Broker Check

5-Star Advisor Scorecard


How do you rate the quality of the investments your advisor offers?

A "5-Star" advisor provides sound reasoning for the investment lineup they recommend for your plan--as well as documentation of their process for selecting and offering the investment.  An advisor who actively benchmarks the performance of the investments they recommend and changes the lineup when appropriate is a sign of an advisor with your employees' best interests in mind.

How do you rate the level of administrative support your advisor dedicates to your business?

A “5-Star” advisor knows the ins and outs of your plan—and has the time and availability to troubleshoot with you, when needed.  In addition to offering administrative services and staying up-to-date on deadlines to prevent fines, the advisor should be willing to offer dedicated services toward managing your plan.  The advisor should be proactive in helping to guide the plan, coordinate required administrative work between your other service providers, and equip your plan manager with the resources that they need to be able to handle any trouble that they run into.  Plan services should include: proactively contacting newly eligible employees to enroll in the plan, providing annual in-person reviews of your plan’s success, regularly benchmarking your plan against others and general plan governance consulting.

How do you rate the level of investment education that the advisor proactively provides to your employees, including one-on-one, personalized investing support for everyone?

A “5-Star” advisor provides customized enrollment meetings unique to your employee needs and demographics.  They should have a team of retirement plan specialists who will sit with employees one-on-one to help develop a plan to retire successfully.  If you have multiple business locations, your advisor should have the resources and commitment to visit them all so that your entire workforce is supported.  They should also offer a help desk hotline for employees to call if they need answers to questions—preferably from real people.  Retirement plans and investments can be difficult to understand, and many employees need hands-on, personal help selecting their investments.  Face-to-face meetings with a retirement professional are perhaps their best chance to set a path toward achieving their retirement goals.

How do you rate the advisor’s fees in comparison to the rest of the industry—and are the fees flat, or do they vary based on the investment chosen?

A “5-Star” advisor should offer a simple, easy-to-read fee statement that you and your employees can understand.  Ideally, their fees are charged as a percentage of assets in the plan, or as a flat asset-based fee.  Additionally, the fee structure should be the same regardless of the investment.  Different fee scales for different investments might mean the advisor makes an extra commission for recommending a certain investment over others—which can create a conflict of interest that you and your employees don’t want to be exposed to.  Finally, the advisor should be free to recommend the best recordkeeping and administrative options for your needs.

How do you rate the advisor’s ability to clearly convey the cost for the specific services they will perform?

A “5-Star” advisor will provide a Service Provider Disclosure that includes the services you have requested—and nothing more—in an easy-to-understand document.  The services you are paying for should be spelled out clearly and allow you to get a refund or a fee credit, or fire them, if they aren’t fulfilling their terms.  Ideally, the advisor would also include some basic reporting to confirm that those services are being performed.  The advisor should also offer a mechanism to review your service needs every year or so, to confirm they are still valuable to you over time, and to help you monitor that the cost is in line with what other advisors charge for those services.

How do you rate the advisor’s ability to help manage legal and regulatory risks as a fiduciary?

A “5-Star” advisor can offer you 3(38) or 3(21) Investment Advisory Services, which takes the liability for recommending, selecting, and updating investments off your plate.  If the advisor is a fiduciary, it’s important to know whether they will outsource their fiduciary management to a third party, or –more preferably—act as a fiduciary in-house.  Certain advisors will go beyond managing model portfolios and fund lineups, with developing an Investment Policy Statement, and providing considerations for fiduciary insurance.

How do you rate the advisor’s specialization in serving the needs of retirement plan sponsors and participants?

A “5-Star” advisor is one who spends a good portion of each week focused on serving the needs of retirement plan sponsors and plan participants—like you and your employees—and they do it well.  Retirement plan investments are not the same as individual investors’—and the advisors experience and client base should reflect a focus on retirement plans.  Additionally, if an advisor has strong client retention, it may be an indicator of a job well-done when it comes to fulfilling their responsibilities to both the plan sponsors and their participants.


Last reviewed 6/1/2022

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