Visions

The mainstream media's coverage of DC plans ceased being real journalism many years ago. The agenda-driven output has morphed from journalism to entertainment and from entertainment into manufactured propaganda. Given that DC plans are the most successful savings vehicle in history and more important than ever before, the media's attempts to misrepresent, distort and attack supplemental savings plans is nothing less than disturbing. Media, academic and political bias against the DC plan system is also something that needs to be addressed publically.

Given the decades of fiscal mismanagement, huge federal debt, ongoing federal deficits, state & local deficits, wealth destruction, an aging nuclear deterrent, ongoing geopolitical challenges and already high tax burdens, growth is the sole solution to our problems and challenges. Capitalism can't survive without growth and neither can the financial services industry as we know it today. We cannot tax our way to a solution and adequate income streams cannot be supported by inadequate assets.

Unlike select product manufacturers, service providers and distributor organizations that must sell product to stay in business, the CFDD does not believe this is a good time to enter the mature, highly specialized and marginally profitable retirement plans business. In addition to trade attempts encouraging rookies to sell retirement plan products with visions of building a wildly profitable stream of annuity income, we are equally weary of fiduciary zealots pounding their chests with missionary fervor.

In addition to capturing the discount, exhibitors who register early could benefit from one year of complimentary advertising and repeated exposure to the industry's richest database of retirement plan specialists. The recession forced many to limit their advertising & marketing expenditures and we are pleased to offer exhibitors complimentary advertising with a value in excess of $25,000.

Opinions vary, but some feel the ERISA fiduciary role, acknowledged or functional, limits the ability to cross-sell.  As a result, this could preclude advisors from earning  additional compensation. Others feel that cross selling is permissible with level compensation. Conventional wisdom is rarely correct, but there is a trend among BDs to permit their registered reps to accept fiduciary liability. Given the challenging economy, downsizing, increased small plan liability, compliance issues, the lack of revenue from small plans and the impairment of cross selling, advisors should be very selective when accepting an ERISA fiduciary role.

To meet the objective of driving consolidation of retirement plan advisory services to qualified specialists, the CFDD's online ERISA Advisor Evaluation (EAE) tool will be the technological vanguard influencing the way retirement plans business is consummated in the future.  Sponsors have become more knowledgeable about retirement plans and the evolving higher standards established by ERISA, including the need to evaluate service providers.  However, evaluating retirement plan advisors remains a specialty with little available guidance.  To meet the needs of today's sponsor, the CFDD's independent, objective and efficient EAE tool will help sponsors with their fiduciary duty to select and monitor their advisors. 

The CFDD's new web-hosted Plan Sponsor RFP Tool for Advisor Evaluation, EAE, will professionalize the evaluation of retirement plan advisors, increase sales activity, improve the closing ratio of qualified specialists and accelerate the consolidation of retirement plan advisory services, particularly in the small plan market. The unbiased RFP approach to advisor evaluation is also a credible way for decision makers to exit relationship-based sales with comfort. Indeed, the EAE Terminator will soon be stalking the nation's country club and golf course-sets.

Many non-specialists active in the small plan market are still driven by 5.00% deposit-based compensation. Given their lack of specialization and flawed approach to ERISA plans, the 500,000 DC plans with less than $3 million are ripe for consolidation at the broker-of-record level.  By targeting the right market segment and operating with  fiduciary standards, affirmative insurance coverage and a RIA type of business model, advisors can grow their practice in a world without growth. Pricing and service standards must, however, be applicable to the targeted market. Processes should also be strong and liability must be managed.

Long-term Treasury rates have increased in recent weeks and if the trend continues, managing the growing federal debt will require a Herculean effort. On a personal business level, advisors should note that a rate spike would set the stage for a jump in DB plan terminations and increase the demand for select investments, including immediate annuities. Like BOR consolidation, we expect a bull market in DB plan consulting and plan terminations over the decade ahead. Corporations are re-evaluating their DB plans and this is a timely opportunity for advisors to offer value added DB plan consulting services with teeth. In addition to fee-based revenue and much needed advice, these services open the door to other growth opportunities.

Advisors are increasingly questioning why they should relinquish control to proprietary asset allocation fund managers from a business and fiduciary perspective. In addition to a loss of control, some feel their perceived value diminishes as the assets in these proprietary funds grow. They acknowledge the need for partners with proven expertise, but note that operational advancements now allow them to provide custom solutions to small plans. They further note that becoming an ERISA 3(38) fiduciary allocator could give them an edge in BOR consolidation.