Broker-Dealers Cite Technology as Key to Future Business

What would broker-dealers do with an extra $100,000 to invest in their businesses? Spend it on technology.

Sixty-two percent of broker-dealers surveyed said they would invest additional money in technology automation and integration, according to a news release about a recent SEI quick poll. Twenty-seven percent stated that offering best-of-breed technology was a key selling point to advisers.

Attendees of SEI’s first annual summit for broker-dealers who participated in the survey noted that advice, not commissionable products, is driving the industry, with 67% saying they are now more open to fee-based programs. Respondents also indicated increased regulatory scrutiny has significantly affected operations, along with a shifting focus from providing products to assuming more fiduciary responsibilities.

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For the future, broker-dealers predicted greater industry consolidation – fewer and larger players in the marketplace. They also predicted that as products become more commoditized, the industry will continue to move toward holistic planning and advice, and that increasing compliance complexity and market environments will drive greater need for stronger relationships with broker-dealers.

Other than investing in technology to prepare for the future, survey respondents suggested that to avoid redundant due diligence efforts, working with fewer product providers is one way to prepare for emerging industry opportunities. Respondents also said adviser firms can increase profitability by leveraging their broker-dealers to help offload time-consuming administrative burdens.

Twenty-five summit attendees from some of the largest national broker-dealer firms were asked to participate in the poll.

John Hancock Announces New Retirement Portfolio Calculator

John Hancock Funds recently launched a new retirement portfolio calculator on its Web site.

The goal of the Lifecycle Retirement Portfolio Probability Calculator is to show the results of a model portfolio built with the same asset allocation as the John Hancock Lifecycle Retirement Portfolio, the fund manager said, in a press release. The Calculator determines the probability that such a portfolio would last throughout retirement, given different retirement lengths and annual withdrawal rates.

By adjusting the sliders to view different annual withdrawal rates and distribution periods, investors will see a projected probability of success, defined as a percentage chance of retirement portfolio survival, according to the announcement. The chance of portfolio survival is projected using Monte Carlo simulation, which is useful for modeling outcomes with significant uncertainty and variety of inputs.

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Carey Foran Hoch, Senior Vice President, Marketing, John Hancock Funds, said in the release that the calculator runs more than 5,000 simulations for 14 different asset classes. “During retirement, making your money last is critical. The insights gained from our Retirement Portfolio Calculator can help investors select a lifelong investment solution and more efficiently plan for their retirement,” according to Hoch.

Visitors to the John Hancock Funds site (www.jhfunds.com) can find the calculator by selecting the “Retirement Planning” tab at the top of the home page, choosing “Tools and Calculators” and then “Preparing for Retirement.”

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