At this week’s TRAU session at UCLA, 60 top advisors and industry professionals gathered for three days to learn and share. Here’s what’s top of mind for these leading advisors from all different types of BDs and RIAs and what’s keeping them up at night:
- The DOL — Specifically, will plan fiduciary advisors be able to work on rollovers and, if so, will they be able to charge more than they get from the DC plan? Can they work with participants on outside assets, and can they charge more? Do the proposed regs give plan advisors working as fiduciaries an advantage over advisors looking to capture rollovers?
- Outcomes and fee compression — Yes, they are tied together. If the CFO does not see how their DC plan is valuable to the company’s bottom line, why would they pay more for advisory services? Hugh O’Toole, now of Plan Outcomes, argued that once advisors show the CFO the cost of older workers not able to retire on time, then and only then will they be willing to pay for the true value of an experienced advisor. Until then, look for more advisor fee compression.
- TDFs — If plans are simply picking their record keeper’s TDF, advisors will have trouble showing their value. While Vanguard, Fidelity and T Rowe Price still have a 71% market share in TDFs, advisors are asking about custom solutions, as well as matching plans and TDFs based on the demographics and behavior of employees, not their record keeper’s proprietary solution.
- Provider consolidation — Who’s next and how can they avoid placing clients with record keepers likely to exit?
While advisors are positive about the business — which is booming for experienced plan advisors — concern about the DOL’s proposed fiduciary reg and fee compression seem to cloud the future.
