PA NC: The Future of the Independent Adviser

As plan sponsors look to their advisers to serve as co-fiduciaries on the plan, the fact that independent advisers can be allowed to sign on as co-fiduciaries is a competitive advantage over wirehouse advisers. Bo Bohanan, Director of Retirement Plan Consulting of Raymond James & Associates said his firm allows advisers to serve in such a role on a case by case basis. Dick Darian, Chief Marketing Officer of National Retirement Partners (NRP), said that NRP believes that all its advisers are fiduciaries and allows them to say as much.

The Pension Protection Act (PPA), especially the fiduciary adviser safe harbor, allows for many opportunities for advisers. Both Darian from NRP and John MacGregor, Senior Vice President, Retirement Services at LPL Financial, said they are making the DALBAR Fiduciary Adviser Network program available to advisers. Although he thinks is probably not going to be embraced by the masses of participants, it will allow advisers to work more with the high net worth folks, MacGregor said.

The rollover market will be significant, all three representatives agreed. Why should the providers be retaining those assets, Darian asked; why wouldn’t it be the adviser? Bohanan said that rollovers will require the advisers to get access to some type of comprehensive planning, including marketing support materials and intellectual capital.

Wirehouse Competition

There are more plans out there than there are good advisers to help them, Darian commented. “So,” he said, “we are glad wirehouses are increasing their services.” However, he said, he is aware of the limitations the wirehouses have.

A traditional limitation is that wirehouse advisers cannot serve in a fee-based advisory role. However, moderator Steve Wilt, financial adviser with The STAR Group with Merrill Lynch pointed out this dynamic is changing. However, despite that ability, MacGregor said he did not see that as a threat, pointing out that LPL has rolled out two fee-based platforms, one for institutional advisers and one for the masses. Saying instead that wirehouses will still have constraints, even as they roll out flexibility, MacGregor commented that he believes the independent channel will remain the place to be for serious 401(k) advisers, saying surveys support that people want an independent adviser.