What My Fishing Trip Reminded Me About Local Service

Ah, summer time!  I’m not one of those people who prefer summer over the other seasons, but I will admit it has its delights.  For example, I was able to get together with one of our field service leaders recently, and we had some time to throw a line in the water and do a little fishing.  Some people play business golf.  I do a little business fishing.

(Maybe someday, if I could ever elevate my golf skills to “lousy”, I could add a little business golf in there as well.)

Whether it’s fishing or golf, the opportunity to maintain and develop business relationships on a face to face basis is of key importance. I was thinking about those relationships as I overheard one of my colleague’s business calls in between casts.  It seemed like a relatively routine conversation with a client and their financial professional.  My colleague ended his call with the simple assurance, “whatever you need, I’m there for you.”  He wasn’t just a voice on the phone—he is local, and can be physically present at the client or financial professional’s location on short notice.

It’s easy for a retirement plan sponsor to take for granted having a live “go-to” person, but the fact of the matter is that not all plans do.  This is especially true for tax-exempt organizations. Some retirement plan service providers have developed models that minimize plan sponsor-level service, providing nothing more than an 800 number for administrative questions. What service is provided seems to focus almost exclusively on participants. This is probably done in an effort to reduce the cost of providing services.

While participant service is necessary and a good thing, having someone available to proactively work with the plan sponsor also provides a great deal of value.  Some of the services they may provide include:

  • Working with the plan’s financial professional to help develop and monitor the plan’s investment policies.
  • Assisting with the development, evaluation and consistent execution of education policies.
  • Tracking the utilization of the plan and its features, and helping analyze the plan’s effectiveness in preparing participants for retirement.
  • Keeping the plan and its features consistent with the needs and objectives of the plan sponsor, even as regulations and employee demographics change.
  • Being available in person to assist with questions and problems when a long-distance phone conversation just isn’t enough.

The local service I describe likely comes with a higher price tag than the simple phone contact.  Do all plan sponsors need or desire this level of service?  Of course not.  One size never fits all.  But for those that need or prefer receiving help with the complex details of managing their plan from someone with whom they’ve developed a relationship of trust, they find the service to be well worth the cost.

A reminder about “fee reasonableness”

The subject of retirement plan fees has received a lot of attention lately, starting with changes to Department of Labor disclosure requirements. Since those requirements took effect, a great deal of media attention has been focused on retirement plan costs.  Remember that fees are supposed to be reasonable, not necessarily the lowest.  Fees themselves cannot be reviewed in a vacuum; in fact, the regulations specifically state otherwise.  The Department of Labor isn’t expecting a plan to cut its expenses to the bone.  They simply expect the plan sponsor to understand their fees and ensure they are reasonable given the level of service.  You get what you pay for!

I find those personal relationships invaluable, whether it’s the opportunity to catch and release a few fish on a sunny summer afternoon, or just the ability to pick up the phone when I need help.  Fortunately, this type of personal service is also available to those plan sponsors that feel the same way.


In addition to blogging here, I also tweet regularly about topics of interest to Tax Exempt plans. Follow me on Twitter: @1aaronfriedman1.

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While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Insurance products and plan administrative services are provided by Principal Life Insurance Company, a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

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