What do 2,845 hospitals, 5,906 credit unions and 1,700private colleges have in common?

|

Aside from a dedicated focus on improving the lives of others,all are nonprofit, nongovernmental organizations that need help torun effective retirement savings plans for their employees.

|

And all are part of what is estimated to be more than a $1.63 trillion, largely under-servedmarket.

|

There is tremendous opportunity for financial advisors toprovide value to both plan sponsors and participants in thenot-for-profit (NFP) retirement plans marketplace.

|

NFP or nonprofit organizations tend to be highly appreciative ofand loyal to those who support and help them. That means assets from nonprofit retirement plans tend tostay in place, especially when providers and advisors deliverhigh-quality service year after year.

|

Yet, many NFP plan sponsors go wanting for support and strugglewith managing their retirement plans. One reason:the market has some idiosyncrasies that may trip up theuninitiated.

|

Advisors as well as plan sponsors can make missteps if notproperly informed. For instance, a common mistake is that manysponsors – and sometimes their advisors -- do not realize thatassets from a 403(b) defined contribution plan cannot be co-mingledwith assets from a 401(k) plan. Given that many nonprofits have oneor both of these plans it’s a mistake that advisors need to be onthe lookout for when conducting reviews.

|

But many advisors who support nonprofit organizations are notspecialists in this marketplace. They not only survive but thriveby working with an astute and responsive provider with the know-howand resources to support them.

|

Recently, there has been consolidation among providers who servethe NFP market as the biggest, most experienced players expandtheir leadership positions. The picture becomes even clearer whenadvisors ask providers a handful of fundamental questions:

|

Advisors should look to work with an experienced provider. (Photo: Getty)

1. How much experience do you have in the NFP market?

Advisors should look to work with a top provider withdecades of experience and, at a minimum, tens of billions ofdollars in NFP retirement assets under management.

|

If the provider tells you that they’ve been in the ERISA 403(b)retirement plan space for fewer than 10 years, consider looking forthe exits.

|

2. What kind of NFP or tax-exempt specific support do youprovide?

A provider that is well-versed in this space typically has aspecialized unit or swat team of regional representatives who arededicated to the NFP market.

|

Often, these specialists work directly with advisors or backstopother field reps who are generalists in the retirement plansmarketplace. The key is making sure you have access to information,insights and intelligence, preferably as local as possible.

|

Ask providers if their support is high-touch or high-tech. (Photo: Getty)

3. Is your support high-touch or touchless?

High touch may mean high success. Providers that are makinggains in the market have feet on the street in the form of local orregional wholesalers. But the support shouldn’t stop there.

|

Plan sponsors and advisors should expect to interact withretirement plan specialists or relationship managers who can helpensure the plan runs smoothly. Relationship managers can helpevaluate the effectiveness of the sponsor’s retirement plan andrecommend changes or other initiatives as appropriate.

|

Top providers also have educational specialists who can conductworkshops for participants, explaining the importance of retirementplanning, offering guidance on sound approaches, and supportingasset consolidation for individual transfers to different 403(b)plans. Ask if the specialists are available to meet one-on-one withparticipants.

|

Some providers offer high-touch only for plans with $50 millionin assets or more – or not at all. In those instances, check to seeif they define “support” as a website and an 800 number.

|

4. How do you evaluate the health of retirement plans?

Plan health has become an industry buzzword and every providerhas seemingly jumped onto the bandwagon. Don’t jump on yourselfunless the provider can deliver precise analytics on retirementreadiness with real data – not hypotheticals – for both the planand its participants.

|

An effective plan health program should also includerecommendations on how to push the needle, including options forplan designs and a variety of ways to reach out to participants.Experience says that two-thirds of a retirement plan’seffectiveness is determined by design and the remaining third isdependent on participant outreach.

|

The first step in assessing the NFP marketplace is to drivearound your own community.

|

Can you spot hospitals, clinics, private colleges anduniversities, private K-12 schools, credit unions or charitableorganizations for child and family services?

|

If so, chances are they offer one or more retirement savingsplans with a common denominator: they may very well benefit fromyour investment insights and expertise.

|

This article is for informational purposes only and shouldnot be construed as legal, investment, and/or tax advice. Please consult your own counsel and other experts regarding thespecific application of the information set forth herein to yourown plan and/or circumstances.

|

RS-42430-00

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.