Wednesday, March 23, 2011

Are Your Consultants Getting It Right? Ask Another Consultant to Check for You.

Are your retirement plan consultants doing a good job? How do you know? Are the fees they are charging you fair? How do you know?

The answers to those questions, in reality, for most companies, are probably a consistent "I don't know", or "I hope so." The fact is that much like relationships with audit firms prior to Sarbanes-Oxley, the typical company has no way of knowing. Oh, they know if there is a disaster, but beyond that, they really don't know if they are getting quality service or high value for the fees that they pay.

Do you? I didn't think so. I bet that you would like to know how to find out.

Perhaps, in the long run, you will save money and get better value from your consulting relationship by engaging a consultant to monitor, or at least review your consultants. Sounds counterintuitive, huh? It is, but if you really think about it, it makes sense.

Essentially what you are doing is finding a consultant who will agree to not seek your ongoing work, but whose purpose is to review the quality and the value of the work that you are actually getting from your actual consultants. If done properly, such a review should be able to answer these questions:

  • Are your consultants following accepted professional standards of practice?
  • Are they holding to their fee agreements with you?
  • Are their fees fair?
  • Is the work that they do for you accurate and complete?
  • Is the work technically sound? Have any consulting letters explored all the issues, or simply given you the same solution, packaged very slightly differently, that they give to all their clients?
  • Are appropriate levels of consultants servicing your account? In other words, is the team too top-heavy, too bottom-heavy, or about right?
  • Is the relationship still fresh? Often times, teams that have seen no change do not bring you new ideas?
  • What are their other clients saying about them that is particularly good or bad? Would you agree with the good things? Have you seen the bad things? If not, are they not present on your account, or are they just doing a good job of hiding them?
Based on feedback from clients, you see much more variability with the larger firms. Are you getting the A team or the C team? Don't you think it's time you found out?

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