Reflecting on Your Practice

In order to do so, you have to know what the other players are holding, much as you have to know what other advisers are offering to compete in the retirement plan space, whether for clients, or new staff members, or center-of-influence relationships. Otherwise, how can you ever differentiate your practice or services?

A recent survey by PLANADVISER of advisers who work with employer-sponsored retirement programs found them to be well tenured in the area, even though some were not committed exclusively to this area. For example, while more than half (59.8%) of those surveyed have been an adviser to employer-sponsored retirement plans for a decade or longer, more than a quarter of those (28.1%) say that 50% or less of their assets under advisement represent retirement plans.

When it comes to managing their practices, most (69.1%) are operating with a written business plan and nearly as many are revisiting or revising it on a regular basis (63.9% of advisers are doing so annually, semiannually, or even as frequently as quarterly).

Advisers are optimistic about the future. Over the next two years, 55.2% of advisers say their practice will grow in the number of support staff, while 49.1% expect it to grow in the number of advisers. Only 1.2% anticipate a decline in advisers, while more than a quarter (28.8%) expect their practice size to stay the same.

Advisers are also optimistic about growth in their assets and the number of plans under advisement in the next year as part of their practice growth. In fact, when asked what the most significant growth areas in the next year would be, new plan acquisition (including things such as prospecting, broker of record changes, and increases in referrals) garnered 19.2% of responses, well in front of the second and third most popular growth areas of rollovers and specialty services (such as group benefits, insurance, and health and welfare plans).

However, although they think the most opportunity for growth is in new plan acquisition, the adviser survey respondents also have the most concern over sales and marketing of their practices. When asked for their top concerns, sales and marketing was part of 22.5% of the answers. This was followed by revenue and expenses and ongoing plan services; each received 14.1% of responses.

Advisers in this space continue to cluster at the national full-service wirehouses (25.5%) or independent broker/dealers (27.3%). As the quest for independence remains strong, those in the category of dually registered adviser have shown significant growth; last year, only 4.7% of adviser respondents said they fit in that camp while, this year, nearly four times that level (19.0%) are. However, the registered investment adviser (RIA) continues to make up nearly one-fifth of the advisers (17.2% are RIA only).

Although independence seems to be attractive to many, advisers seem happy with their broker/dealers. In fact, 69.8% of advisers say they either “like” or “love” their broker/dealers (only 4.1% say they are planning a move). Further, 44.3% say their broker/dealer positively affects the level of services they provide to retirement plans. Most advisers say their broker/dealer is offering expertise in 401(k) and defined benefit plans, sales support for retirement plans, RFP or provider search support, and asset allocation models.

The continued prevalence of the wirehouse and independent broker/dealer business models might help explain why a clear majority of advisers (65.7%) say they serve as broker of record on retirement plans and another 20.1% say they sometimes do.

So, what does this mean for you? Well, sometimes it isn’t enough to know what you are doing for clients. Knowing what your competitors are presenting can help you play your cards right the next time you are at the other side of the RFP table.

METHODOLOGY

In July 2009, online survey questionnaires were sent to those 8,500 people subscribed to the PLANADVISERdash e-mail newsletter, as well as to 1,000 advisers taken from client lists supplied by DC recordkeepers. Of the 324 responses, 267 were considered valid. The survey questionnaire, developed by PLANADVISER editorial and research staff, consisted of more than 60 questions, with a significant emphasis on the scope of the adviser’s qualified plan business.