Crystallizing the opportunities and challenges of plan advisors, the Wall Street Journal published a piece that put advisors at the center of change in the 401(k) market. Society, government and the general press have clearly awakened to the importance of participant directed corporate retirement plans like 401(k)s. The burden of funding, investing and planning is shifting to individuals who are clearly not equipped — which puts advisors in a key position. But are they ready, and are there enough skilled practitioners to handle the demand?
With greater demand for services from both individuals and plan sponsors, advisors are being pulled in different directions, with 81% of advisors claiming to offer one-on-one advice, according to a Cogent study, and 72% actively suggesting new plan features. With little room for error and profits dwindling, the demand for knowledgeable plan advisors is expected to grow. But only an estimated 5,000 currently have the experience and skill set to even begin to meet those needs and stay afloat.
Though the demand is growing, attracting more advisors to the 401(k) market, so are the challenges. These include advisors acquiring the technical competence of a surgeon and the practice management skills of a corporate executive — in addition to the investment, marketing and sales experience most successful advisors already have.
With growing demand for advice from participants and today’s focus on improving outcomes, already-challenged advisors need to have the skills to serve both companies and individuals. The spotlight is clearly on plan advisors — which may drive the dabblers off the stage.
