The mid-year update of NAPA Net’s list of broker dealers in the DC market is complete. We’ve updated both the list and its accompanying commentary.
Life is not easy for BDs and RIAs in the retirement market. Though fewer than 50 have at least one person dedicated to supporting DC plan advisors, all distributors will likely struggle to comply with the new requirements (as currently proposed) of the DOL’s fiduciary rule, especially as it relates to IRA rollovers. Most have conceded that advisors working on a DC plan will have to either act as a fiduciary or outsource that responsibility to a third party — but it could be a bitter pill to swallow when it comes to IRA rollovers.
Though 250,000 of the estimated 300,000 active financial advisors are getting paid on a DC plan (up from 150,000 before the recession), and 25,000 advisors have at least $25 million of DC assets under management (AUM) (up from 5,000 less than 10 years ago), few BDs have increased support of their plan advisors. Of the 250 or so BDs with more than a few hundred reps, fewer than 40 have dedicated resources to support retirement plan advisors. One would have thought that as more advisors got involved with DC plans, that support would have increased. If so, one would have been wrong, at least in aggregate.
The segment that is growing consists of groups of advisors or teams that come together to share resources, most of which clear through a separate BD. For advisors focused on DC plans, or looking to do so, the first choice is whether to:
• go wire house or employee-based, looking for well-known brands;
• go independent (usually dually registered); or
• go entirely fee-based or RIA.
Since going it alone is difficult, the next choice is which team to join. Look for more teams to form and those teams to find a friendly landing place, with some more concerned about freedom than resources.
There have been two particularly notable changes to the DC BD and RIA list since our last update at the end of 2014:
• CAPTRUST invested in Pensionmark, which departed LPL to join CAPTRUST’s BD.
• GRP reinvented itself after the acquisition of Financial Telesis, selling itself to the advisors in the group and then recruiting some of the top advisors that had been part of NRP.
Like DCIOs, there are fewer dramatic movements or exits now that Cetera and RCAP have gone quiet. The DC business is unlikely to drive BDs, but it will be hard to avoid — and those that do not pay attention do so at their peril.
Click here to view the updated list of BDs. (Our DCIO list and commentary have also been updated.) Next up: DC record keepers. And remember, you can access all of our industry lists — DC Top Wholesalers, DCIOs, DC National Record Keepers, Top 50 Plan Advisors Under 40, and DC Provider Consolidation, here.
