Did your "advisor" need an escort to win your business?

I had the privilege of being in a finalist presentation today, which is always fun. The retirement plan committee asked a very pointed question at one point that caught me off guard.

"Do you suggest we move our plan or can we leave it where it is [at the current record keeper]? In our other meetings, the advisor has suggested we move our plan, but you seem... vendor agnostic."

I was taken aback for a moment, but I realized what had gone on. These other "advisors" were trying to tell the client what they thought was best without knowing the client. It boils down to this: 

Why would I order your lunch for you if I don't know whether you have food allergies or not?

It's very disturbing to me that a retirement plan "advisor" would parade another record keeper along side with them to a finalist presentation where they are hoping to be chosen as the client's trusted advisor. After all, we advisors are supposed to be hired for providing wise council. Taking in another product with you is, well, a product sale, not advice! 

Back to my lunch comment above: How on earth can you make any judgement call about what's appropriate for a client you don't even have yet and don't know what is important to them? Where's the RFP that contains what the client is looking for? Why do you want to put the company through a plan transition and are they prepared to handle that mess? Where is the prudent due diligence process??!

It chaps my hide to think that this nonsense still goes on in our enlightened age of fiduciary responsibility, due process, and prudent decision making!

In this case, the answer is unfortunately pretty simple. The plan had been sold direct to the client without any broker/advisor affiliated. That means there isn't any commission built into the fees for the plan. Thus, by walking in with another vendor, the other "advisors" were ensuring they could get paid -- through commissions by selling a product.

By walking in without any strings attached or the need to generate a commission by selling a product, it turns out we were ensuring the client got unbiased advice.


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