companies. So we chose DALBAR as the “gold standard” to conduct our certification.
Five months ago, we asked DALBAR to open the Optimizer’s hood and kick the tires. The certification process covers the following points, among others:
- Clean background check
- Investment theory is generally accepted
- Performance and fees are reasonable
- 5-year track record
- No conflicts of interest
After 7 weeks of intense scrutiny, we received DALBAR’s certification on May 20th, 2013. Needless to say we are proud to have received this credential.
Now we can say that the Optimizer has been evaluated by DALBAR to determine if it meets the requirements to be used as a Certified Computer Model as defined by the Employee Retirement Income Security Act of 1974, as amended [“ERISA”] Section 408(g) and Internal Revenue Code [“IRC”] Section 4975(d)(17). As a result, the HCM 401(k) Optimizer® computer model has been granted Certified Computer Model status by DALBAR. This is important, because ERISA plan fiduciaries who meet all other ERISA requirements and use a certified computer model will qualify for the fiduciary relief granted under ERISA Section 408(g).
There are very few companies offering models that have been certified and none that we know of that embrace the Advisor as the Optimizer does.This is very important because it allows us to partner with advisors to offer plan sponsors a solution that can grant them fiduciary relief.
Image Courtesy of nuttakit at Freedigitalphotos.net