The RIA primarily
targets small to midsize independent advisers interested in owning
their own RIA firms. Among the advantages are offloading growing regulatory
complexity and costs to an industry expert. Triad Hybrid Solutions offers investment
adviser representatives (IARs) the flexibility of custodial partners typically
associated only with RIA firm ownership.
Affiliated
independent advisers of Triad Hybrid Solutions can use a range of custodians, including
Charles Schwab & Co., Fidelity Institutional Wealth Services and National
Financial Services LLC. The firm anticipates more custodial partnerships later
in the year.
Triad Hybrid
Solutions expects to attract investment advisers of RIAs that deal with
multiple state registrations, those who do not have the desire to dedicate
staff and resources to RIA maintenance, or wirehouses breakaways who may prefer
an established structure. Association with Triad’s broker/dealer also lets
financial professionals offer products and services in a true hybrid business
model, serving clients on either a fee or commission basis.
Triad Hybrid
Solutions will offer the benefits of customized, end-to-end practice management
support through third-party providers. Resources include Advent Software’s
Black Diamond portfolio management and performance reporting technology, as
well as Salesforce.com’s customer
relationship management (CRM) solutions.
The business model
of Triad Hybrid Solutions meets a rapidly growing demand among an overlooked
yet sizable segment of the independent adviser population, says Michael C.
Bryan, senior vice president of advisory services. “Advisers can leverage our
extensive experience in the hybrid space, access industry-leading tools and
take comfort in knowing we manage the significant challenges of compliance and
regulatory changes,” he says. Bryan will serve as CEO of Triad Hybrid
Solutions.
Hybrid Advisors
Inc., headquartered in Atlanta, is a national, independent broker/dealer and
multi-custodial RIA.
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Plan participants increasingly realize they are
responsible for generating their own retirement income, but many still pass
over investment advice offerings, a survey from Schwab Retirement Plan Services
finds.
Nine in 10 participants surveyed indicated they are relying
on themselves for the money needed to live in retirement, and most use a 401(k)
as their primary or sole source of retirement savings. Despite this,
respondents say they are much more likely to have someone change the oil in
their car (87%) than have someone help them choose their 401(k) investments
(24%).
According to the survey, participants on average spend
roughly the same amount of time reviewing and choosing investments for their
401(k) as they do investigating new cell phones, which are often traded in from
year to year. And, they spend more than twice as much time researching their
cars before buying than they do evaluating their 401(k) options.
Today, many 401(k) plans offer some type of professional,
personalized investment advice, but while many of the participants surveyed
believe they would likely benefit from this type of assistance, relatively few
are actually taking advantage of it. Less than one quarter (23%) of those with
access to professional 401(k) advice say they have used it. Yet, among those
not using advice, roughly half (49%) believe they would achieve better
investment results if they did so.
In
addition, the survey found 70% of participants surveyed say they would feel
extremely or very confident in their ability to make the right investment
decisions if they enlisted the help of a financial professional, while only 39%
feel that same level of confidence when making investment decisions on their
own.
Six in 10 participants are most likely to seek help with
retirement planning once they start to approach retirement age, but Schwab
notes getting help sooner may lead to better outcomes.
According to Steve Anderson, head of Schwab Retirement Plan
Services, the survey didn’t explore why participants are not using the help
offered to them, but Schwab did not find the results surprising. “It’s similar
to behaviors we’ve observed in the industry for some time,” he tells PLANADVISER.
“Plan sponsors may create tools for participants, but if they have to seek them
out by going to a website or making a phone call, rarely do they take
advantage.” He adds that the 401(k) concept may be daunting and confusing to
participants, so they shy away. “It has to do with participant inertia in
making decisions about things with which they are not comfortable.”
Anderson believes plan sponsors need to use what the
industry has learned from behavioral finance and enroll participants in a
program that offers help or advice. He says a trend Schwab thinks will take
hold in the industry is the use of managed accounts as default investments for
401(k)s, rather than target-date funds. He contends offering managed accounts
that use multiple data points from recordkeeping and payroll systems—such as
age, salary, account balance, savings rate, estimated Social Security benefits,
marital status, and state of residency—to create individual portfolios for each
participant will improve participant outcomes. “Anything short of that is
leaving something on the table; the industry needs to move forward with its use
of data,” he says.
According to Anderson, Schwab has found 85% of employees whose
employers offer managed accounts are staying in them. And, participants who
used third-party, professional 401(k) advice tended to increase their savings
rate, were better diversified and stayed the course in their investing
decisions.
He
adds that plan sponsors are in a position to make prudent decisions for
employees that can make a difference, including automatic enrollment, automatic
deferral increases and automatic investment defaults. “When it comes to the
default investment, employers that really want to help participants should
reenroll and move all employees into the default and let those who have the
time and knowledge to invest on their own opt out,” he contends.
Anderson also addresses the issue of higher costs for managed
accounts. “Using data to provide better results to individuals requires a fee
for service, but plan sponsors can drive overall costs down by using indexed
investment products,” he says. “[The industry] needs to drive more expense out
of products and provide more advice.”
Schwab’s nationwide survey of 1,000 401(k) plan participants
finds that a 401(k) plan is considered a crucial benefit by an overwhelming
majority. When asked which benefits are “must haves” aside from health
insurance, nearly nine in ten respondents (87%) say a 401(k) is a “must-have”
benefit—more than disability insurance (45%), life insurance (42%), extra
vacation days (34%) or the ability to telecommute (15%).
However, the survey finds many participants are still unsure
exactly how their retirement benefits work:
Half
of those surveyed say their 401(k) plan investment information is more
confusing than their health care benefits information;
Roughly
one in three (34%) admit they feel a lot of stress when it comes to
allocating their 401(k) dollars; and
More
than half (59%) wish it was easier to choose the right 401(k) investments.
Other survey findings included:
A
majority (86%) of participants who get matching contributions from their
employer say they are contributing at least enough to receive the full
company match;
More
than half of survey respondents (57%) have increased their 401(k)
contributions in the past two years, with many saying they did so because
they were concerned about having enough money to retire comfortably; and
While
many 401(k) plans allow participants to take loans against their account,
three-quarters (76%) of respondents have never taken a 401(k) loan.
The online survey was conducted by Koski Research among
401(k) plan participants who worked for companies with at least 25 employees,
were current contributors to their 401(k) plans and were 25 to 75 years old.
The study was conducted between May 27 and June 4. Findings can be found at http://www.aboutschwab.com/press/research.