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DC 401k Heaven and Hell for Broker Dealers

The implementation of the DOL conflict of interest rule will be a defining moment for broker-dealers, and the effects will determine which ones will surge ahead or even survive in the DC market.

Most BDs have ignored the DC market, with fewer than 40 having even one person focused on supporting their DC plan advisors. What are the implications for advisors interested in growing their DC practice?

Like DCIOs, but unlike record keepers, the DC business is just a part of these BDs' overall business – hard to separate, but becoming more important. BDs have typically have eschewed the low-margin and high-liability DC market, where scale matters. Like Core Advisors, a few BDs have realized that the key to IRA rollovers and access to the mass affluent is through DC plans. The implications of the DOL rule for IRA rollovers has gotten the attention of almost all BDs, with some, like MetLife and AIG , calling it quits as a result.

The independents had been gaining but now seem caught between the wirehouses and DC specialty groups, as well as the Elite Advisors who are shifting most of their business to an RIA.

Insurance BDs, traditionally the stepchild of the DC world, might be in an interesting position if small and mid-size companies integrate all worksite benefits, where insurance advisors have an advantage over wealth management advisors — assuming these BDs can successfully navigate the DOL rule and can wean themselves off of high-commissioned variable annuities.

So where should advisors who are looking to grow their DC business turn? Well, that depends on who you are.


  • Emerging Advisors – Made up of accommodators and blind squirrels, these advisors can be found in wirehouses, indies and insurance BDs alike. Accommodators likely will not make any moves, as the DC business is not essential or even important to their overall practice. Blind squirrels need training, support and mentors found either in wirehouses, where they will have serious restrictions as a result of the DOL rule, or within specialty groups. The problem for them will be that as their practice develops, who owns it? Or how to extricate it to get higher payouts.

  • Core Advisors – Made up of younger advisors with $25-$250 million of DC AUM using DC plans as a way to build their wealth management practice, these advisors need scale in a world where margins are declining and competition is tougher. Many will look to join specialty groups, adopting a long-term view keyed on succession planning, or stay within the wirehouses or insurance BDs, acting as DC fiduciaries and hoping to pick up business from advisors who are either uninterested in the DC market or are forced to partner.

  • Elite Advisors – Specialty groups are looking to buy practices from those advisors looking for more immediate succession planning, while others offer tools, support and lower-cost investments for those looking to remain independent. Elites, like national RKs, must grow or go, either partnering with a larger group or creating one of their own.


The BD world will look entirely different in two to three years as a result of the DOL rule. That means advisors looking to grow their DC practice must make some serious strategic decisions soon — decisions that will have long-term implications.

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

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