Insights

To protect what they have and continue growing, specialists must complete the transition from salesperson to businessperson. Investing time in designations that teach them what they already know is not the answer. In short, specialists must learn how to manage their business or hire someone to do it for them. Efficiency, standardization, staffing, liability management and marketing are no longer luxuries.

Given the potential fiduciary conflict that could result in a prohibited transaction, fiduciary advisors would be wise to pursue higher fee wealth management and other cross-selling business opportunities with a conservative approach.

Most advisory practices are small and operate with limited resources. Nevertheless, competition has intensified and regardless of size, marketing efforts must be bolstered. This is easily accomplished because most advisors don’t have a marketing strategy in place, a formalized referral process, a media relations campaign and few have leveraged the power of the Internet.

Retirement plan providers, TPAs, retirement plan specialists, generalists and B-Ds are all facing different scenarios. Individual providers, advisor practices and retirement plans could continue to grow. Individual plan participants will also continue to benefit, but overall employer sponsored plan asset "growth" now appears to be limited.

Like providers, advisors must justify their fees. Fees have been under pressure, but advisors can justify higher fees if they can demonstrate the value added. As specialists replace non-specialists with their value proposition, BOR turnover has intensified. Broker turnover does not benefit providers, but the savvy providers are holding their own in the “BOR war.”

When viewing the more than twenty suits already filed, it is clear that the plaintiff’s bar is attempting to make new law by challenging long standing industry business practice.  The trend towards breach of fiduciary duty vs. fraud type litigation clearly raises the bar on plan prudence.  It also elevates the standard for intermediary professionalism, but it should drive growth for distinguished retirement plan intermediaries in the mid-market.

With more plan sponsors using them as default options, Target Date Funds continue to grow in popularity. I know they are important, but the huge variations in these funds make them hard to evaluate. How do I benchmark and illustrate the differences between Target Date Funds?

Advisors must acknowledge the difference between retirement income products and guaranteed retirement income products. They must also come to terms with the huge cost difference between “group” retirement income products and individual “retail” products. Although not widely discussed, we do not believe the open architecture recordkeepers have worked through the system issues when these products are offered outside a bundled program.

The DOL's long anticipated 408(b)(2) proposed rules for fee disclosure - including new requirements to qualify for “reasonable” & the new Form 5500 - will have a major impact on sponsors, providers and intermediaries.

“Training employees that lack natural abilities is like fertilizing a rock.” Fortunately, the hiring process can be improved and candidates with the skills to excel can be identified.