Eighty-five percent of retirement plan advisers are currently performing services traditionally performed by plan fiduciaries, JHFN found in its survey. However, most of these advisers are not declared plan fiduciaries; only 34% of respondents said they held the AIF designation.
“The difference in these numbers reflects the pressure plan sponsors are exerting on advisers to bear some of their fiduciary responsibility,” said Bruce Harrington, head of retirement sales and strategy, John Hancock Financial Network. “With upcoming regulation requiring more transparency, JHFN sees an opportunity for broker/dealers to provide support in order to enable advisers to become experts if they choose to specialize.”
Of the survey’s 220 retirement plan adviser respondents, 44% were affiliated with wirehouses, 21% were independent, 20% were with regional broker/dealers, and 15% with insurance broker/dealers. When asked to characterize their approach to the retirement plan business, 18% said they were plan design/ERISA experts, 31% considered themselves investment experts and a slight majority (51%) felt they had a general sales approach to the business.
Eighty-six percent of the plan design/ERISA experts regard new fee disclosure regulations as an opportunity for future business growth. Greater fee disclosure and increased demands by plan sponsors, including accountability, as well as tying fees to services provided, are driving advisers to shift to more fee-based business in the future.
Further, while advisers reported that 31% of their current business is fee-based, in the future, they expect that number to double to 60%.
When asked what they most wanted from their broker/dealers, the advisers cited the following as their top three needs:
- Fiduciary guidance (82%)
- Competitive information (76%)
- Regulatory updates (75%)
“Not surprisingly, what advisers want most is help with the changing landscape,” said Harrington. “We think that those who understand the changes and train to become specialists will find quite a bit of opportunity.”
To that end, JHFN has developed a new Defined Contribution Consulting Program for its advisers (see “JHFN Launches DC Adviser Consulting Program”).
Getting business from advisers
Respondents were asked their thoughts on how product providers demonstrated their commitment to the qualified plan business, and what attributes were most important to them in an external wholesaler.
Respondents felt that a top-tier product provider displays the following attributes:
- High quality personnel (80%)
- A strong brand (76%)
- Competitive products (70%)
- Readily available sales support (69%)
- Investment in technology and the business in general (66%)
- Established client service program with results (66%)
Retirement plan advisers’ preferred ways of receiving sales support are: through a single point of contact available by phone/e-mail (49%), a support team (43%), and external product managers or wholesalers (34%).
Respondents also expressed views on the most important attributes of external wholesalers ranking them in the following order:
- Integrity (81%)
- Product knowledge (68%)
- Knowledge of competitors (62%)
- An interest in helping me grow my business (60%)
- Industry knowledge (53%)
Their top-three preferred methods of receiving product and industry updates were: in-person meeting with external wholesaler (54%), e-mail newsletters (43%), and through conference calls (37%).