Outside voices and views for advisers

Mar 27, 2017, 3:03 PM EST

Tips for managing clients' health care expenses in retirement


By Jamie Hopkins

Survey after survey shows that health care expenses in retirement are a top concern for clients, and financial advisers are finally taking notice. According to a 2017 Survey conducted by The American College of Financial Services, advisers reported that health care expenses topped the list of concerns of their retired clients. Despite these findings, many advisers struggle to seamlessly incorporate health care planning into the overall planning process. Even for the adviser who does not offer a full range of Medicare or health care insurance options, there are a number of ways to help clients get a better grip on their retirement health care expenses.(More: Demographic shift of retirees to affect consumer spending) Tip 1: Determine a reasonable estimate of retiree health care expenses.While an adviser might have limited access to health insurance products, one thing any adviser can do is to help his or her client determine a reasonable ... Read full post

Mar 16, 2017, 6:19 PM EST

Retirement industry to undergo major changes with or without DOL fiduciary rule


By Cynthia Dash

The business of saving for America's retirement is changing. The retirement industry is facing a $7.7 trillion gap, and the Department of Labor's new fiduciary rule, which states that advisers must give clients the best advice at a reasonable price, is at risk. The rule was originally supposed to take effect on April 10, but President Donald J. Trump in February ordered its review, resulting in the DOL's recent proposal to delay the rule's implementation for 60 days. Regardless of the rule's final outcome, firms are transforming their approach to the retirement side of their businesses to become more transparent on fees and suitability and are moving forward with changes anyway because it makes sense for advisers and their clients.(More: DOL issues bulletin to ease confusion over near-term fiduciary rule compliance)In order to comply with the rule, advisers and brokers must be able to show that fees charged to clients are appropriate,... Read full post

Mar 16, 2017, 5:09 PM EST

Small-market retirement plan advisers face big-time challenges


By Tim Irvin

Once upon a time, defined contribution plans seemed to be "set it and forget it" tools for plan participants. Organizations would decide to offer a vehicle for retirement savings and put the plan in place for employees to defer money. From that point on, not much was done by way of changes or monitoring. Fast-forward to 2017: The retirement industry has matured dramatically and, in the wake of the Pension Protection Act of 2006, the fee-disclosure movement and an ever-growing number of lawsuits, it is now under a nationwide microscope. There are various aspects of a retirement plan that require ongoing review (i.e., plan design, participant communication and education efforts, record-keeping tools and services), but investments and fees continue to make headlines. While many of the cases featured in the news involve large plans (with $100 million or more in assets), smaller retirement plans with less purchasing power face similar... Read full post

Mar 16, 2017, 4:40 PM EST

Finra is asking broker-dealers, 'What's in your clients' 529 savings plans?'


By Kamran Fotouhi

The Financial Industry Regulatory Authority Inc.'s targeted reviews of 529 college savings plans date back to the mid-2000's, when the regulator began a fact-finding sweep which resulted in a number of large fines for broker-dealers. With continued growth of these plans — currently in excess of $260 billion — and as an extension of the agency's ongoing reviews of mutual fund sales practices, Finra has stepped up scrutiny of 529 plans, both through cycle exams and targeted inquiries. In fact, 529 plans were included in Finra's 2016 Priority Letter.(More: Finra's lobbying expenses down, but regulator still spends heavily to make sure its voice is heard on Capitol Hill)Finra's concerns center primarily on the broker-dealer's recommendations of mutual fund share classes within the 529 Plans as they relate to their clients' time horizons. The agency is seeking to ensure that appropriate due diligence and suitability of share... Read full post

Mar 15, 2017, 12:33 PM EST

How to service small retirement plans and still make a profit


By Aaron Pottichen

Small 401(k) plans — those with less than roughly $10 million in assets — need the most help from a fiduciary plan adviser, and yet this is the market that's most underserved.That's partly because fiduciary advisers traditionally working further upmarket may view small plans as a way to quickly increase workload for little monetary payoff.But it's up to us to help walk these small business owners through the sometimes complex process of setting up and monitoring retirement benefits, and there is a way to do that without drowning our practices in small retirement plans. One way to help ensure advisers earn the income they need to justify servicing this market is to do less. Yes, do less. When my practice works with small plans, we typically won't provide ongoing investment monitoring or education meetings. Both of these items can eat up large chunks of time and, unless they are itemized separately, will reduce your ability ... Read full post

Mar 15, 2017, 6:04 PM EST

Will the DOL fiduciary rule kill 401(k) plan referrals?


