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advocacy community education
The participant who puts all of his or
her money into a mid-cap fund
because he or she considers it the
"average of the market" may still do so
even after getting education at the
enrollment meeting and through a
one-on-one meeting. As with most
things with retirement plans, it's about
following a process and not guaran-
teeing a result. You are not trying to
teach an MBA course; you just need
to provide sufficient information so
that plan participants can make deci-
sions that are informed and not based
on the economic theory of "locker
room allocation" (what the guy next to
you selected).
While many advisors state that partici-
pants aren't interested in education
meetings and one-on-one participant
meetings, we really believe that most
advisors do not do a very good job of it.
A plan education/enrollment meeting
doesn't have to be treated as jury duty.
Financial advisors would be wise to add
some interest by spicing up these meet-
ings. While the information can be bor-
ing for most, advisors can encourage
the plan sponsors to have lunch or end-
of-the-day meetings. You can also try to
inject everyday economic issues that
people can relate to into your meetings.
Breaking down important financial con-
cepts into English with a little wit can
also go a long way. Happy plan partici-
pants will help you maintain your role as
an advisor for your plan. While people
won't remember what mutual funds are
offered under their plan, they may
remember that Donna in accounting won
the Target gift card. Anything that can
boost attendance will help boost educa-
tion and garner better results for plan
participants, as well as help limit the plan
sponsor's potential fiduciary liability.
Offering plan education is a facet of the
fiduciary process that all financial advi-
sors should assist in, because helping
a plan sponsor in that process is the
role of a retirement plan financial advi-
sor. Not offering education allows the
advisor's competition an advantage by
highlighting that the incumbent advisor
isn't covering all of the bases in pro-
tecting the plan sponsor's exposure as
a plan fiduciary. A plan sponsor who
thinks his or her advisors aren't han-
dling all of the tasks that they are sup-
posed to is often the same plan spon-
sor looking for a new financial advisor
to work with at the end of the day!
David M. Snetro is a First Vice
President Corporate Retirement
Director at Morgan Stanley Smith
Barney in New Haven. He can be
reached at or
Ary Rosenbaum, Esq. is an independ-
ent ERISA attorney at The Rosenbaum
Law Firm and can be reached at
Tax laws are complex and subject to change.
Morgan Stanley Smith Barney LLC, its affiliates,
and Morgan Stanley Smith Barney Financial
Advisors do not provide tax or legal advice and
are not "fiduciaries" (under ERISA, the Internal
Revenue Code, or otherwise) with respect to the
services or activities described herein except as
otherwise agreed to in writing by Morgan
Stanley Smith Barney. This material was not
intended or written to be used for the purpose of
avoiding tax penalties that may be imposed on
the taxpayer. Individuals are urged to consult
their tax or legal advisors before establishing a
retirement plan and to understand the tax,
ERISA, and related consequences of any
investments made under such plan.
Breaking down important financial concepts into
English with a little wit can go a long way.
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