In the previous installment of 401(q&a),
Jerry Bramlett of
The 401k Company said a number of things about advice providers, not all of them nice. His comments were likely to provoke a reaction, and
David Evans, vice president of
TeamVest, reacted.
The 401kWire: What is TeamVest?
David Evans: TeamVest is a multi-channel advice provider. We have a free online calculator with over 1,200 plans already loaded in. Beyond our online services, we have personal advisors ready to talk to participants, and provide more personalized advice for a fee.
401kWire: What did you think about Bramlett's remarks?
Evans: He's dead on in a number of areas, but I'd like to take issue with a couple of things. First, Jerry says that no one can figure the stock market out, not even advice providers. He asks "If
Warren Buffet can't do it, why do
mPower and
Financial Engines think they can?" Fortunately, TeamVest dodged a bullet and wasn't mentioned.
I think I can speak for all advice providers when I say that we're not trying to be Warren Buffet. We're not telling participants that we're smarter than the market, or that we're going to hit a home run. That's not what were all about.
What we're about is trying give participants a high degree of confidence that their goals will be achieved if they use our disciplined processes. We're asking what they want in retirement, and we're saying that can have a very high degree of confidence, even a measurable degree of confidence, that they will achieve that goal.
401kWire: Bramlett says that almost everybody fits into one of a small number of models, and that it's not rocket science to figure out which one.
Evans: I think he's on the mark about putting people into the appropriate models. This is just good science applied to asset allocation. He's saying that it's not a big mystery, and I think he's right.
401kWire: Well, if the actual investing is fairly straightforward, where's the challenge?
Evans: I think the real issue is helping participants understand where they're going. Most haven't even figured out where they're trying to get to.
We help participants figure out why they're in a 401(k) plan in the first place. If we've done nothing but help the participant clarify a destination, we've done that person a tremendous service.
401kWire: Doesn't everyone want the same thing? Don't we all want to be on a beach in Hawaii?
Evans: If that's so, then why isn't everyone contributing the maximum to their plan? The reason is that they've never bothered to quantify what it's going to take to be on that beach, what they have to do to get there.
Jerry said that the biggest problem is helping people overcome a lack of initiative, and he's right. We have to help motivate participants, and that comes from education and providing the types of tools and resources that participants will embrace.
401kWire: Bramlett said that in three or four years, advice will be free. A good part of your service is free. Can advice providers continue to charge for their services?
Evans: I don't know. I'm not privy to how successful Financial Engines and mPower have been in signing up companies that will pay. It doesn't seem that an inordinate amount of companies have stepped forward.
I think that as we move forward, two things will happen. I think that Jerry is right about more tools and applications and calculators becoming available for free. At the same time, sponsors are becoming more willing to pay for enhancements like advice. Two forces are working against each other. I'm not sure how it'll end up.
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