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.

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.

  NEXT: Beyond Fees


Despite all the talk of fees, Shofner kept emphasizing that retirement plan advisers need to show value before wondering how they will get paid. “It’s not about showing hours spent but showing tangible, measureable success for clients,” he said. “I think this is elusive in our industry.”

He added, “We’ve been working on showing clients how we are winning and getting them what they want and deserve. In my opinion, all clients are better off with a specialist adviser.”

Shofner said a retirement plan adviser’s business model should not just be about investing, but also about plan governance, plan administration, compliance, participant experience, and now health care savings, as well. “Productive employees who are financially well and can retire on time is good for both employees and employers. Advisers should get down to what matters,” he stressed.

That said, wealth management might be a natural extension of serving retirement plan participants. Shofner said, if helping participants get to retirement leads to moving into wealth management by continuing to serve them afterward, that’s great. 

According to Shoff, CAPTRUST is not in the rollover business, but is in the wealth management business. He said many retirement plan advisers haven’t thought about taking on these businesses, but he wonders whether, if the industry used a word other than rollover, that would change. “If you find a way to take care of retirement plan participants after retirement, you will grow your business,” he told attendees. However, he believes most money will stay in plans, going forward.

Shoff said his catalyst from moving from an independent firm to CAPTRUST was he wanted a partner to help him do what he couldn’t for clients on his own. He noted that he was an owner from day one at CAPTRUST. 

Shoff explained to attendees that most partners in CAPTRUST came there without a book of business. CAPTRUST looks for someone resourceful and likeable and who knows the business. But CAPTRUST has an infrastructure to help that person, over time, build a client base; it creates a glide path for revenue growth. It usually takes about three years to see if it works out.

Shofner added that whether to go independent or not is a challenge up-and-coming advisers struggle with. There is much consolidation in the market, and he said he can see why many advisers would be attracted to a brand and what it has to offer.