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Fielding Miller: DOL Rule Among 5 Trends That Favor Elite Advisors

While there are a number of trends that could significantly affect DC plan advisors, none is bigger that the DOL’s proposed conflict of interest rule, says CAPTRUST founder and CEO Fielding Miller. The market forces causing plan advisor consolidation have been brewing for a while, but the rule could accelerate that movement dramatically, he predicts.

Five current trends will continue to affect plan advisors, according to Miller, all of which seem to favor elite advisors — especially those who are part of specialty groups or are backed by committed BDs:



    • Advisor RFPs — RFPs used to be rare, but CAPTRUST is now filling out one a day, including many for plans under $10 million. It’s harder for emerging and solo advisors to use simple third-party tools to fake their way through an RFP.

    • Fee Disclosure — The first wave of disclosure rules ferreted out obvious issues, but with more advisor fees being disclosed, it opens the door for other advisors to come in for way less for the most attractive plans.

    • Commoditization of Investment Menus — With a focus on index and target date funds, advisors who rely on their investment selection acumen will be squeezed out.

    • Participant Advice — Plan sponsors realize that their employees need more than education. Providing advice will be even tougher under the DOL’s proposed fiduciary rule, and only experienced advisors with scale will be able to supply advice and meet the documentation requirements.



    • Related: Chetney: Reshaping the Future Again




    • DOL Fiduciary Rule — BDs make infinitely more money on IRAs than on DC plans. Larger BDs restricted advisors — first by limiting their ability to act as fiduciaries and then by only allowing a smaller group to act as one. Under the proposed DOL rule, nearly everyone will be considered a plan fiduciary. But the rule will also make it harder for plan advisors to work on IRA rollovers. Miller says that BDs will start asking, “Why are we in this business? There’s a ton of risk but not much upside.”

    Miller predicts that DC specialists will be forced to look for a new home if their BD, protecting its IRA business, starts restricting their ability to work with DC plans. “Blind squirrels do a lot of plan business collectively,” notes Miller, “which is even more an issue for their BD.”

    Opinions expressed are those of the author, and do not necessarily reflect the views of NAPA or its members.

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