by Ron W. Hagan
The investment industry ceases to amaze me with its incessant need to brand and label lofty concepts in an attempt to deceive investors and/or those who make decisions on behalf of investors. Did I say deceive? OK, maybe not deceive, but certainly an intent to tickle the ears of some in the audience and outright to confuse others.
In my world, particularly the work that my company (rolandcriss.com) performs, business leaders who are tasked internally with the responsibility to manage and oversee the company's retirement plans play an important role and they bear an even heavier legal burden.
Back in the day, the investment product sales people peppered these executives (let's call them fiduciaries) with slick marketing campaigns, well known brands, and investment data that read and sounded pretty good, whether they could verify it or not. The problem: the investment community essentially defined and wrote the rules of engagement.
In contrast, most mid to large size companies allocate significant budgets to quality assurance and supply chain management programs. In this venue, the company (buyer) defines and writes the rules of engagement. These corporate professionals pursue advanced degrees and sit through professional development and continued education sessions to hone their skills. Supply chain managers would no sooner implement a vendor's recommended steps for monitoring its success than they would hand the supplier the corporate check book.
However, that is precisely what we have done in the retirement plan industry. In an honest attempt to offer retirement benefits for our employees, and in a manner that serves their best interest, most (not all) of the plan sponsor community has inadvertently entered into contracts that serve the best interest of the service providers.
How did that happen? Hmmm, where do I start?
In large part we accepted what the providers (brokers, investment advisors, and third party administrators) presented in a sales presentation or RFP bid as truth. No fault of our own, we didn't posses a method or QA program to help test and verify what was verbally promised, but contractually omitted.
Today, the retirement plan freeway is littered with terms like co-fiduciary, full fee transparency, independent fiduciary, fee neutral, fund agnostic; I could go on and on. But is anyone reading the contracts or actually testing the services delivered for their value? Do we know what to look for? I encourage you to do so. You will be glad you did.
This is what drives my passion. We clean up the messes; we help fix conflicts; we slash fees for participants; and we define success measurements and monitor results. We are not an investment advisor or manager with a better mousetrap. We are an honest to goodness fiduciary who pursues excellence.
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