Fidelity wants to get advisers into the 401(k) game

Fidelity Institutional Wealth Services wants to help them make a concerted push into plan advising

Mar 19, 2014 @ 9:39 am

By Trevor Hunnicutt

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Fidelity Institutional Wealth Services wants advisers to stop dabbling in 401(k)s and to start winning accounts.

The mutual fund company is rolling out a new program to help advisers make a more concerted push into the retirement plan business, according to Meg Kelleher, executive vice president and head of the custodian's record-keeping and retirement advisory unit.

The Retirement Plan Growth Strategies Program, which is expected to be formally announced this week, will include a diagnostic tool that will ask advisers a series of questions to assess their readiness to pursue 401(k) plan sponsor business. That tool is being rolled out in the summer, Ms. Kelleher said.

And a third-party database to help advisers prospect for clients, Referral-Edge, can point advisers to retirement plan sponsors with whom they may have a mutual relationship, like an existing client who sits on the board of directors of a company with plan administration needs. The firm says it will also offer additional workshops and tools to advisers who decide to “accelerate their retirement plan business.”

The custodian — and its competitors — have in recent years been increasing their efforts to assist advisers in capturing the business of small and midsize employers looking to meet their legal obligations in managing defined-contribution plans for their employees.

More than six in 10 Fidelity advisers work with at least one retirement plan, but despite the potential for specializing, most work with fewer than three of those plans, according to Ms. Kelleher. She said many of those firms retain central focus on serving the wealth management needs of well-heeled individuals while missing opportunities to specialize and pursue new business.

“There never was an intentional strategy to be in the 401(k) business; there was never an intentional strategy to grow,” Ms. Kelleher said Tuesday at Fidelity Inside Track, a practice management conference for advisers in Washington, D.C.

A description of the program is expected to be released Thursday. An advance copy was reviewed by InvestmentNews.

Ms. Kelleher said RIAs can benefit from serving plan sponsors for reasons including increasing demand by overstretched plan sponsors, to diversify revenue streams, and for the potential to see rollover assets from the plan participants.

Fidelity, which conducted a study of 173 advisers last year, said the top third of retirement advisers have increased their retirement business by 50 percent or more in the last five years. More than half of those advisers expect their business to double in the next five years.

In January, TD Ameritrade announced it was bundling a package of services such as record keeping, custody and third-party administration from an affiliated trust company, for RIAs who serve plan sponsors. The program mirrored some of the offerings Fidelity rolled out to RIAs in 2010.

In April 2010 Fidelity unveiled its bundled 401(k) platform for distribution through RIAs. Fidelity Advisor 401(k) bundles record keeping, investments, participant education and fiduciary support materials.

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