That’s the Stock Broker, one of the many characters voiced by Wally Wingert on Family Guy, the animated television sitcom created by Seth MacFarlane and airing on Fox.
If you’re not up on pop culture, the show centers on a dysfunctional family that lives in the fictional town of Quahog, Rhode Island. In the real world of small 401(k) plans and 403(b) plans, however, a broker/adviser/consultant is a critical element in the retirement plan’s ultimate success. And in most cases, his or her compensation is in the form of commissions.
Bob Toth talks about this in the context of 403(b) plans in his recent post, 403(b) Commissions: In Defense Of (Reasonable) Compensation, on Baker & Daniels‘ Benefits Biz Blog:
I do not argue in defense of those unethical salesmen who sell the wrong product at the wrong fee to the wrong person. There are employers and employees for whom some of the products are unsuitable. But, as we issue new RFPs to support the new regulations, we are finding that there are very real services being provided in this market.
The impeding 403(b) changes to which Bob alludes means that if it looks like a 401(k), acts like a 401(k), and sounds like a 401(k), then it must be a 403(b) – Part 1 and Part 2.
And so what will evolve with 403(b) plans are a set of best practices provided by the the most professional 401(k) brokers. Those individuals who:
- Identify plan sponsor and participant needs
- Manage the RFP process
- Involve themselves in the process of changing service providers
- Provide an investment policy statement
- Assist with fund selection and performance monitoring
- Conduct employee enrollment meetings
- Provide assistance to individual participants
- Continually involve themselves with the plan sponsor and the other service providers
- Communicate rollover and other options to terminating employees
This ain’t Quahog, Rhode Island.