In a perfect world, your relationships with retirement plan committees would be frictionless. Meetings would proceed on schedule; participants would understand the technical points of your proposal and be able to discuss their merits; and oversize egos and personality clashes would not interfere with decisions.
It can work that way. But in reality, committees often consist of high-level executives who are used to getting their own way. Coordinating their busy schedules for plan-related meetings can be a challenge and when they do get together, retirement plans aren’t their primary area of expertise. So how can you better manage the consultant-committee relationship for greater productivity?
Guide committee composition
A plan sponsor might believe that having a large plan committee that includes employee representatives and the company’s CEO will be beneficial. That’s not always the case, however, according to John Pickett, senior vice president with CAPTRUST Financial Advisors. As committees expand in size, efficiently coordinating multiple schedules becomes more difficult. Employees from the shop floor often lack the requisite financial human resources expertise to contribute meaningfully. A CEO’s presence can inadvertently (or intentionally) squash discussion. Pickett recalls a committee meeting in which he made a proposal to a plan where the CEO was committee chair. After Pickett completed his proposal the CEO told him, “You’re hired.” The executive then looked around the table and announced, “Let the minutes show the vote was unanimous.” While that approach speeds decisions, it also constrains other members’ participation, Pickett cautions.
Orient new members
Plan committees’ rosters can change over time. Because participant turnover can slow a committee as new members get up to speed, providing an orientation and fiduciary training for new members allows them to be productive at their first meeting. “They’re not asking questions about something that was covered in detail at the last meeting,” Pickett says. “They’re able to participate; that’s just what you want them for. You don’t want them slowing you down asking a bunch of questions nor do you want them sitting there sitting on their hands not doing anything or saying anything because that’s not why they’re in the room.”
Use focused meetings for technical topics
Retirement plan management often involves technical discussions that can exceed some members’ knowledge. When those issues are on the agenda, a separate advance meeting with a subset of committee members can help facilitate the full committee’s discussion. Pickett gives the example of installing a liability-driven investment (LDI) strategy, which he notes can get very technical very quickly. Committee members from human resources can’t be expected to be fully conversant with LDI, but members from the treasury and finance staff will have the backgrounds needed to grasp the concepts more readily. An advance meeting with treasury staff members to answer their LDI questions will help the full committee meeting reach consensus more readily, in Pickett’s experience.
Go one-on-one when needed
There will be times when committees reach an impasse. Perhaps members are at loggerheads and a member has dug in her heels on a particular issue. When that happens, discussing the situation individually with that member can help resolve the problem. Pickett cites a scenario in which a member has strong feelings for or against a particular asset class or investment. Addressing the issue privately can clarify the disagreement’s cause outside the meeting’s pressure. “If you can talk to them offline and away from, if you will, their peers, I find that to be an effective way of handling it,” he says.
Get in front of potential problems
Michael Cagnina, head of North American institutional sales for SEI Institutional in Oaks, Pennsylvania, believes potential pitfalls should be identified long before they actually become problems, through constant communication and dialogue with the committee. “It’s paramount that we are always on the same page as the committee,” he responded by email. “We work hard to have advance discussions around our clients’ goals and how the investment management process can support those organizational goals. This focus mitigates any potential confusion along the way as we consistently assess if we are on the right path.”
Don’t always expect clear solutions
From an investment standpoint, there is not always an exact answer, Cagnina maintains. Consultants need to consider and weigh all views and opinions against potential outcomes. “Our clients have committees who are smart and experienced and they are going to have their own views and opinions,” he says. “In the instance that our views are different, the committee’s view could be the better option at the time. That’s why shared accountability is a critical component to the partnership. It ensures everyone is always making decisions they believe to be in the best interest of the plan and ultimately the participant.”