Nicklas Financial | Every Move Matters

Questions & Answers

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Q: If You are Not Taking Your Retirement Plan Out to Bid Right now, You Should.

Answer from :

We have been taking our clients plans to live bid on a 36 month cycle for the last 12 years, it’s actually a part of our service plan.  The results of those bid proposals, in terms of decreased expenses to participants and/or increased provider services, cannot be overstated.  But the last 18 months has presented 3 unique opportunities that plan sponsors should capitalize on because once gone, we may not see again for a long time.

  • High Account Values – A rising tide floats all boats and the extended bull market has certainly floated retirement plan balances, especially the rapid appreciation in the equity market experienced in 2017. Most recordkeepers look closely at total plan assets and average participant balances when pricing, the higher the better.
  • Bottom of Fee Compression – Since the 408(b)(2) disclosure requirements were fully implemented in 2012 we have seen a steady decline in service provider fees. Today we are at or very close to the bottom of this trend.  We have begun to see a trend of adding additional services for fee or requiring use of certain investments as service providers seek to recoup lost revenue due to fee compression.
  • Changing Investment Trends – The continued trend towards index based investment lineups has driven down costs for actively managed mutual funds too as active managers introduced retirement share classes with low or no revenue sharing. Active ETF and Collective Investment Trust investments (CITs) have begun to appear on more service provider platforms.  The opportunity to drive investment costs for participants lower has never been better.

Over the last 6 months we have seen plan sponsors have more successful outcomes in reducing plan expenses due to live bid RFP’s.  In some cases, though not all, we have seen potential decreases anywhere from 34% up to 68%.  Additionally, live bid RFP’s can provide valuable information to plan sponsors when negotiating with their current service providers.

If you have never taken your plan out to a live bid RFP or if it’s been a while, NOW IS THE TIME!  The stars are aligned to create a potentially great opportunity for your retirement plan participants.  Remember, every dollar saved in expense is a dollar left in participant accounts to compound for their retirement.

 

 

Securities offered through a Registered Representative of Securities America, Inc., member FINRA/SIPC. Advisory services offered through a Financial Advisor of Securities America Advisors, Inc. Nicklas Financial Companies and Securities America are unaffiliated.


Q: What payout can I receive and what are the associated costs?

john
Answer from John:

Nicklas Financial’s rewarding compensation system allows you to choose a payout based on your business model. Your selected payout applies across the board to all sales, brokerage commissions, trails and advisory fees. Only individuals or groups engaged full time in financial services are eligible to become licensed with Nicklas Financial and Securities America. Give us a call and let us help you choose the payout that’s right for you.


Q: Why should I offer a retirement plan to my employees?

kenny
Answer from Kenny:

A retirement plan gives you the opportunity to inspire employees to plan for successful outcomes in the future. Regardless of financial participation, emphasizing education and planning is important for your employees’ financial future. It’s a small price for a motivated, more educated employee. I often say, “it doesn’t cost, it pays!”


Q: Who is your broker/dealer and who do you clear through?

john
Answer from John:

Securities America, Inc. (SAI) is our broker/dealer. Established in 1984, SAI is headquartered in LaVista, Nebraska and has more than 1,700 registered representatives. SAI is a wholly owned subsidiary of Ladenburg Thalmann Financial Corp. As of year-end 2012, Securities America Advisors, Inc. had approximately $43 billion in total client assets under supervision. We have more than $14.5 billion in advisory assets under management (AUM).

We firmly believe the technology and financial strengths of our clearing firms provide distinct advantages to advisors and their clients. Securities America has built strong relationships with National Financial Services, LLC, A Fidelity Investments Company; Member NYSE/SIPC and Pershing, LLC., member FINRA, NYSE, SIPC a subsidiary of the Bank of New York Mellon Corporation. This means you can go about your daily business assured that your practice and the safety of your clients’ assets will not be negatively impacted by a clearing conversion.


Q: How do you charge for your services, and how much?

aaron
Answer from Aaron:

At Nicklas Financial, we want to make sure we do what is best for our clients, which is why we offer two payment options: commission and fee-based at one percent of assets under management (AUM). If you don’t know what that means, have no fear! I explain the difference between the two options thoroughly at the initial meeting, and then you can pick which one works best for you.


Q: What licenses, credentials or other certifications do you have?

aaron
Answer from Aaron:

I have my Series 7 Registered Representative and 66 Investment Advisor Representative licenses. I also have my Life Insurance license and have amassed 20 years of experience in finance and stock markets.


