Data & Research January 13, 2011

Advisers Intend to Better Communicate with Clients

An SEI Advisor Network  survey found nearly one-third (30%) of advisers said they are "optimistic" heading into 2011; however, only 3% of advisers said their clients felt the same. 
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Advisers are more optimistic about 2011 than they were about 2010; 60% expect a stock market gain of greater than 7%.  Market pessimism was reserved for the bond market, with nearly two-thirds (64%) of advisers saying there is at least a 50% probability of a “bond bubble burst.”   Advisers were also asked about their take on the federal deficit.  A consensus on how to best to solve the deficit challenge was not found; advisers were split between reduce current stimulus plans (31%), revisit healthcare reform (28%), or increase the retirement age (16%).

Business Outlook 

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SEI found that the toughest part of 2010 for advisers was dealing with the below-expected revenue levels. However, advisers identified positives as well: the market uncertainty provided an opportunity to strengthen relationships, show their real value, and examine existing business processes and procedures.   

Looking ahead, top goals for advisers to increase revenues for 2011 are: proactively acquire clients using new initiatives (32%), increase efforts with centers of influence (25%), and continue their existing referral process (21%). More than half (55%) of advisers said the most important aspect to growing their business is getting referrals from existing clients.

The adviser-client relationship will see a hefty boost in communication in 2011: 77% of those surveyed identified communication as the area in need of greatest attention, which is far ahead of the need for more reporting (16%) or more research (7%).  Forty-one percent of advisers plan to use in-person meetings more frequently.

Top Priorities 

SEI found that top priorities for advisers in 2011 are to create better work-life balance and improve processes and procedures. When asked how a professional coach could help them, the most popular choices were new business development, marketing and public relations, and business organization and staffing. Similarly, the top three New Year’s Resolutions for 2011 among advisers are: spend more time on growth activities, remember what really matters in life, and segment clients and service them differently based on profitability.

The poll, conducted by the SEI Advisor Network, surveyed 367 advisers during December 2010 and January 2011. Nearly two-thirds of respondents (61%) have spent at least 15 years as an adviser.

In Practice January 13, 2011

Mercer Suggests 2011 New Year’s Resolutions

Mercer released its list of suggested New Year’s Resolutions for defined contribution sponsors; something a plan adviser may want to pass forward. 
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The resolutions include: 

  • Participant Fee Disclosure. New rules are coming in 2012. Determine what’s required, who’s responsible and how to integrate the new requirements with other plan communications.
  • Fee Oversight. Establish a policy for ongoing fee benchmarking. Receive all required disclosures. Document your oversight in a fee policy statement.
  • Stable Value Wrap Contracts. A joint study by Federal regulatory agencies (to be completed by October 2011) will determine whether stable value wrap contracts are exempt from the swap restrictions of Title VII of the Wall Street Reform and Consumer Protection Act .
  • Inflation Hedge Option. Consider adding a diversified inflation hedge option to your lineup. Evaluate a diversified option versus a Treasury Inflation-Protected Securities (TIPS) option.
  • Retirement Income Solutions. New retirement income products and modeling tools continue to hit the market. Plan sponsors should understand the available solutions to determine if one or more are appropriate for their demographics.
  • Participants Nearing Retirement. Investment performance is critical for near-retirees. Do their investment strategies match expected spend-down needs? Would retirement planning seminars and other assistance reduce financial anxiety (and its drag on productivity)?
  • Roth 401(k) Contributions. In tough economic times, consider a low-cost plan enhancement, such as a Roth, that expands financial opportunities for participants.
  • Managed Accounts and/or Investment Advice. Should you offer participants advice or managed accounts (or both)? Should you take advantage of improved access to custom target date funds, which allow tailored glide paths based on your core options?
  • Auto Features. “Set it and forget it” doesn’t work for plan sponsors! For example, should auto-enrollment contribution rates be increased? Are vesting and withdrawal provisions still appropriate for your organization?
  • Plan Operations. The Internal Revenue Service and Department of Labor are focusing on defined contribution plan compliance and recommend periodic review of plan operations both against the terms of the plan and against governmental requirements.

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