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Establish a standard to evaluate 401k and 403b plan advisors – 3 Tips for Plan Sponsors

standard to evaluate 401k and 403b plan advisors

Finding a financial advisor for your company 401k or 403b plan is not always simple and straightforward. Aside from finding an advisor with the right credentials and background, plan sponsors should also determine if the advisor is a good “cultural fit” as well. By cultural fit, I mean a person or company that shares and appreciates your company’s corporate culture. Plan sponsors should establish a standard to evaluate 401k and 403b plan advisors.

But let’s not forget about the simple basics of evaluating a 401k plan advisor for his or her professional suitability first. Plan sponsors should look for three basic or standard traits to evaluate 401k and 403b plan advisors.

  1. Disciplinary actions – does the advisor have any disciplinary actions against them? A quick check with FINRA’s BrokerCheck data base can give you a broker or registered advisor’s disciplinary history.Also, some easy ways to get a sense of a professional’s history is to ask for references, then follow-up. This is a very obvious, yet seldom used method of screening prospective advisors.Finally, Google the advisor’s name and company, be aggressive and vigilant. If something does not appear correct, bring it up, address it up-front. Look for short-term engagements or gaps in service to companies. It is sometimes easy for unscrupulous professionals to cover-up poor behavior and lack of ethics. It may not be easy, but avoiding bad players is perhaps the most important element of your search.
  2. Leadership and Innovation Skills – Does the advisor publish any articles or are they known for their work within their profession? Most successful advisors are sought-after for their opinions in the press. What innovations and tangible successes can they show you as a result of their ability to take initiative and lead the effort towards better outcomes for participants?Few of your workers have an identical financial profile, share your challenges with a prospective advisor and listen to how they would solve your most basic, then your toughest challenges. If the answers don’t get you excited, you may wish to move on.
  3. Results – This is where you can really get a sense of what to expect from your advisor. An advisor should make a significant impact in several key areas. After all, why have an advisor if they cannot give you a reasonable expectation that they will improve your plan?
    1. Enrollment – do they have a history of increasing employee enrollment?
    2. Do they find ways to motive higher deferral rates?
    3. Do they understand and take the time to address individual needs
    4. How do they handle the thorny issues such as plan loans? Plan loans are a major cause of bad outcomes. Do they take an educational approach, or just look the other way.

Are their other clients ready for retirement? Are they closer to being ready? Ask them to benchmark their recent work at other firms.

Timothy Kelly
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Timothy Kelly

Tim Kelly is the Founder of ForexTV. Since its inception in 2003, ForexTV has been a global leader in forex news and has expanded its news coverage to multiple industries. ForexTV is now one of the most recognized brands in global financial news. Mr. Kelly was also the creator and co-founder of 401kTV where he served as Managing Editor until April 2017.

Mr. Kelly is an expert in online marketing, search engine optimization, content development and content distribution. He has consulted some of the top brokerages, media companies and financial exchanges on online marketing and content management including: The New York Board of Trade, Chicago Board Options Exchange, International Business Times, Briefing.com, Bloomberg and Bridge Information Systems and 401kTV.

He continues to be a regular market analyst and writer for ForexTV.com. He holds a Series 3 and Series 34 CFTC registration and formerly was a Commodities Trading Advisor (CTA). Tim is also an expert and specialist in Ichimoku technical analysis. He was also a licensed Property & Casualty; Life, Accident & Health Insurance Producer in New York State.

In addition to writing about the financial markets, Mr. Kelly writes extensively about online marketing and content marketing.

Mr. Kelly attended Boston College where he studied English Literature and Economics, and also attended the University of Siena, Italy where he studied studio art.

Mr. Kelly has been a decades-long community volunteer in his hometown of Long Island where he established the community assistance foundation, Kelly's Heroes. He has also been a coach of Youth Lacrosse for over 10 years. Prior to volunteering in youth sports, Mr. Kelly was involved in the Inner City Scholarship program administered by the Archdiocese of New York.

Before creating ForexTV, Mr, Kelly was Sr. VP Global Marketing for Bridge Information Systems, the world’s second largest financial market data vendor. Prior to Bridge, Mr. Kelly was a team leader of Media at Bloomberg Financial Markets, where he created Bloomberg Personal Magazine with an initial circulation of over 7 million copies monthly.
Timothy Kelly
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