October 25, 2019

A Time of Change

Advisers have a variety of strategies to evolve their firm—from good partnerships at the plan level to well-thought-out M&A’s.

Reported by Judy Faust Hartnett

Art by Dalbert B. Vilarino

As has been a major theme with us over the past year—and subject of the cover stories in our last two issues—the retirement plan adviser landscape is in flux. In late September, Global insurance brokerage firm Hub International Ltd. announced the acquisition of several well-established advisory practices. As reported on PLANADVISER.com, CAPTRUST has been on a serial buying streak of its own. Meanwhile, other practices are following the affiliation model, leveraging tools and services from firms such as GRP Advisor Alliance, Resources Investment Advisors LLC and Retirement Plan Advisory Group (RPAG). In “The Persistent Pace of M&As,” we discuss why and how the advisory space has seen so many of these transactions in the first three quarters of this year.

As an advisory practice plans to changes focus, strategically grow or pursue a merger or acquisition, it first must assess its profitability at serving individual clients. “Addressing Profitability,” our cover story, discusses what advisers need to consider to gauge how productive their relationships are—including when to end a client relationship.

According to data gathered by SCORE, a nonprofit provider of consulting services to U.S. small businesses, 71% of businesses that have no retirement plan blamed the cost of plan setup, and 63% said they have inadequate resources to pay for plan administration. In “Effectively Serving Small Solutions,” we share strategies some advisers are profitably using to serve the smallest of clients. We include SCORE data indicating that plans can cost the employer just 2.4%, on average, of a worker’s annual compensation.

As advisers grow their practice by taking on new clients and expanding assets under advisement (AUA), it’s essential they partner with providers that are a good fit. We are proud to deliver, for the 12th year, the PLANADVISER Retirement Plan Adviser Survey. Brian O’Keefe, director of research for PLANADVISER, has made an in-depth examination of the types of services that investment managers and recordkeepers offer adviser clients, and reveals advisers’ top choice of provider for each. We also report advisers’ top five criteria when they select one asset management firm, overall: 1) performance against benchmarks; 2) five-year return; 3) Sharpe ratio; 4) manager tenure; and 5) fee structure for plan.

This issue’s Investment-Oriented article probes whether fixed-income investments are currently doing their job. According to one expert interviewed, switching from stocks to bonds to reduce risk and generate more income simply doesn’t work in this low-interest environment. What discussions are you having with plan sponsor clients?

And I look back fondly on the three days in mid-September, when industry experts, including representatives from the winning 2019 Retirement Plan Advisers of the Year, gathered at the 2019 PLANADVISER National Conference (PANC) to engage with attendees on important issues of the day. The conference, held in Orlando, Florida, was framed this year by the theme “Contagious Ideas: It’s all about the outcomes.” This was my first time at PANC, and the event feedback has been awesome. If you missed it, maybe we’ll see you at PANC 2020, September 14 through 16 next year, in Scottsdale, Arizona.

We hope this issue’s lineup impacts your practice goals. Let us know at editors@issmediasolutions.com