February 11, 2019

Brass Tacks

Serving as a 3(38) fiduciary enables an adviser to focus more on plan outcomes

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Art by Uijung Kim

Our cover story this issue, “A Forward Focus,” makes the case for offering not just 3(21) fiduciary services but 3(38) as well. By removing decisions about investment selection entirely from retirement plan committees, advisers can get down to the brass tacks of discussing the retirement plan—and help the plan make significant improvements to its outcomes. Some advisers view 3(38) management as one of their key growth opportunities, particularly as advisers usually charge more for 3(38) services.

This issue also includes our 2019 PLANADVISER Top 100 Retirement Plan Advisers list. There you can see what firms have reached the top of their respective peer group in terms of assets under advisement (AUA) or number of retirement plan clients. Once again we have evaluated firms in four categories based on the number of advisers in the practice: individual, small team, large team and mega team. Additionally, we looked at three areas: AUA, number of plans under advisement and specialization—i.e., 403(b), 457, nonqualified or defined benefit (DB) plan. You can find an interactive list online at planadviser.com.

“Micro Market, Macro View” is the 2019 PLANADVISER Micro Plan Survey of plans with less than $5 million in assets. The survey reveals many opportunities for advisers to enhance these plans, particularly with respect to acting as a fiduciary, evaluating provider fees, benchmarking plan design and creating and monitoring an investment policy statement (IPS).

“Student Loan Debt Relief” lays out several ways that advisers can help participants pay down their student debt so they can save more, or begin to save, for retirement. An IRS private letter ruling to Abbott permits the company to make 401(k) contributions to employees who are trying to clear away their student debt. Industry insiders expect other companies to follow in Abbott’s footsteps and offer relief of their own. Advisers can also help participants refinance student debt or can direct them to a federal loan forgiveness program, if they are nonprofit employees. Moreover, experts believe that, by helping participants manage their student loan debt, retirement plan advisers will show the client they have multiple skills and are working diligently, with participants’ best interests at heart.

“Climate Change and ESG” admits that interest in environmental, social and governance (ESG) investing is only in its infancy in defined contribution (DC) plans, but ESG funds have attracted $12 trillion in assets, a 38% increase since 2016, according to The Forum for Sustainable and Responsible Investment. Some human resource (HR) executives note that participants have begun to inquire about socially responsible investing (SRI), spurred by concerns over climate change and shocking news events such as the recent school shootings in Parkland, Florida. Experts believe that advisers can distinguish their firm by offering ESG funds and that interest in this type of investing resonates among younger participants.

We hope that these stories expose you to new opportunities to expand your practice in 2019.