Are You a Self-Proclaimed or a Recognized Expert? Part 1
Understanding expertise in the legal and academic sense holds lessons for all advisors. This discussion focuses on criteria attorneys use to evaluate experts and how plan sponsors can apply them.
David Witz1 min read198 wordsAdvisors assist most fiduciaries with the responsibility to manage trillions of dollars of other peoples money in the increasingly complex private pension system. As ERISA has evolved, so has the role of the advisor and the need for fiduciaries to retain advisors with subject-matter expertise.
The Low Barrier to Entry
In many states, the experience and educational requirements to become licensed as a hair stylist are more extensive than those required to become an investment advisor. A clean criminal record, the ability to pass a test, and financial wherewithal to pay a state fee are the only criteria necessary. This low barrier permits dilettantes to enter the industry and secure engagements based on personal relationships despite little actual experience or expertise.
Experience Matters
Plan sponsors are best advised to adopt legal counsels lead to retain advisors who have developed expertise over long periods of time by engaging in extensive practice and accumulating extensive experience in a subject matter.
Questions to Ask
To determine the advisors qualifications, a plan sponsor should query an advisor about when they secured their first retirement plan client, the number of retirement plan clients they service, the percentage of gross revenue derived from retirement business, and the common services they provide to all plans.
