Bringing advisor perspectives to Washington, D.C.

Bringing advisor perspectives to Washington

Regulatory change is constant in the retirement plan industry, and advisors have a critical role in shaping it, not just reacting to it. We spoke with Lisa (Garcia) Drake, Managing Director of Retirement Plan Consulting at SageView Advisory Group, and JoeDeNoyior, President of HUB Retirement and Wealth Management, about how advisors can better navigate and influence the rules coming out of Washington.

Helping plan sponsors keep up

Today’s regulatory environment is fastmoving. The new administration has weighed in on cryptocurrencies in 401(k) plans and private investment options and appointed a new head of the Employee Benefits Security Administration (EBSA). For plan sponsors, who juggle many other benefit-related responsibilities, keeping up is difficult.

Lisa sees staying informed as an essential part of the advisor’s job. “We have to be aware of what’s happening so we can educate our clients,” she says. “At SageView, we educate nationally but also tailor our approach to local markets. What affects one state may be felt differently in another. And relaying all that information to plan sponsors in bitesize pieces — private investments and lifetime income are just two of the current ones — we have to find the right time and messaging to do that effectively.”

Joe’s firm makes regulatory updates a standing agenda item. “We meet with a client’s committee and always carve out time to discuss any impending rules that could affect their plan. Keeping it simple is key.” For Lisa, that means avoiding information overload. “When SECURE 2.0 came out, we had to weigh the pros and cons, identify relevant provisions, and help clients act on them, while also scanning the industry for trends and connecting clients with the right partners.”

1. Advisors play a critical role in translating and implementing complex regulatory changes for retirement plan sponsors.
2. Getting involved with industry organizations and policymakers can give advisors a stronger voice to help potentially shape legislation.
3. Advisors agree that future reforms should focus on closing the retirement coverage gap and clarifying lifetime income rules.

“Our responsibility is to learn as much about the plan as we can, and interpret the rules for them,” says Joe, “we’re still the ones driving the conversation.” One of the challenges though, as Joe sees it, is the sheer amount of information that plan sponsors can get, whether from reputable sources like a recordkeeper, or just from news websites or social media, as it is the role of the advisor to help get the best information to the committee. To manage this, he says, “We make sure that we have a host of webinars and learning portals where we talk about upcoming rules and regulations. This way the committee is already educated when we bring these topics up. It means we can then work to figure out how to implement the new rules in the plan.”

Getting involved in policy

Advisors can influence policy by working through their firm’s government relations teams and engaging with industry organizations like the National Association of Plan Advisors (NAPA).

Lisa, now NAPA president, says her involvement started simply and grew from there: “Just show up. We care about our plan sponsors and participants, but attending NAPA events like our fly-in Washington, D.C., shows you care about the industry too.” Events such as the one in D.C. present an opportunity to sit directly with lawmakers, something advisors may not be able to do on their own, and that is a valuable chance because “these lawmakers often don’t know how they really affect the everyday person, how they affect your clients, so hearing from us directly does make a difference.” Lisa says.

Joe believes all advisors should be part of NAPA or similar industry groups but acknowledges the time challenge. “Between the American Retirement Association (ARA), NAPA, and the Defined Contribution Institutional Investment Association (DCIIA), and other policy forums, it’s tough when you’re busy. But for those who do participate, the opportunities are tremendous.”

Engaging early in the legislative process benefits clients, Lisa adds. “There are always proposals with both positives and negatives. Advisors who get involved can advocate for beneficial provisions and prepare clients before changes take effect. It also allows advisors to get to know the provisions earlier, which can help them then explain them to clients when they are enacted.”

Joe sees advocacy as part of the profession’s core mission. “Everyone in the 401(k) space is passionate about helping people. What better way to help employers and employees than making your voice heard on Capitol Hill where you can influence the outcome?”

What’s next on advisor wish lists

Even after SECURE 1.0 and 2.0, there’s plenty of room for more reform. Joe wants a “SECURE 3.0” aimed at simplifying plan administration for small employers to help close the coverage gap. “The tax credits we have are good, but we need simpler discrimination testing, more risk protection for small businesses and better support for non-profits that don’t benefit from current credits.”

Lisa agrees, calling coverage a “major hurdle” that still needs legislative attention. “We’ve made progress, but there’s much more to do to close the savings and access gaps.” She adds, “Our focus remains on the expansion of retirement plan access to people who don’t currently have that. We have made meaningful progress, but a lot of work remains.”

Lifetime income remains a priority area as well, with safe harbor language helping to build confidence among plan sponsors, but more could be done to add additional clarity. Joe sees that need, “it is currently just a little confusing for both advisors and plan sponsors, what the liability is, what the best practices are for selecting a partner for the plan, checking the QDIA and choosing the right annuity option. We need some additional help there.” Lisa is also asking for more assistance, adding, “We focus on accumulation but there is still a need for education to participants and advisors to clarify what is allowed and what we still need to develop from a regulatory standpoint. We need to be the ones driving that.” Lisa agrees that the conversation must go beyond accumulation. “We need to educate participants and advisors about decumulation options, clarify what’s allowed, and push for needed regulatory updates. Advisors should be driving that effort.”