Q: Why would I join a branch?

john
Answer from John:

There are many advantages to joining a branch:

  • Outsourced compliance protects your practice and lessens your burden
  • Coaching, mentoring and local support helps you reach your business goals
  • Working with planning and product experts grows your knowledge base and creates camaraderie
  • Training provided for you and your staff enhances skill sets.
  • Ability to market under an established branch brand or receive support in building your own brand gives you choices to fit your individual needs and goals.
  • Established branches provide built-in succession and contingency planning and support for basic operational issues and problem resolution.
  • As a liaison between advisors and the broker-dealer, branch managers offer products and programs available from the broker-dealer, eliminating research time for you.
  • You get the best of both worlds—the ability to enjoy independence while still receiving support.


Q: What is plan benchmarking and why should I do it?

kenny
Answer from Kenny:

Benchmarking involves comparing and evaluating performance levels and processes—looking at the inner workings of the plan to see how well it’s serving participants. Because plan fiduciaries are responsible for properly selecting and monitoring all individuals and entities that provide services to their plan, benchmarking can provide information needed to improve the plan and demonstrates a documented process for making important plan provider decisions. Basically, it strives to ensure the best possible plan at competitive costs for participants.


Q: What services do you/does your firm provide?

aaron
Answer from Aaron:

I offer general investment advice as well as holistic financial planning that is tax and cost cognizant. That is a fancy way of saying that I help you through the process of determining your financial goals and developing a plan of responsible management of your financial resources with those goals in mind.


Q: What is a plan fiduciary and, as a plan sponsor, am I a plan fiduciary?

kenny
Answer from Kenny:

A plan fiduciary is someone who assumes decision-making authority or control over the administration of the plan, or who is paid to give investment advice regarding plan assets. The definition depends on the functions a person performs and not on the person’s title. Plan service providers such as actuaries, attorneys, accountants, brokers and record keepers are not fiduciaries unless they exercise discretion or are responsible for the management of the plan or its assets.

As an employer sponsoring a retirement plan, you are always deemed a plan fiduciary under the law.


Q: What types of clients do you specialize in?

aaron
Answer from Aaron:

I work with individuals, families and business owners who need guidance with investments, insurance and overall financial planning.


Q: How can you help me grow my practice?

john
Answer from John:

Through our relationship with Securities America, you will have access to a multitude of resources to assist you with your business. Just a few examples include:

  • Custom programs like HR Advantage to help with HR needs
  • Practice acquisition, continuity and succession planning services
  • Branch expansion support for firms looking to add advisors
  • Coaching programs designed to help grow or improve your business
  • Coaching programs designed to strengthen your support staff
  • And much more


Q: What is my fiduciary responsibility and liability and can I hire someone to relieve me of that responsibility and liability?

kenny
Answer from Kenny:

Fiduciaries have a lot of responsibility when making decisions regarding plan management. A fiduciary must act solely in the interest of the plan participants and their beneficiaries. Fiduciaries’ responsibilities include carrying out their duties with respect to the plan with care, skill, prudence and diligence, following the terms of the plan document, diversifying plan assets and paying only fair and reasonable expenses.

Fiduciary liability can include both criminal penalties and civil action. A fiduciary is personally liable for any losses resulting from a breach and the penalties can be severe. While fiduciaries/trustees may look to hire outside professionals as co-fiduciaries, they still have the responsibility to monitor such individuals or entities. Failure to do so exposes the fiduciary to liability.


Q: What is your investment approach?

aaron
Answer from Aaron:

Because each individual is unique, I don’t believe in a one-size-fits-all approach. Depending on the age of the client, I have different outlooks. I genuinely care about my clients and try to have a lot of contact with each one. Proper investment planning won’t make you rich overnight, but it will create a solid strategy with your end goals in mind.


Q: How can you help me with Continuity and Succession Planning?

john
Answer from John:

Financial advisors are dedicated to helping clients plan their financial futures, but sometimes need help putting plans in place to ensure the smooth transitions of their own practices. As a Nicklas partner, you’ll have access to the Practice Transition Center by Securities America—a first-of-its-kind library of videos and tools that help advisors understand and implement the process of buying or selling a practice.

 

Securities America Continuity-Succession-Acquisition


Q: How can I help my participants become more financially ready for retirement?

brandon2
Answer from Brandon:

The key to helping participants become more retirement ready is to adopt a much broader mindset in regard to your plan. This mindset moves beyond investment options and fiduciary warranties and focuses on designing a plan properly to increase the likelihood of better retirement outcomes for participants.

Some of the tactics a plan sponsor/trustee can consider utilizing in order to help their participants become more retirement-ready include:

  • Proper use of automatic features to get people in the plan and increasing contributions on a systematic basis
  • Greater utilization of asset allocation models, as well as professional investment management
  • More targeted and engaging participant communications that focus on participants’ income needs in retirement vs. current contributions
  • A focus on plan monitoring and governance to drive plan efficiency and cost effectiveness.