What Lies Ahead for Advisers and Clients

“I think the next big thing is going to focus on participant outcomes and how we improve those,” said Bradley Arends, CEO of Alliance Benefit Group Financial Services Corp.

Hugh O’Toole, senior vice president of sales and client management at MassMutual, echoed that sentiment. In three to five years, he anticipates the industry will focus even more on improving participant outcomes and helping employees prioritize retirement. “I think it’s a very, very exciting time to add value to business owners,” he said.

Advisers and sponsors must move from efficiency to effectiveness and take responsibility for the outcome of the plan, he added. Behavioral finance is one tool advisers can use to improve outcomes by getting participants to “do things they didn’t realize were smart” — for instance, plan sponsors can stretch their match to potentially save the company money while helping participants save more for retirement.

A successful adviser is one who is able to demonstrate that he helped work with the plan sponsor to improve outcomes for a demographic that was previously unprepared for retirement, said Dominick Quartuccio, vice president of national sales and key account execution for Prudential. This also helps the plan sponsor see value in the adviser’s fees, O’Toole added.

Looking ahead, advisers may have more fiduciary responsibility, whether as 3(21) or 3(38) fiduciaries. There will not be a huge leap in advisers with these statuses in the next one or two years, but in the long run it is likely because clients are increasingly asking advisers to take on more fiduciary responsibility, Quartuccio said.

More sponsors are starting to understand the difference between 3(21) and 3(38) status, but it’s a work in progress, Quartuccio said. “I do think we are a few years away from total understanding of this,” he added.