The Path Forward

Art by Chris Buzelli

Last issue’s cover story spelled out the breadth of services that advisers will likely offer in the future. To continue that discussion, our lead story this time, “An Array of Models” examines the development strategies many solo advisory practices now consider. With all of the merger and acquisitions (M&A) activity taking place in the industry, this is a critical area that advisers must evaluate to stay competitive.

One option is to remain independent but to join an aggregator and leverage its back-office support. Advisers could also seek to join a large, established financial services or employee benefits organization. A third option is to enter an “adviser alliance” or “adviser affiliation network.” In the end, some experts expect that the industry will begin to take on a barbell shape, with many firms looking to expand through the opportunities cited above and others remaining fully independent niche retirement practices.

Accompanying the 2019 PLANADVISER Recordkeeper Services Survey is “The Value of Data,” which explores how recordkeepers use artificial intelligence (AI) and machine learning, paired with their participant data, to personalize education. These developments should result in heightened participant interest in the retirement plan, thereby making it easier for advisers to engage with these individuals and affect positive change.

“Advancing Advice for All” reveals a new kind of managed account service from investment managers that is easier for participants, and advisers, to use. Offering these services is expected to simplify having one-on-one discussions with participants. Still, one adviser says, to be effective, these services need to help with both accumulation and decumulation of assets; they need to be priced competitively; and they must have in-person direction by the adviser as financial coach.

“Pension Risk Transfer on the Rise” describes the various ways that advisers can help sponsors of defined benefit (DB) plans transfer all or part of their liabilities to an insurance company. The article also discusses the factors advisers should consider to determine whether a DB plan is ready for a pension risk transfer transaction.

“Investment Oversight Partners” not only discusses why aggregator firms typically handle investment oversight at headquarters but why independent practices are starting to turn to third parties to handle 3(38) fiduciary investment oversight. In the past, advisers’ central role for retirement plans typically was to oversee the investment lineup. However, as the focus of plans has shifted to retirement readiness and retirement outcomes, to be a true retirement plan adviser and not just an investment consultant, the professional must spend more time on plan design and participant outcomes. In addition, experts say, centralizing the investment function frees advisers up to strengthen current customer ties and build new ones.

In “Through the ‘Window,’” John Keefe writes that although many retirement plan advisers are not big fans of brokerage windows, many lawyers, engineers, airline pilots and doctors are. So how can advisers ensure that the option gets used properly?

If there are other topics you’d like to see in the magazine, please reach out to us at editors@strategic-i.com to say what you would like us to cover.