Regulatory changes driving up demand for retirement plan advisers

Disclosures, investments and fees are key areas of focus, panelists say

Oct 23, 2013 @ 1:00 pm

By Trevor Hunnicutt

A flurry of changes to how the federal government oversees retirement plans could provide financial advisers with the opportunity to work more closely with employers on these plans, industry professionals said on Tuesday.

“We can't hire people fast enough to keep up with demand,” said Jania Stout, a retirement plan consultant at the Fiduciary Consulting Group at PSA Financial Services Inc.

Ms. Stout spoke on a panel of three industry experts who focus on the Employee Retirement Income Security Act, which governs private-sector retirement plans, during an InvestmentNews webcast Tuesday. The law was passed in 1974, but it remains the subject of new legislation, court cases and regulatory review by agencies, such as the Labor Department.

Marcia S. Wagner, who specializes in pension and employee benefits law at The Wagner Law Group, said the key for advisers is to understand the hot issues that are the focus of continuing regulatory action, including required disclosures to plan participants and sponsors, and the automatic selection of investments, such as target date funds, for retirement plans.

Ms. Wagner said there also would be a continued focus on ensuring lifetime income for retirees and the new recognition of same-sex spouses after the Supreme Court's June 26 decision in United States vs. Windsor, which overturned a key section of the Defense of Marriage Act.

The human resources executives, financial professionals and lawyers given the tasks of making sense of the regulations are massively confused, and they need the expertise of advisers, said Michael Kim, a senior vice president at Genworth Financial Wealth Management, which helps advisers get business from defined-contribution plans. He recommended that advisers start building practices in this area by focusing on existing business owner clients whose plans need to be updated or are performing poorly.

Once advisers develop relationships with their existing clients, they can start reaching out, the panelists said. Ms. Stout's firm, which she founded in 2009, employs a full-time worker who cold-calls potential clients. The firm works with 75 midmarket clients and $2.1 billion in plan assets.

Ms. Stout also seeks new clients by networking with auditors, specialist lawyers and human resources officers.

And she researches her audience.

“We change our script depending on the market size that we're going after,” Ms. Stout said. “If you use the word fiduciary in the small-plan market … a lot of those business owners don't understand what that is.”

Ms. Wagner, however, said advisers should not be afraid of industry jargon, like the buzzword “fiduciary,” or of cold-calling potential clients. She said she built her practice, one of the nation's largest boutique law firms, by mastering both arts.

“Don't be afraid; this is not rocket science,” she said. “This is eminently doable with hard work — as is practically anything in this world.”

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