Advisors had a lot to say in our second annual survey of NAPA 401(k) SUMMIT advisors.
Advisors participating in the nation’s retirement plan advisor convention brought a lot to the sessions, networking, and – once again, shared valuable insights via an exciting new medium; the NAPA 401(k) SUMMIT Insider.
Once again, while there was no shortage of big issues to focus on, “client retention” loomed largest for survey respondents – in fact, even larger in this year’s Summit Insider. More than a third (35%) of this year’s 531 respondents rated it as a “very important” consideration, compared with about a quarter (24%) a year ago. Moreover, nearly as many (34%) rated it as an “important” consideration.
In fact, in this year’s Summit insider, the “competition” for concerns was even more fierce than a year ago. Fee compression – last year’s second highest consideration – slipped back some, rated as a “very important” consideration by (just) 23%, though important by 39%.
Instead, this year’s strong second concern was cybersecurity, noted as a very important consideration by 35% (and important by 38%), closely followed by attracting and retaining talent, cited as very important by 31% and important by 38%. “Growing staff, keeping employees and their home life happy with constant travel is a big concern,” explained one respondent. “My employees must be happy if they are going to give top notch service.” Still another cited as a concern “Maintaining culture during significant growth in practice.”
Competition wasn’t far behind, noted as “very important” by nearly a third (30%) and important by 42%. “We are less concerned with other advisors, competition is good,” explained one respondent. “Biggest issue is cybersecurity and government involvement especially at the state level.”
Consolidation Concerns?
What didn’t seem to be of much concern was industry consolidation. While provider consolidation was noted as “important” by 37%, fewer than one-in-ten classified it as a “very” important practice consideration (nearly twice as many said it was “not at all” a concern). Advisor group consolidation, though cited as “important” by 26%, was noted as “very” important by just 9%, and “not at all” by a robust 28%.
That said, one reader cautioned, “We are being commoditized by the recordkeepers. Access to plans is limited to none. We can’t help the sponsor with the administrative problems, which are huge. The industry is being painted into a corner. It is not about investments is about behavior.” Another cited as a concern, “Providers that build an ecosystem that cuts into role of plan advisors,” while another echoed “Plan Provider Relationship Managers trying to take the client away from you.”
Meanwhile, the fiduciary regulation – though we now have prospects for updates from both the Securities and Exchange Commission and the Labor Department – at the time of the survey’s assessment was seen as “very important” by just 15% (though it had enjoyed that assessment by even fewer a year ago), though important by nearly four-in-ten (39%).
Other articulated concerns were succession planning (more on that later this week), the lack of support for financial wellness initiatives, being squeezed by the state-run retirement plans, participant engagement, the challenges of expanding current practices to incorporate new elements (like health savings accounts), and, as one reader expressed it, “The uneven playing field in terms of compliance between major firms and RIA’s.”
Tomorrow: Plan Sponsor Concerns
