Are advisors charging enough for their services? The answer is no, according to a panel of broker-dealer executives (free registration required) leading a discussion at the NAPA/ASPPA 401(k) Summit last week in Las Vegas. To begin with, price competition is driving advisor fees down. As Pat Rieck of Morgan Stanley Smith Barney LLC, recounted: “I often have conversations with advisors, where they’ll say, ‘Here’s the average fee, and I’m below that.’”
Advisors are looking to add non-qualified deferred comp plans for their 401(k) clients as a means of increasing their fees. Margins are much higher, and providing such extra benefits to their clients is a way of adding value as well as setting themselves apart.
Addressing the DOL’s upcoming reproposed definition of fiduciary and its effect on IRA rollovers, Rieck indicated that Morgan Stanley will wait to act. Conversely, other large firms like LPL Financial are taking steps to anticipate the new investment environment. “We invested $4 million in a transition services support desk,” said Bill Chetney, Vice President at LPL Financial Retirement Partners. “We’re building an infrastructure that can pivot as change comes.”
