Interview: Louis Harvey, Dalbar

I believe when it comes to retirement plan sponsors and plan providers, information and education are just strong concepts that will just make the industry and retirement plans far more efficient. One of the leaders in information and education is Louis Harvey, who is being doing it for 40 years leading Dalbar.


Q: You founded Dalbar 40 years ago, how did you come up with the idea of starting it?

A: When Dalbar was founded in 1976, less than 10% of consumers were investors and my hope was that the cottage industry would benefit from shared services from an independent expert. This early realization led to a winding course over which various solutions were created to meet needs as times changed.


Q: So many know Dalbar because of the training courses you offer. Besides training what does Dalbar offer?

A: For the 401(k) market, Dalbar evaluates and certifies the products and services over which fiduciaries must exercise prudence. Training is a relatively small part of what Dalbar does today, supporting our Registered Fiduciary (RF™) candidates in preparing for the RF™ exam. DALBAR’s primary business is certifications that offer protection to plan sponsors and service providers ensuring that thorough due diligence has been performed. Providers of investment products, investment management, advisory services, participant and plan sponsor services gain a marketing advantage from their Dalbar certification. Evaluations include fees and expenses, communications and digital services.


Q: What’s the biggest difference you’ve seen in the investment and retirement plan space in the last 40 years?

A: The shift from Defined Benefit to Defined Contribution (“DC”) as the principal source of retirement funding has brought personal responsibility and with that products and services that enable average workers to control their savings and investments. The DC expansion has introduced retirement plan benefits to nearly one million small businesses that did not even consider such benefits 40 years ago.


Q: How has fee disclosure impacted your business?

A: The regulations have expanded the need for independent evaluations of fee disclosures as well as the assessment of the reasonableness of plan fees. Dalbar has answered these needs with a Fee Disclosure Evaluation service as well as a Certification of Reasonableness of plan expenses.


Q: How do you think fee disclosure has impacted the retirement plan business?

A: Indiscriminate cost cutting has been avoided by the recognition that significantly above-average fees can be reasonable when they represent additional value in the form of tangible and intangible benefits.Fee disclosure requirements combined with increasing excessive fee litigation has dramatically reduced the number of expensive legacy plans that remain.


Q: What do you think plan providers are missing the most in terms of trying to improve their business?

A: The single greatest missed opportunity is unwillingness to capture taxable contributions for retirement. There are no limits on retirement savings that have no tax advantage, but providers fail to pursue them. Instead, providers service only the tax advantaged contributions with no provision to handle the potential trillions of after-tax dollars. (See article on the subject.)

Q: How has the rollout of the new fiduciary rule impacted your business?

A: Firms seeking to comply under the new rules are taking advantage of Dalbar‘s services including Registered Fiduciary (RF™), Auditing required under ERISA 408(g), Computer Model Certification, Proof of Reasonableness of Compensation and Assessment of Rollover Practices. The fiduciary rule also creates new compliance burdens for the contact center. We have integrated fiduciary rule compliance into our evaluation criteria. This new element adds to the value proposition of our Service Quality Measurement Program. We look forward to continue helping contact centers grapple with the practical implications of the rule.


Q: How do you think the fiduciary rule will impact the retirement plan business?

A: The most devastating effects arise from the compensation limits imposed. A large number of advisors and product providers will lower their compensation in a fruitless attempt to achieve the impossible goal of all being below average. In the coming years, the burdens of the new rule and the compensation limits will drive advisors to make extensive use of computer based advice to reduce cost and time to service clients and to avoid the risks of human error.


Q: Do you think President-Elect Trump will roll back the fiduciary rule?

A: In the short run, no. There is not sufficient time to roll back the rule in an orderly way before its applicability date. The immediate solution of an Executive Order would create an enormous backlash that would obstruct the stated Trump priorities. Over time several aspects of the fiduciary rule will undoubtedly be revised as its consequences are felt. This will take place through the normal process of proposal, public comment, presidential approval and adoption.


Q: You review the call centers, websites, and statements of plan providers and award for providers for excellence. What do you think makes these tools standout for the providers you recognize for excellence?

A: The common cornerstone of effective call centers, Websites and statements is their ability to communicate relevant information to their intended audience. This starts with using language that can be understood by the intended audience and is presented in an inviting way. The content must be based on an appropriate presumption of the level of knowledge of the audience as well as finding ways to provide sufficient context for required disclosures. In summary, for a call center, Website or statement to earn the Dalbar recognition for excellence it must be useful to its intended audience.


Q: How can plan providers find out more about Dalbar? 

A: Dalbar‘s Website contains information about the firm, its services and an extensive collection of papers and analyses. Of particular interest are the sections on the fiduciary rule and the best interest contract exemption. (See “Other Dalbar Websites” tab at the top of the home page lists other sites that may be of specific interest.Alternatively, please e-mail your question or area of interest to

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