By Fred Barstein

Experienced defined contribution plan advisers are excited about the potential flood of referrals from less-experienced plan advisers not interested in acting as a 401(k) plan fiduciary when the DOL fiduciary rule kicks in. Many less-experienced plan advisers are expected to refer current or potential 401(k) clients to more experienced plan advisers, but there's a catch. The referral may be considered a fiduciary act and questions of whether compensation for those referrals is reasonable will also arise, regardless of the DOL rule, which will make a fiduciary of anyone providing investment advice for a fee in retirement accounts.So what does the future really hold for referrals of DC plans to advisers?The best way for experienced plan advisers to get new clients is via referrals from other professionals like accountants, third party administrators, attorneys, bankers, employee benefits brokers, wholesalers from DC service providers... Read full post

Mar 15, 2017, 4:24 PM EST

Why the best portfolios mix active and passive investments


By Andrew Crowell

"The reports of my death are greatly exaggerated."The famous quip attributed to Mark Twain humorously captures a theme that many financial advisers and investment managers would apply to active management. In my experience as an adviser, the best portfolios meet each client's individual needs with a mix of both active and passive investments. The popularity of low-cost passive strategies has garnered significant press, yet claims that active management does not work or is dead would be gravely mistaken. Passive index strategies are typically marketed as low-cost, diversified approaches providing market or sector exposure and approximating benchmark performance. According to Morningstar, assets under management in passive mutual funds exploded 320% globally to $6 trillion since 2007, whereas actively managed funds grew 54% over the same time. The well-documented underperformance of the average active investment manager has added to the... Read full post

Mar 15, 2017, 2:54 PM EST

Keep calm and carry on with both commissions and fees


By John Kennedy

Heightened transparency and education around the many financial products and services available in the marketplace today is critical in a client-adviser relationship, particularly surrounding changing consumer preferences for financial advice. The industry will continue to evolve, and as it does, advisers must escalate the importance of acting in the best interest of clients and present them with all available retirement income offerings. Regardless of regulatory changes, good advisers act in each client's best interest. Saving for retirement is not as simple today as it was for previous generations. Demographic changes, and the fraying of corporate and government safety nets have had a profound impact on retirement income planning. With interest rates at historic lows and equity markets at all-time highs, the conditions that have allowed the most trusted strategies of the past to succeed are unlikely to be successful much longer. In... Read full post

Mar 14, 2017, 11:00 AM EST

How independent financial advisers can build practices that thrive regardless of DOL fiduciary rule outcome


By Adam Antoniades

When it comes to the Department of Labor's fiduciary rule, financial advisers continue to feel considerable uncertainty driven by the recent complexity of presidential directives and federal court decisions.Beyond the general sentiment of DOL overload, the potential for prolonged further uncertainty about the rule's future reinforces the importance for independent financial advisers to build practices that can thrive regardless of the regulatory outcome.As a starting point, it's reasonable to assume that the industry's future will not belong to those advisers who operate on a product-centric and purely transactional basis.Instead, our future will be defined by the need for advisers to focus on financial planning and personal finance coaching to deliver a truly advice-centric experience that helps retail investors meet their life goals.(More: Prospects for independent adviser exams fade with increased SEC efficiency, Piwowar... Read full post

Mar 14, 2017, 2:54 PM EST

The Department of Labor's fiduciary rule: Where are we now?

Fred Reish-main

By Fred Reish

The Trump administration has issued a proposed regulation to delay the applicability date of the Department of Labor's fiduciary rule. That will almost certainly be followed by a final rule that delays the date until June 9, 2017.During that delay, the DOL is likely to determine that the fiduciary rule limits investors' access to advice and/or increases the cost of advice. That means the DOL will need to either modify the rule or kill it. Either way, there will be an extended period of uncertainty.Even with that uncertainty, and regardless of the outcome, we know one thing: The old fiduciary definition continues to apply to advice to retirement plans, participants and individual retirement account owners until a new rule is adopted. That means this is a good time to revisit the original regulation, as set by the Employee Retirement Income Security Act of 1974.The rule has five parts, or requirements, for an adviser to be a fiduciary.... Read full post

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