In Practice September 30, 2011

Cerulli Reports on Opportunities in 403(b) Market

New legislation is shifting the 403(b) market from highly individualized and retail-focused, to one that is more efficient and institutionalized, according to Cerulli Associates.
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As a result of this shift, retirement advisers, third-party administrators (TPAs), and investment only (IO) asset managers are presented with new opportunities, Cerulli says in its latest report.

The legislation being analyzed, enacted in 2007 and finalized in 2009, enables 403(b) plans to take on a more 401(k)-like structure. Certain 403(b) segments, such as health care, are moving toward single provider and will more closely resemble a 401(k) plan than others, such as the K-12 market, which continues to have multiple providers.

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Cerulli says firms and players that can accommodate the changing needs of the various market segments are well poised to benefit from the projected growth. These include:

  • Advisers: As the retail relationships between advisers and participants in the 403(b) space diminish, opportunities are being created for more 401(k)-like retirement specialist advisers who act as plan fiduciaries.
  • Asset Managers: As 403(b) plans become more single-plan provider- and ERISA-based, they will also be more open architecture, enabling IO asset managers to grow their DCIO businesses.
  • TPAs: As more 403(b) plans become ERISA-based (during the past five years the percentage of ERISA 403(b) plans has increased from 17% to 40%), plan sponsors will continue to need help with the regulatory responsibilities, creating opportunities for TPAs with capabilities to accommodate the unique needs of this market.
Products September 30, 2011

Updated Platform Helps Create Tax Efficient Portfolios

Orion Advisor Services is releasing an updated version of its portfolio management platform, Advisor Desktop.   
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Designed for registered investment advisers (RIAs), the new Advisor Desktop has an added feature to help advisers create tax efficient strategies for clients at the household level.

“Advisers are constantly looking for new ways to increase tax efficiency in their portfolios,” said Eric Clarke, President of Orion Advisor Services.

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The tax-efficiency feature assists advisers in creating model portfolios for clients at the household level to help reduce tax liability by allocating income-generating assets into tax-deferred accounts, and capital gains-oriented assets to taxable accounts. Advisers will have the ability to prioritize asset classes according to their tax efficiency status and rebalance the household portfolios to locate assets in the most tax efficient locations.

In addition to household level modeling capabilities, Orion also added a tax efficient trading feature with the ability to swap out securities with a predetermined loss amount and then purchase an alternative security with the proceeds, allowing advisers to capture investments with a loss against their cost basis.   

For more information about Orion Advisor Services, LLC, visit www.orionadvisor.com.

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