A new survey of industry experts expects the number of advisor practice mergers and acquisitions to escalate through 2019, in the same fashion change has decimated the ranks of recordkeeping firms.
By 2019, as many as 30 large advisory practices will have a national reach, according to Transamerica’s Prescience 2019, and the vast majority (91%) of industry expert survey respondents say that mergers and acquisitions will increase the market share of the top advisory firms. Moreover, local teams dedicated to retirement plans with five or more plan advisors (plus staff) will become commonplace, as the role of plan advisor moves from “from prescriber to decision-maker.” The panel of experts surveyed for the report project there will be as many as 100 such teams in the country by the end of 2019.
Two-thirds of the industry experts think that, by the end of 2019, plan sponsor demand for ERISA 3(38) and ERISA 3(16) fiduciary service will have fundamentally changed the role of retirement plan pdvisors. Seven in ten experts either agree (63%) or strongly agree (7%) that major retirement plan advisory firms will have unbundled the advisor position to draw a clear line between the plan sales function and plan service functions to comply with new or pending compensation regulations.
As registered investment advisors become more prevalent in the marketplace, 70% of the industry experts surveyed predict that by 2019 plans will move to fixed-fee pricing versus asset-based pricing. At the same time, provider relationships with investment consultants and advisors will be key drivers of defined contribution plan sales.
Roughly one in five industry experts strongly agree (and 63% agree) that “many” plan sponsors will demonstrate a genuine interest in enhancing the financial literacy of their employee population.
The Labor Department’s fiduciary proposal notwithstanding, 53% of industry experts disagree (and another 10% strongly disagree) that fee-based advisor compensation for retirement plan sales will be the only option rules and regulations allow.
