Recent events prove that bigger isn’t always better

I disagree with a quote from Richard Bove in the article “Small banks positioned to build wealth management…

I disagree with a quote from Richard Bove in the article “Small banks positioned to build wealth management business,” which appeared in the April 13 issue.

Mr. Bove, who is a bank analyst for Rochdale Securities LLC of Stamford, Conn., said: “People who let small banks manage their money are making a mistake.”

Before coming to me last year, a client had 14 of 15 funds held in a major mutual fund company, and the account was down almost 40%.

As we have learned in many areas, bigger isn’t always better.

George V. Reis
President
George V. Reis Investment Group Inc.
Two Rivers, Wis.

Small businesses have retirement plan options

There are several flaws in logic in the article “Small-business retirement plans fine in theory, difficult in practice,” which appeared on InvestmentNews.com on April 20.

First, what is the definition of “small business” that was used?

Having worked exclusively in the small-business market, concentrating on the design and implementation of retirement plans, we have encountered few of the difficulties that were alluded to in the article, specifically related to ease of use. There are myriad plan options for our small-business clients.

Also, in terms of cost, if this is a new plan, the plan sponsor receives a tax credit for the first three years to offset plan expenses.

If the average participant balance is above a certain threshold or when it reaches a certain threshold, the plan administrative costs are reduced to zero.

And what about the cost savings from a tax perspective to the small-business owner, accruing from sponsorship of a qualified plan?

The article made no mention of that.

In addition, is it a coincidence or my imagination that with little discrepancy, those surveyed cited lack of ease of use, lack of ease in establishing a plan and fee transparency as the reasons for not establishing a plan?

Perhaps consultation with others besides SunTrust Banks Inc. of Atlanta should have been considered prior to publication of an article that relied only on an online survey from that company.

Colin Fitzpatrick Smith
President
The Retirement Company LLC
Cleveland

Big hurdles hold back advisers on technology

I agree with the Just Thinking column “For advisers, technology is not an elective,” which appeared in the April 20 issue.

The problems that hold many of us back from using advanced technology in our financial planning practice, however, are significant.

Over the years, we have tried various programs, with little success.

Thus we are still back where we were 10 years ago.

The reasons are:

• Expense. It costs a good deal to buy what is essentially a “trial and error” program. Add to that the time attempting to bring staff along, and it usually adds up to a lot of money spent with few redeeming results.

• Complexity. We usually find the programs far more complicated than we bargained for, and don’t fully understand or appreciate what we have paid for. Now we have added time to the money invested — again with minimal results.

• Disconnect between the technology companies and the investor. When I try to use these programs, I seriously wonder whether the authors/manufacturers have had real-world experience with what we are trying to accomplish with our clients. The clients often find our efforts at explaining the programs confusing and have difficulty perceiving the value.

• Lack of prompt support. When I need help with a program, I can’t afford to wait 24 hours to reach someone with a solution, nor do I have time to wait on hold to spend 20 minutes with someone to bring me along.

• Shelf life. In this world of such rapid change, today’s “must have” can quickly become tomorrow’s quaint artifact.

In short, give me something that is understandable, has value, relates to my clients in real terms and will be a trusted tool for the next three years, and I will move heaven and earth to buy it, learn it, teach it and apply it.

Until then, I will opt for what works best for me and my clients, and for right now, that is the status quo.

Jeff Young
Senior vice president
First Financial Equity Corp.
Scottsdale, Ariz.

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