Practice Management

PANC 2017: Business Models of the Future

Despite changes brought on by the DOL’s fiduciary rule, retirement plan advisers should focus on structuring their business model to best service plan sponsors and participants.

By Rebecca Moore editors@strategic-i.com | October 12, 2017
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Unquestionably, the Department of Labor (DOL) fiduciary redefinition—aka the conflict-of-interest rule—has had an effect on the advisory industry. And that effect has especially been felt in fee models.

Nearly one-third (32%) of attendees of a panel at the 2017 PLANADVISER National Conference said they have made a change from commission-based to fee-based pricing. However, 45% indicated there has been little change to their fee model because they already offer fee-based approaches, and 9% have likewise made little change because they will utilize the provided exemptions.

Rick Shoff, managing director of CAPTRUST Financial Advisors, says the fiduciary rule is a non-issue for his firm because services have always been fee-based. “[The rule] validates our decision to work in the best interest of clients as a fiduciary under a contract,” he said. He told attendees if they can align working in clients’ best interests with how they get paid, they will get business.

Brett Shofner, president of Work Plan Retire, an independent firm, said his practice has changed its fee model to fee-based, but the impetus was wanting to attain fee transparency and structure.

In another poll, more than half (52%) of the panel’s attendees indicated they have seen mild to moderate fee compression that is manageable, while 21% reported their pricing has remained stable for years, and 20% reported significant fee compression that is not manageable.

Shoff told attendees CAPTRUST is not experiencing fee compression because it provides additional services.

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