Looking to the Future
Art by Red Nose Studio
Where is the retirement plan industry going? While some retirement plan advisers will remain specialists, others are expanding their practice to offer wealth management services, as discussed in this issue’s cover story, “Advisers’ Future Trajectory.” Some think this blurring of the lines between private wealth managers and retirement plan advisers, particularly in light of the demise of the fiduciary rule, could be the wave of the future. They say that retirement plan participants are asking for the added coverage, especially as they seek out retirement income options. In fact, some believe that specialists will need to embrace a holistic approach to survive the next decade.
While retirement plan platforms offered by defined contribution investment only (DCIO) providers have traditionally been open architecture, “Tangled: The State of the DCIO industry” reveals that, lately, this has reversed somewhat, to a semi-closed architecture with fewer funds on the investment menu. Additionally, many DCIO providers are working to improve their value by supplying advisers with qualitative information on funds.
“High-Tech Meets High-Touch” details how retirement planning tools are, in and of themselves, somewhat useless to participants. Advisers need to step in to show participants how to use these tools and help them gauge their retirement readiness by factoring in their individual circumstances. Besides helping them input the right information, advisers can help narrow the financial wellness focus to topics that resonate with the individual according to his stage of life, when his needs and objectives may have changed. Further, advisers can use the tools to obtain information from participants, which can be invaluable during in-person connections.
Determining a participant’s retirement readiness, or how much his savings will deliver in retirement income, really needs to be done on an individual basis, as we learn in “Whatever Suits.” Sources suggest that advisers find ways to get individualized information from each participant about his personal financial situation and then schedule a one-on-one meeting to determine his goals for retirement and whether his savings will be sufficient.
Given that assets in exchange-traded funds (ETFs) have soared in the past 10 years, from $716 billion to $5.02 trillion, it’s worth exploring why such growth has yet to be seen in the retirement plan market. “New Platforms Support ETFs” explores whether offering this investment choice to participants has merit.
Litigation continues to be a force in the retirement plan industry, and it can be hard to keep track of all that is going on. “Major Cases” examines four recent lawsuits brought against retirement plans, plus, most notably, the close of the long-running Tussey v. ABB. After 10 years in court, the parties in that case have finally reached a $55 million settlement. The plaintiffs had argued that ABB engaged in self-dealing by using Fidelity Investments for recordkeeping for the 401(k) plan, the company’s pension plan, and a health and welfare plan, as well as for payroll processing.
We hope these stories help you ask important questions of your practice and set you on a path for greater profits.