The average plan member is by no means a financial expert, and the choices offered by many service providers can leave some members bewildered and in need of advice. Plan sponsors and service providers have been understandably averse to providing such advice due to the risks involved, but one company thinks it has found a way to provide solid financial counseling while protecting the plan sponsor from liability.

Great West Life (GWL) recently unveiled its Member Investment Selection Service which gives plan members access to advice on their group retirement plan investment options, and addresses key issues many plan sponsors face when providing investment advice to plan members. The company even backs the advice with a written agreement.

“What plan members are looking for is an answer to that simple question: Where should I put my money?” says Bill Kyle, senior vice-president of Great-West Life Group Retirement Services. “For several reasons, plan sponsors have been reluctant to step over that line and tell them.”

He explains that GWL has developed a process which includes asset allocation, risk assessment, funds group matching, and fund rebalancing to guide each plan member to a stable financial platform. Plan sponsors are protected in the event that advice turns out to be erroneous, he says. “We agree that we will make it our accountability and not yours.”

Jana Steele, head of the pensions, benefits and compensation group at Goodmans LLP, says the service should prove successful assuming GWL is on solid legal ground. “I think it’s a welcome option for plan sponsors as a whole,” she says. “Making investment choices can be a challenge for members and this seems to be a step in the right direction.”

Steele agrees with Kyle’s assertion on the need for such a service, as many plan members are often guided through the maze of options available to them only to feel abandoned when they ask for advice on where they should put their money. “One of the problems with a DC plan is that people end up with a default option with the money just sitting there, so I think there’s a need for it,” she says.

As the first service of its kind in Canada, GWL expects the uptake to be significant, especially in the large-case market. Steele believes the key to success will be the protection offered to plan sponsors. “Plan sponsors will probably want to know more about it,” she says. “If the protection is there, they’ll go for it.”

The service is currently available for a fee of $20 per year per member, which can be paid by the plan sponsor or built into the cost for the member.

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