Outside-IN

Retirement plan advisers need to start marketing to providers

Providers are being forced to make tough decisions on which advisers they can support

Sep 13, 2017 @ 1:13 pm

By Fred Barstein

Defined-contribution-plan plan advisers are relying more and more on providers, especially asset managers, to help them with marketing and practice management.

But resources are shrinking as margins get thinner, with more assets moving into target-date funds and passive investments, forcing these providers to make tough decisions on who they can support. As a result, advisers need to start "selling" providers on why they deserve support and treat them like true business partners rather than vendors.

As advisory fees decline and the demand for services increases, advisers need to focus on efficient ways to run their practices and acquire new clients. Most broker-dealers are just beginning to understand the unique needs of retirement plan advisers; most of those that do understand offer less support than in the past, because they're focusing more on limiting liability and transitioning to a fee-based fiduciary world courtesy of the Department of Labor's conflict-of-interest rule.

As a result, plan advisers are joining aggregator firms and larger regional practices or are relying more on providers for support. Advisers are in denial if they think providers are lining up to offer support, no matter how large the practice. And even those with a significant amount of 401(k) assets and plans are having less success getting support if they are not generating new business, or if very few of the plans or investment menus they work with are turning over to new providers.

Beyond looking for practices that have new-business potential, providers are looking for growing and viable practices. Those are the ones positioned for success, to make the investment to offer better client service and to acquire new practices, along with hiring and training new advisers and support staff.

(More: Where 401(k) advisers are on the industry consolidation curve)

In addition to needing to start marketing to provider partners about why they deserve support, advisers also need to include providers in their sales, marketing and business planning if they want these providers to be true partners.

Advisers also need to be honest about their practices and willing to admit when they are struggling and the areas where they need the most help. Finally, advisers have to stop believing they deserve support just because they might have given business to providers in the past or because they have a sizable book of business.

Providers, in turn, face their own issues. With the growth of aggregators, many of which are still attached to a broker-dealer, providers are being asked for support from three tiers: the broker-dealer, the aggregator and the individual adviser or practice. Tough decisions will have to be made.

And providers are equally delusional if they believe in the "show up and throw up" concept: thinking white papers are enough to help advisers run their practices and get new clients. Providers need to offer actionable and relevant value-adds that have top- and bottom-line impact for advisers. Asset managers in particular need to make sure that they are training their wholesalers to be better business consultants and partners, not vendors who can only tell a good investment story.

The 401(k) world is evolving. Advisers and providers alike need to adjust and form deeper partnerships as the market matures. Not all will survive this transition.

Fred Barstein is the founder and CEO of The Retirement Advisor University and The Plan Sponsor University. He is also a contributing editor for InvestmentNews' Retirement Plan Adviser newsletter.

0
Comments

What do you think?

View comments

Recommended for you

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Upcoming Event

Oct 23

Conference

Women Adviser Summit - San Francisco

The InvestmentNews Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video

INTV

Ron Carson: If you aren't growing you're dying

There are two group of advisers, according to Ron Carson: Those that are expanding and those that are just "hanging on." So, which group do you belong to?

Latest news & opinion

LPL rolls back recruiting policy aimed at driving more assets to its corporate RIA

LPL erases $50 million hurdle for new advisers to join so-called hybrid firms.

Don't be fooled by the numbers — the industry is in a dangerously vulnerable state

Last year's stock market gains helped advisers turn in solid growth in assets and revenue, but that growth could disappear in the next market downturn.

Divided we stand: How financial advisers view President Trump

InvestmentNews poll finds 49.2% approve of his performance, while 46.7% disapprove. How has that changed over the course of his presidency?

10 states with the most college student debt

Residents of these states have the most student debt when you consider their job opportunities.

Ex-Wells Fargo brokers sue for damages, claiming they lost business in wake of scandals

In a Finra arbitration complaint, two brokers allege that Wells Fargo's problems damaged their business.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print