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Competing and Thriving in a Cost-Sensitive Market

As 2018 ends and our advisors are finalizing their 2019 business plans, a consistent theme is how to continue to compete, differentiate and thrive in an industry focused on costs and fee compression. Here are some successful strategies that have worked at Pensionmark:

Moving from a 3(21) to a 3(38) service model

Outsourced investment management is gaining popularity, and for good reason. For starters, plan sponsors enjoy the increased protection provided and the amount of time saved for their in-house staff. Many plan sponsors do not view themselves as “Investment Experts”, by taking investment decisions off their plate, due diligence meetings can revolve around topics advisors really need plan sponsors to be a part of – such as plan design, participant experience, etc.

It is appropriate for you to adjust your fee for the additional services provided. 3(38) is not as simple as it sounds – if you cannot outsource the work to home office, you must implement appropriate policies, procedures, documentation, E&O and bond coverages. Keep in mind that the size of your retirement plan practice may be limited if you try to take on every function of your offering. 

Providing Plan Health, Financial Wellness, Fee and Service Reporting

We call it the “what have you done for me lately” report.  Provide clients with a transparent history of the plan with you as their advisor. Show them their plan health (participation, deferral, diversification), costs, participant wellness engagement, along with every meeting and service instance you have delivered during your tenure. This is a great way for you to demonstrate your value as their advisor, and invaluable if there are changes to the management team at your client. This is especially important if you are asked to justify cost and you can show how you have reduced your fees over time.

Automating/Outsourcing Investment Reviews

The ability to automate report generation and delivery to clients will save you hours of time per client each quarter in the investment review process. It is important that you have established data feeds and processes to ensure accurate and timely information. More advanced technology will send quarterly investment reviews to each of your clients on your behalf, and automatically upload to a fiduciary document vault. If you have access to qualitative analysis and can also outsource the fund recommendations to home office, you may greatly increase your bottom line.

Participant Advice and Financial Planning Services

Financial Wellness has become status quo in our industry and providers are continually building more robust platforms for retirement plan participants. Participant Advice and Financial Planning Services may offer you a way to differentiate with an expanded participant experience that only a true advisor can deliver. However, the service can be cost and/or time prohibitive if engaging a third-party or offloading the ongoing service to your home office is not an option.

Custom Investments and Managed Accounts

Offering investment options such as low-cost collective trusts or customized target-date funds may significantly lower the total cost to the plan and expand your value proposition. A more personalized approach is to replace vendor driven managed accounts with advisor-built programs. These deliverables, however, are typically only available through larger firms or your home office if applicable.

Hopefully these tips help you as you head into 2019 confident about your practice. As always, feel free to reach out if you have any questions or want to hear more about how Pensionmark is accomplishing all of this.

Contact: Andrew Doering – – (805) 456-7097


About the Pensionmark Advisor Support Program

Pensionmark’s Advisor Support Program provides its affiliates a full-service suite of deliverables and the groundwork needed to position their practices for long-term growth without losing the spirit of independence. In addition to benefiting from the size, strength, and relationships of a national consulting firm, customizable solutions allow the affiliate to select the support level that best suits their business model and client base. Pensionmark’s centralized service design provides time-tested reliability in investment analytics and due diligence monitoring, plan sponsor and participant employee education systems, lead generation and proposal assistance, and compliance support.