“A jack of all trades and a master of none.”
That expression came to mind while I attended a non-qualified deferred compensation conference in Chicago last week.
I have spent 35 years in financial services and more than 20 years focused on retirement plans. My practice advises roughly 100 plans, and socially responsible investing is central to our work.
I have deliberately chosen depth.
But sitting at that conference, I found myself asking: How much should I know about a related field? And when does staying focused leave a client need unaddressed?
An interesting service is not necessarily a client priority
Non-qualified deferred compensation allows selected employees to postpone receiving compensation. It can help address retirement savings needs beyond the limits of a traditional retirement plan and support an employer’s efforts to retain key employees.
Those are meaningful purposes. Whether they warrant another benefit program depends on the employer.
This week, I visited a nonprofit with approximately 20 employees and about $1 million in retirement-plan assets. From my conversations, the organization faces ongoing fundraising demands, and I believe its executive director deserves better compensation.
Would deferred compensation be the right next conversation? My first questions would concern current pay, available resources, and the organization’s ability to sustain another commitment.
Compare that with an employer whose retirement plan holds $30 million, whose leadership team is well compensated, and whose executives want to save beyond the existing plan’s limits.
I would ask different questions.
The retirement plan’s asset balance does not settle the issue. But it belongs in the conversation, alongside employee compensation, cash flow, and the employer’s priorities.
Most of the plans I advise have less than $10 million in assets. That matters when I consider how much of my practice to devote to another specialty.
How many clients actually need it?
The potential participant pool is typically narrow. In PSCA’s 2022 survey of 135 non-qualified plans, an average of 5.6% of employees were eligible to participate. More than two-thirds of employers used job position or title as their primary eligibility criterion.
Small employers are not automatically excluded. Principal identifies financially stable businesses seeking to benefit one to five key employees as the target for one of its executive retirement products. That particular product is designed for businesses, rather than nonprofits.
Those findings lead me to a practical question: How many of my clients have a need that would justify the cost, administration, and commitment?
Before building another specialty, I should understand the answer.
What about the competitive risk?
There is another question I cannot ignore.
If I do not address this subject, could another advisor enter the relationship through executive benefits and eventually compete for the retirement plan?
I cannot put a probability on that. But it raises a legitimate business concern: What happens when a client needs expertise beyond my own?
I see three possible responses.
- I can develop that expertise myself.
- I can work with a specialist and remain involved in the client’s evaluation.
- Or I can leave the client to find help independently.
For my practice, I favor learning enough to recognize the need, ask informed questions, and work with a specialist when the circumstances warrant it. If enough clients need the service, that would give me a reason to consider a deeper investment.
That approach still demands judgment. A referral should follow an assessment of the client’s needs, rather than substitute for one.
The Parting Glass
I left Chicago thinking about the responsibility that comes with specialization.
I do not believe serving clients well requires mastering every adjacent field. I do believe it requires paying attention when their needs extend beyond my expertise.
The decision to add a specialty should begin with the clients I serve: their needs, their resources, and the problems they are trying to solve.
That is the standard I want to apply to my own practice.
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