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DC Optics Viewpoints

Thought-provoking content to help you advance your DC practice

Gary Shipper
Gary Shipper
DCIO Specialist

Be a champion: Change your game

Whether it’s in sports or business, when the game changes, champions change the way they play it. And it doesn’t matter whether it’s on the court or in the boardroom; those who fail to identify trends and evolve typically hasten their own extinction.

A different way to score

In the past five years, professional basketball has experienced a three-point renaissance. Once considered a gimmick shot, the amount of three-point shots taken throughout the league has risen by more than 50%.

Teams that have evolved and embraced this change produced the best records in the league, while teams that failed to embrace the new way the game is being played and took the fewest three-pointers in the league are not making the playoffs—they're staying home.

One person’s trick shot is another person’s shot at a championship. It is the nature of competition that those who shift their tactical approach in the face of changing game conditions have a greater shot at winning. Likewise, not changing your game can be the fastest road to obsolescence.

When it comes to servicing 401(k) plan sponsors, what is the next evolution of the game? In a recent study Wells Fargo conducted with plan sponsors around the country, we learned that the number one factor sponsors used to differentiate advisors was plan engagement.

Gone are the days of showing up once a year and delivering plan-level reports. Plan sponsors told us that elite advisors consistently demonstrate their expertise by offering insights on potential ways to improve plan performance and participant education. They continually review plan health and demographics to provide active ongoing service to the plan and to justify their fees.

Active, continual plan engagement is the three-point shot of plan service. What was once the exception has become the rule—at least for the championship advisory practice.

Three-point plan to show engagement with clients

Here is your three-point shot for a championship practice. Integrating these three actions into your plan service model will help demonstrate your value, build plan retention, and more:

  1. Find out exactly how they want to be engaged: Conduct a client satisfaction survey. Because each client has unique needs and objectives, when you conduct a satisfaction survey, you gain valuable insight into how your team is already performing, but you also can learn:
    • New topics of interest to the individual client that you can introduce at committee meetings
    • Levels of enthusiasm for other services you might offer outside the plan, like executive benefits, HSAs, or financial wellness programs
    • The frequency of communication desired by plan decision-makers

    Take action: The Science of Satisfaction: Client Feedback Surveys guide and template

  2. Use industry insights to add value to plan health conversations. Raw data doesn't give your client very much insight. For industry data to help an individual client, put the plan-level data you already receive into the proper context. Add value by taking the analyses and reports you already receive from industry groups, recordkeepers, and DCIOs and comparing your clients’ data to the plans in the study. When a client’s plan doesn’t align with industry averages, offer suggestions for improvement using industry data as proof points.

    Take action: Defined Contribution Plan Insights

  3. Provide an annual summary. Sponsors have a lot more on their plate than just the plan. They don’t have the time to stop and think about all the work you do—so let your annual summary tell them. This is your opportunity to demonstrate your value, and to document it. Take inventory of all the time you spend on their plan: interactions with the recordkeeper, participant calls, on-site meetings, project work, fund reviews, and reviews of legal and regulatory issues that may affect the plan. Sponsors need to know how many functions you fulfill and how many hours you spend on their plan. This could be an eye-opening exercise, both for you and the sponsor. Your goal with the annual summary is to provide a yearlong document of plan activity—but it’s also a permanent record of the lasting value you add, a clear justification of your fee, and in many cases, an indication that you’re worth even more.

    Take action: The Science of Satisfaction: Annual Summary for Satisfaction guide and template

Take your shot

Changing your game with strategy and purpose is a practice of champions. Paradigm shifts in sports or in business are common and should be expected, and the competitive advantage typically goes to those who can identify and implement the necessary adaptations.

When you embrace the three-point shot of plan engagement, excelling at client retention is only the beginning of your new advantage. You also will be competitively positioning your practice for long-term victory.

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