It can be hard work building the advisor-client relationship and ensuring that needs are met and anticipated.

Enhancing the Advisor-Client Relationship is More Important than Ever

Advisors may think the hardest part of the business is landing the client. However, sometimes the real work comes in building the advisor-client relationship and ensuring that needs are met -- and anticipated.

The strength of the advisor-plan sponsor relationship has never been more important. Fidelity’s Plan Sponsor Attitudes survey tracks a number of metrics but one that stands out in its 2017 report is that 38% of plan sponsors are actively looking to change advisors. This number is up from 30% in 2016 and 9% in 2013.

This uptick could be tied to several factors including fees or fiduciary concerns, says Russell Warye, president of Benefit Partners Financial Group, but he also points to communication.

“Generally, plan sponsors need a more compelling reason than cost savings to make a major move,” he says. “My guess is these are companies that the advisor is not reaching out to regularly and there’s a general failure to support the relationship.” He also sees plan sponsor dissatisfaction when they are not receiving proper plan design assistance. 

The Plan Sponsor Attitudes research found that only 31 percent of respondents said their advisors were good at proving their value to the plan. While financial wellness programs are on the forefront of value-added services, Warye notes that there are other unique opportunities that advisors can use to build value.

His firm advises 120 plans and several years ago he contracted with a casualty company so he could offer ERISA fidelity bonds directly to his clients, saving them the step of working with a third party. He says the benefit to clients is twofold: they have fewer points of contact to manage and with Warye involved, they are better equipped to ensure they are receiving the correct type and amount of insurance.

“I’ve reviewed client 5500 forms and found cases where they thought they had ERISA insurance but instead were only covered against employee theft. Or they were paying for an ERISA insurance bond with coverage of one million dollars, far above the half million-dollar maximum allowance per plan.”

Warye notes that being straightforward and offering clear communication to all plan sponsor representatives is imperative, but there can be different strategies in dealing with the various executive level players and advisors should be prepared to answer a variety of questions.

“CFOs are of course focused on costs and aspects such as average deferral percentages. But HR directors may want to drill down on website portal metrics, including who is using the website and what are the most popular features.”

In an attempt to streamline processes, advisors also make the mistake of offering packaged programs and telling the plan sponsors what they need. They also spend too much time talking about fund expense ratios adds Wayre.

He says advisors need to instead ask questions to learn what plan sponsors want. He suggests partnering with a plan design specialist who can ask creative questions to create custom plan options that are specific to the company and its participants.

As important, quarterly check-ins are a must for mid- to large-sized companies (for small companies, every six months).

“Advisors should be front and center on decision-makers’ minds. And be smart about when you contact them, such as around compliance times to provide guidance when they are working on 5500 forms,” notes Warye.

How much is too much?

Some of this will depend on the “personality” of the plan sponsor and what they need in terms of service. But as Warye points out, if an advisor doesn’t come across as “sales-y”, most plan sponsors are open to talk with you and appreciate the inquiry.

If advisors handle these steps correctly, the rest of the relationship will follow.

“There is a tremendous amount of loyalty to advisors who are taking care of their clients,” concludes Warye.

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