Turn Abouts

Now, scrutiny of fees is nothing new, of course. It’s been a topic of discussion at PLANADVISER since its inception and I don’t see the debate over the “proper” type (and amount) to end anytime soon. I will admit that most people don’t know what they are paying for their retirement plan, whether in administrative or advisory fees. Having spent all my “retirement-focused” life in the defined contribution space, I think that the plan sponsors who are offering these plans are not out to pillage their participants’ accounts. That is why I have been surprised at the continued vilification of the 401(k) in the mainstream press.
 
It might only get worse, however, as people get accustomed to seeing how much they are paying for a plan they generally thought of as “free.” How advisers are charging, how much they get paid for services provided, and what is disclosed about those services will continue to be under scrutiny. Little wonder that, these days, retirement plan advisers are “Walking a Tightrope,” as you can see in this month’s cover story.

Just a couple of years back, fee lawsuits were big news, as a relatively unknown law firm was targeting some very big name plan sponsors and their retirement program fee structures. Well, it seems that lawsuits no longer are limited to large plans—certainly, if the case discussed in “Hidden Agenda?” is any portent of what is to come. The suit alleges excessive fees and inadequate disclosure and, a popular claim in many of these plan fee suits, that revenue-sharing was undisclosed.

A large part of the focus on fees has to do with what others in the industry are doing. In “Benchmarking your Practice,” you will find the results of our annual survey of advisers. However, if you’re expecting to see a major shift in fee models, you might be surprised. See how you stand up to your competitors. We will be sharing more information from this survey with you in an upcoming issue, so stay tuned.

Last issue, our cover story talked about finding the right business model for you. This month, Steff Chalk highlights “The Value of Difference,” reminding advisers that, although it’s important you believe in your own business model, all advisers succeed by virtue of the fact that those different business models do exist. Speaking of different models, adviser Stephen Wilt, who earlier this year moved from Merrill Lynch to CAPTRUST, offers some advice for other advisers contemplating such a move in this month’s Viewpoint column, “Exit Strategies.”

Speaking of movements, it was one year ago this month that the markets “caved in,” and advisers started hearing people say they would never be able to retire. However, some interesting analysis and studies have shown that it might not be as difficult as people think, provided—and here is the key point—that people stay invested in equities. For those who moved out of equities, however, recovery could take longer. That might not be the easiest story to tell to participants who see last year as a possible normal instead of a potential market anomaly. Get some ideas of how to convince people to stay the course in “Selling Recovery.”  It’s not quite a distant memory yet, but I, like many retirement plan participants, am less reluctant to open my quarterly statement now. Let’s hope this September is memorable for much more optimistic reasons.