In Practice August 7, 2008

The Changing Face of Advisory Firms

The growth of the dually registered adviser mirrors a trend toward incorporating more financial planning in the adviser industry.
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In The Cerulli Edge Advisor Edition, Cerulli Associates says advisers will continue to be attracted to B/D firms that work with its advisers to act in the client’s best interest, evidenced by the rise of the dually registered advisory firm, which houses both a registered investment adviser (RIA) for fee-based advice while also maintaining a broker/dealer affiliation. From 2004 to 2006, those firms experienced a growth spurt, swelling at an annual rate of more than 20%, than slowing to 6% growth between 2006 and 2007, the report says. Asset growth at these firms was more impressive, experiencing an annualized growth rate of 21% from 2004 to 2006 and 18% in 2007.

The move toward more fee-based service in the last decade is evidence that advice is becoming more of a critical part of adviser practice (64% of advisers are fee-based, compared with 34% in 2002, according to Cerulli data). A recent Cerulli study said that providing more financial planning will be critical to the success of firms (see Advice is Value Added). Overall, Cerulli says the trend toward incorporating more advice is positive—although it has caused some confusion as firms and advisers reshuffle their roles.

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In fact, recent data from the RAND Corporation found that many investors misunderstand the legal responsibilities of their advisers (see Advisers’ Legal Responsibility Blurred for Investors). The convergence of financial planning and product placement combined with the regulatory environment has prompted many firms and advisers to examine how they are working with clients and the legal implications of these actions, Cerulli says.

Some firms have begun to incorporate more financial planning more gracefully than others. The line is hazy between non-investment advice and comprehensive planning. Cerulli says in order to define that line, some firms use software programs to keep advice on track; others use disclosure techniques to explain the scope of the relationship to clients; and some avoid the issue altogether by barring advisers from practicing financial planning under the corporate RIA. The issues surrounding the client’s best interest will certainly continue to evolve, Cerulli says.


Products August 7, 2008

The Hartford Program Helps Advisers Sell Retirement Plans

The Hartford’s Retirement Plans Group introduced the “No Gaps Four-Point Sales System” to help advisers sell the company’s qualified plans as part of their retail sales initiative.
Reported by

The company says the new program is market-, product- and firm-neutral, and is flexible enough to apply to both novice and veteran professionals. It also educates advisers about the Pension Protection Act.

The sales system includes three tools that lets wholesalers talk to advisers about the opportunity in selling qualified plans, how advisers can take advantage of that opportunity, and how The Hartford can help.
The tools are:
  • The No Gaps in Opportunity brochure is a sales brochure that explains to advisers the opportunities in the retirement plans marketplace and why they should sell qualified plans.
  • The Four-Point Adviser Sales System uses flyers to support advisers as their experience grows.
  • The Four-Point Sales System Kit enables wholesalers to package materials for small meetings or for face-to-face meetings with advisers. Shaped by feedback from financial advisers, information in the kit is color-coded and categorized according to the four topics they said they wanted most from The Hartford:
oProspecting: Tools and sales ideas to help identify, target and generate sales leads.
oPlan Design: Support that helps the adviser uncover opportunities with prospects based on legislative activity or alternative plan designs.
oProgram: The Hartford’s product, program and service features.
oPractice Management: A new section with tools, resources and tips to help strengthen the adviser’s sales, presentation and service skills to help grow and retain their client base.
“The qualified plans market is perceived as being intense and time-consuming to learn and support. The No Gaps Four-Point Sales System simplifies and demystifies the business for the financial adviser,” said Chris Chaia, assistant vice president of marketing for The Hartford’s retirement plans group. “The ‘No Gaps in Opportunity’ tagline speaks to the fact that this system can be used from start-up to existing plans, with a corporate or non-profit plan sponsor, and with different types of product solutions, including life insurance.’

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