In Practice October 25, 2016

Trustworthiness Trumps Other DC Adviser Satisfaction Factors

Trustworthiness is a must-have ingredient for brand consideration in the defined contribution (DC) industry, according to a new analysis from Cogent Reports. 
Reported by

The brand attribute of “trustworthiness” outranked more easily measured and objective factors such as consistency of investment performance and the experience of the investment team among advisers reviewing defined contribution (DC) plan service providers, according to the latest Retirement Plan Adviser Trends analysis in Market Strategies International’s Cogent Reports series.

In fact, according to the analysis, DC investment managers that fail to foster trust among DC producers have little chance of being considered for new business. The findings closely echo a previous analysis from the firm that considered the role of trust during the individual retirement account (IRA) creation and rollover process.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

“The power of brand trust and its resounding impact on brand consideration cannot be underscored enough—brand trust is vital for gaining traction among DC advisers as well as DC plan participants and affluent investors,” explains Sonia Sharigian, senior product manager at Market Strategies and author of the analysis. “This is one of the most consistent and hard-hitting trends we’ve seen across a multitude of our studies.”

According to Sharigian, any financial services firm that is striving for growth or seeking to maintain its standing needs to pay attention to this metric.

“In an industry that appears to be plagued by lawsuits and negative media coverage, DC investment managers are facing a significant trust deficit,” adds Linda York, senior vice president at Market Strategies International. “As such, understanding current perceptions and monitoring the experience factors that build trust are imperative to the health of a brand’s DC business.”

It is only once trust has been established, York and Sharigian explain, that managers can “pivot to other leading consideration drivers such as value for the money, the experience of the investment team, company investment philosophy and global product offerings.”

Looking at actual firms operating in the DC marketplace, the analysis suggests American Funds, Fidelity Investments, Vanguard, BlackRock, and Franklin Templeton Investments rank highest among DC-focused advisers on trustworthiness.

The full analysis can be purchased and downloaded here. 

Products October 25, 2016

PCS Launches Rollover Tool to Comply with DOL Fiduciary Rule

The tool is designed to help advisers seamlessly transition IRAs from commission status to fee based in order to comply with the DOL’s Fiduciary Rule.
Reported by

Retirement platform provider PCS is introducing an adviser-initiated rollover system that is fully compliant with the Department of Labor (DOL)’s Fiduciary Rule, according to the firm. The financial services industry is looking at about $4 trillion in commission-based individual retirement accounts (IRA)s that will need to be rolled over into new, complaint structures, PCS explains.

With the firm’s new tool, advisers can capture rollovers out of qualified plans and transition existing IRAs from commissions-based to fee arrangements, thereby supporting DOL compliance.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

“Come April, 2017, every retirement-plan enterprise will have to reassess its procedures,” says PCS CEO Mark Klein. “Advisers, home offices, plan sponsors—they are all feeling the pressure. Of the $7.3 trillion currently in IRAs, $4 trillion is in commission-based accounts. We anticipate that most (if not all) of these accounts will transition to level fee arrangements. Whether handled by independent RIAs [registered investment advisers], advisers registered with broker/dealers, or hybrid advisers, every account will have to be reviewed and converted in accordance with the DOL mandates, as necessary.”

PCS says its mobile-ready software maintains all necessary documentation to determine clients’ best interests, and ensures investor acknowledgement of required disclosures. It’s designed to foster account aggregation with a built-in Monte Carlo analysis capability. The rollover tool also offers a customizable risk-tolerance questionnaire, built-in home office compliance monitoring, and fee approval or set auto-approval based on approved criteria. Where applicable, the tool screen scrapes existing investments such as current positions and fees, avoiding input of required comparison data.

Advisers can also initiate the rollover tool via text or email with “off the street” IRA holders.

“Since PCS was founded in 2001, our express purpose has been to offer advisers a conflict-free, full-fee-disclosure, no-hidden-agenda retirement platform,” says Klein. “With the anticipated cost and liability ramifications of the DOL regulations, we are providing advisers with a comprehensive rollover tool enabling them to remain compliant by quickly addressing the DOL-level fee fiduciary requirements.”

PCS will host a webinar about the rollover tool on November 2 at 1 p.m. (Eastern Time). Registration is available here. 

«