Growth

Rich and Co.

Does Gallagher Retirement Services Have A Total Fiduciary Solution?

How a Team of “Expert’s Experts” Succeed In Today’s Retirement Markets: Gallagher Retirement Services – Part 1

Summary – In today’s hyper-competitive retirement markets it is exciting to uncover a very successful firm that is dedicated to delivering expert advice and counsel independent of fees and other considerations.  In a two part series we have interviewed two of the principals and outline some of what makes them successful.

Disclosure: We have no commercial relationship with any Gallagher company.  We were just impressed by what they’re doing.

Let’s be honest – the defined contribution system is regularly getting “beat up” by “bullies in the playground,” that is the popular media editors and even in some industry press.  

Like Mark Twain’s obituary, which, when he read it, said it was a bit premature, the pronouncements of fatal flaws in the DC system are likely contrary indicators of its remarkable health and growth.  It really is remarkable. 

Keeping the DC System’s Successes a Secret
All fast growing systems (like your kids) have adjustments, pain and problems.  The DC system is no different.  If it weren’t so successful – it wouldn’t have so many critics and be such an easy target.  People deeply care about their defined contribution plans, so any fear mongering headline will get a lot of readers and “eyeballs.”  “If it bleeds it leads” “If it scares — it airs.” is true for business and DC news as all other.  Again, a reliable contrary indicator.  
 

But don’t believe us.  Let’s give you some real-world evidence.

In our work we continually hear some impressive, evidence-based success stories in the defined contribution system.  This seems true world-wide but let’s concentrate States-side.  Frankly, most will not share their stories because they are afraid of being unreasonably attacked in the press. Nowadays, that’s a realistic concern. 

But it does benefit us all to have the discussion be evidence-based and fair.  So when we come across a factual “good news” story that helps to debunk the naysayers, we like to get it out to you to read.  Here is the latest. 

Gallagher Retirement Systems – The “Prudent Man’s” Experts
As marketer’s, we are “tub-thumpers” for a few ideas that we see working in the marketplace right now.  The main theme we see is – expert problem-solving. 

As the pressures increase on all parties in the retirement system the demand and need for true expert advice and guidance is in a bull market. 

The increased velocity, scale and complexity of challenges that face plan sponsors is daunting.   Just from the growth of the system there are (many) more demands, regulations and rules, reporting and risks.   At the same time sponsors are living through the worst recession since the Great Depression and substantial market instability and losses.  Staffs have been cut, resources, conferences, consulting support have also been pruned.  

So plan sponsors are being asked to do (much) more with (much) less. 

Where do plan sponsors go for support?  Who has kept up with the changes in rules and regs?  Where can they get non-conflicted recommendations and solutions?  How do they manage risks?  The questions grow as support seems to shrink. 

Recently, we just met Mike DiCenso who is head of Gallagher Retirement Services and has built a very successful and growing fiduciary consulting practice.  The success is remarkable.  He is seeing growth in both the numbers of engagements but in also the sophistication of the group’s solutions and processes.   Most importantly, he has tapped into real, growing demand in the market for truly expert problem-solving, processes and solutions.  

Let’s dig-in a bit to his practice for some lessons for all of us. 

Bringing a Deep and Solid Foundation in Plan Sponsor Problem-Solving
Mike and his team have deep and long experience in the DC business.  Mike started in the business as a young man with Principal in Tulsa in ’87.  He was “volunteered” as the head of retirement services in his office when no one else could spell ERISA.  He was also the “new guy.”
 

Principal, back then, actually had some of the first and most small business-focused retirement solutions.  Kemper was another.  This was long before even Fidelity knew what a 401(k) was. 

Mike then moved to Minnesota Mutual to successfully build their sales group.  Minnesota Mutual has always had a very solid but low-key DC practice.   Then Mike moved to Pan-American, also a pioneer and innovator in the DC business out of New Orleans – of all places.

Throughout Mike told me he had a vision of a more expert, technical but practical problem-solving service to business owners that was independent of asset fees.  He had a good gut sense of what fiduciary consulting to sponsors should be.   He was pretty sure there was going to be a lot of demand and it could be profitable.  He joined Gallagher with a “blank sheet of paper.” 

Let’s remember that back when Mike was thinking of this, the idea of applying the same fiduciary process, standards and practices to DC plans was consider very radical and dismissed as plain silly.  

DC plans were considered mainly “retail” plans serving each employee’s mutual fund accounts that were no different from any other mutual fund account an individual would have.   Sure they were tax-qualified plans, but the formal and disciplined application of ERISA was considered unnecessary. 

Hard to believe now.  But frankly, if the markets had not imploded, that attitude still might dominate. 

