Top retirement plan advisers worry about threats from record keepers and fee compression
InvestmentNews reporter Greg Iacurci on the key takeaways from his discussion with the nation's largest RPAs.
Transcript:
[Greg Iacurci] I am going to be talking about this week the Retirement Plan Advisors supplement we are publishing. We have a bunch of content from a recent event we hosted where we invited some of the top Defined Contribution plan aggregators to talk about the business of being a retirement specialist.
[Steve Lamb] Ok great. So what can you tell me about the key takeaways that you guys got from the event?
[GI] There were a couple of main themes that the participants chatted about. One being the threat that record keepers increasingly are posing to retirement plan advisors because they are starting to offer more of the same services for free, essentially. Stuff like financial wellness.
Also, fee compression was a another big topic and how advisors are having to combat that threat by offering other types of services, beefing out their revenue in areas like wealth management.
[SL] What about threats that aren’t here now but maybe advisors think are coming in the near-term, long-term, that are coming down the pipeline?
[GI] One of the big ones that participants talked about was the threat of a big player like Amazon come into the business and just disrupt everything and sort of upending the current model of financial advice. There are some systemic problems that the industry hasn’t done a good job at addressing, like coverage for example. And so that leaves a ripe environment for someone to come in and do a better job.
[SL] So the plan sponsors and others, they see a bit of a gap in service there and maybe they’re afraid that there could be some big player out there with a lot of resources that could move into the space.
[GI] Right, right, exactly
[SL] Have they seen any concrete moves by somebody like an Amazon or Google, or Microsoft, have they seen any evidence that this is happening or is this speculation at this point?
[GI] They think more that the threat is, if retirement plan advisors don’t solve for some of the big, pressing dilemmas in the industry, like a lack of coverage in the workplace, because a lot of people don’t have access to a workplace 401(k) plan, so if retirement plan advisors in the industry don’t come together to solve for that, then someone else is gong to see that and then come in, and sort of takeover and disrupt.
The critics to this idea point to the regulation in the industry as a deterrent from this happening. Because the retirement industry is pretty heavily regulated, so, Amazon or another player might see that as a road block and instead of coming in just all together they may partner with somebody else or they may not just even try at all.
[SL] Sure. Well, thanks Greg. If you want to learn more check out InvestmentNews.com
