PLANADVISER - November/December 2022 - 30

practice management / fees
Determinants of Profitability
T
he retirement industry is in a state of flux. Consolidation
is everywhere, from recordkeepers to advisers. A
complex litigation landscape is also putting new pressure
on plan advisers to show their work and provide a
heavily documented process for how decisions about a plan
get made. For firms tasked with plan administration, these
challenges make it that much harder to stay profitable.
Core Services Under the Microscope
Plan advisers typically offer one of two types of fee models.
The first is a flat-fee fiduciary arrangement that is based on
head count and the size of the plan. The second option is
more bespoke and can consider head count and size of the
plan, plus other services provided, including financial advice
or emerging benefits such as financial wellness programs.
Plan advisers say the core defined contribution retirement
services such as 401(k) and 403(b) plans are extremely
price-sensitive offerings whether an adviser requests a flat
fee or a more customized fee.
Phil Webb, vice president and senior plan adviser at RPS
Retirement Plan Advisors in Austin, Texas, says much education
has to go into explaining pricing, especially as retireÀ
la carte vs. bundled pricing-is one of these fees models better for today?
ment needs-e.g., for lifetime income-have become more
complex. RPS has both flat-fee and custom-price clients.
Often, the firm helps clients convert to a flat-fee arrangement
from something that is more customized. Webb
says there are pros and cons to both models, and choosing
the right model depends on specific plan needs. That is a
nuanced discussion, and price sensitivity means advisers
have to be able to show their work in significant detail.
" The challenge is that even when you give a client a flat
fee, the evaluation process is ongoing, " Webb explains. " If
a plan has grown significantly and we don't revisit the fee,
then we could end up spending more to advise the plan than
we're making back. So you have to go back and show how
the plan has changed over time. "
That discussion can work the other way, too, he adds. If a
plan shrinks significantly, fees should be reevaluated.
The retirement industry has responded by settling on
what are acceptable fee limits, but some argue this does not
go far enough. Michael Kozemchak, Bloomfield Hills, Michigan-based
managing director at retirement consultant Institutional
Investment Consulting, says best practices require
an annual review of the fee disclosures for a plan compared
30 | planadviser.com November-December 2022
Art by Julia Rose Barnes

http://www.planadviser.com

PLANADVISER - November/December 2022

Table of Contents for the Digital Edition of PLANADVISER - November/December 2022

Built to Last
Cyber Ready
Measure Your Footprint
Determinants of Profitability
Keep a High Profile
Strategic Moves
The Value of a VCOC
Retroactive Compliance Reviews
Sheri Fitts
PLANADVISER - November/December 2022 - Cover1
PLANADVISER - November/December 2022 - Cover2
PLANADVISER - November/December 2022 - 1
PLANADVISER - November/December 2022 - 2
PLANADVISER - November/December 2022 - 3
PLANADVISER - November/December 2022 - 4
PLANADVISER - November/December 2022 - 5
PLANADVISER - November/December 2022 - 6
PLANADVISER - November/December 2022 - 7
PLANADVISER - November/December 2022 - 8
PLANADVISER - November/December 2022 - 9
PLANADVISER - November/December 2022 - 10
PLANADVISER - November/December 2022 - 11
PLANADVISER - November/December 2022 - 12
PLANADVISER - November/December 2022 - 13
PLANADVISER - November/December 2022 - 14
PLANADVISER - November/December 2022 - 15
PLANADVISER - November/December 2022 - Built to Last
PLANADVISER - November/December 2022 - 17
PLANADVISER - November/December 2022 - 18
PLANADVISER - November/December 2022 - 19
PLANADVISER - November/December 2022 - 20
PLANADVISER - November/December 2022 - 21
PLANADVISER - November/December 2022 - Cyber Ready
PLANADVISER - November/December 2022 - 23
PLANADVISER - November/December 2022 - 24
PLANADVISER - November/December 2022 - 25
PLANADVISER - November/December 2022 - Measure Your Footprint
PLANADVISER - November/December 2022 - 27
PLANADVISER - November/December 2022 - 28
PLANADVISER - November/December 2022 - 29
PLANADVISER - November/December 2022 - Determinants of Profitability
PLANADVISER - November/December 2022 - 31
PLANADVISER - November/December 2022 - 32
PLANADVISER - November/December 2022 - 33
PLANADVISER - November/December 2022 - Keep a High Profile
PLANADVISER - November/December 2022 - 35
PLANADVISER - November/December 2022 - Strategic Moves
PLANADVISER - November/December 2022 - 37
PLANADVISER - November/December 2022 - The Value of a VCOC
PLANADVISER - November/December 2022 - Retroactive Compliance Reviews
PLANADVISER - November/December 2022 - Sheri Fitts
PLANADVISER - November/December 2022 - Cover3
PLANADVISER - November/December 2022 - Cover4
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