In PLANSPONSOR’s recent cover story article, Managing Partner Jim Scheinberg spoke with reporter Ed McCarthy on how advisers demonstrate proactivity, and how advanced thinking and attention to detail help position plans for greatness.
As noted in the article, according to the 2023 Plan Sponsor Attitudes Survey by Fidelity Investments, 22% of plan sponsors with advisers are seeking to switch, primarily due to the current adviser’s lack of proactivity. Proactive advisers are crucial in managing the complexities of plan administration and compliance, as well as providing fresh ideas and strategies. Jim addressed ways to identify proactivity:
For example, advisers can demonstrate proactivity with a plan’s investment selections, notes Jim Scheinberg, managing partner in North Pier Search Consulting in Marina Del Rey, California. Investment oversight for 401(k) plans is often considered a commoditized service, says Scheinberg, and some advisers put little effort into the process.
“Some organizations simply are printing a [portfolio analysis and performance] report that may or may not have some meaningful depth behind it,” he explains. “They deliver the report, and that’s the end of it. If a fund gets a passing score, that’s good enough for them and they move on.”
But other advisers take a different approach. An adviser whose firm purchases securities for its portfolios expends more effort on buy-side analysis and can spot potential problems faster than can less active peers. “They’re far more concerned with making good selections for the long run and not necessarily just good-looking selections from the client’s perspective,” Scheinberg says. “So, proactivity works its way into what is often thought of these days as a commoditized part of the adviser relationship, which is investment selection.”
Jim also noted key evaluation areas where sponsors should investigate advisers’ proactivity. “If [the adviser’s] not being proactive by looking at the demographic, the budget of the organization, and its objectives, then ultimately you might end up with something stale,” Scheinberg says.