It is important to note that Mike started his group with extensive technical and practical experience in serving plan sponsors and closely-held business plans already.  He has a very mature sense of the business.  For a sale and marketing executive, he has a very good head for technical matters as well.  That is rare. 

In His Own Words
Let’s let Mike talk for himself here.  We asked him some questions and here are his responses.  Mike would also be the first to praise his group and admit this is a team effort.  His organization has deep bench-strength in all positions.  He is hiring and expanding.  This would be a very good team to join. 
 

Q. Mike, I just learned about your practice and your success and was so impressed I wanted to help get your story out.  Let’s hear the good news first.  Tell us about your current business, your growth, how you’re structured and how you measure success.  Give us some metrics. 

A.Four Years ago at Gallagher Retirement Services we set out to bring a higher standard of client services to the Retirement Plan consulting industry. 

We created a national vision, strategy and focus around Managing and Mitigating Fiduciary Liability and Risk for Plan sponsors to achieve overall plan governance. We have created procedurally and substantive prudent processes for plan sponsors which are delivered through our 4 business units. 

 

We chose to focus on the plan sponsor level. We do not provide education or enrollment services to plan participants, but rather we create and manage the participant communication strategy and manage the vendors to deliver upon the strategy. With this national vision, strategy and focus we have grown from $4 Billion in assets under care to $45.3 Billion in assets under care in just 4 years with the same number of sales consultants, but with a new team.”

Q. Who are your typical clients?  

A.   Our clients are corporations and businesses of all sizes; non profit entities such as religious organizations, hospitals, K-12, higher education institutions and municipalities. In each of our 4 business units we have an overlapping target market by plan size: 

  • Qualified Plan, Non Qualified Plan and Actuarial Consultants:$3 Mill to $80 Mill of plan assets
  • Institutional Investment Advisory Services: $20 Mill to $2 Bill in plan assets
  • Within any of our business units we are able to consult clients above and/ or below these targets based on the business value. 

Q. What are the main problems you and your team solve for your clients?

A.   We are solving plan and committee issues associated with creating, establishing, implementing, monitoring and benchmarking procedurally and substantively prudent processes and then managing these processes on an ongoing basis. 

Q.  Can you give us an example of a specific engagement you are especially proud of? 

A.  Our client engagements run the gamut. It all depends on the needs of the plan sponsor. For example we have worked with numerous 403(b) plans to reduce the number of vendors and make their plans more manageable and cost effective. 

We also perform limited scope audits and benchmarking projects to help plan sponsors determine if they need to make changes to their plan practices or if their fees are reasonable. But our core practice is to engage our clients in our Fiduciary Risk Mitigation Process so that their retirement committee operates in a procedurally and substantive prudent manner – this is key to managing the risk of being a plan fiduciary.  

Q.  How is your group structured?  What did you and your team have to build to get where you are?
 

A.  Our 4 business units are Qualified Plan Consultants, Non Qualified Plan consultants, Institutional Investment Advisory Services Consultants and Actuarial Consultants.  

The experts in each of these units consult plan sponsors in their unique area of expertise and work together as a team to deliver holistic client solutions. We operate in an independent, objective and zero conflict environment where we do not accept any soft dollars from providers, mutual funds or investment managers. We cannot even take a breakfast, lunch or dinner from the providers. 

We have built our own proprietary system to effectively and efficiently create and deliver our value to our clients on a national basis. Our system is called the Knowledge Management Platform. This is a proprietary platform that aggregates data across numerous platforms and data points to build our consulting deliverables. 

Q.  Where are you opportunities for the next three years?  

A.   Our opportunities over the next three years lie in national growth and expansion of our team through hiring and acquiring individuals and firms who have a philosophical match with Gallagher. 

We see that as the aging population continues to move towards retirement and finds that they do not have enough money to retire we will see an increase in DOL, Regulatory and Litigious actions. Gallagher sees our role as the consultant who will enable plan sponsors to mitigate these situations successfully.  

Contact Information: 
Michael J. DiCenso

National Practice Leader – Gallagher Retirement Services
President, GBS Investment Consulting, LLC
The Gallagher Center
Two Pierce Place
21st Floor
Itasca, IL  60143-3141
(O) 630-285-4093
(C) 609-658-3331
Fax 630-285-3685
mike_dicenso@ajg.com
www.gallagherretirement.com

Coming: Part 2 – What A Successful “Total Fiduciary Solution” Looks Like – Gallagher ’s Fiduciary Risk Mitigation Process

 

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Written by Rich and Co.

March 21, 2011 at 1:43 pm

Posted in Uncategorized

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