Demand rising for 401(k) advisors News added by Benefits Pro on November 7, 2013
By Paula Aven Gladych
The 401(k) market is booming for qualified plan advisors, but advisors who specialize in group retirement plans are few and far between.
Working with 401(k) plans is time-consuming and “it is hard to find someone willing to learn the business. You have to get someone early on in their career,” said Jania Stout, practice leader and vice president of the Fiduciary Consulting Group at PSA Financial Services Inc., based in Hunt Valley, Md.
Because of that, Stout says she is always looking for skilled advisors to hire. If five skilled 401(k) advisors applied for a job with PSA today, she said she would hire them on the spot.
“It is a big market. There is a huge shift going on. It used to be that brokers or advisors would have a couple of plans in their whole entire career. Now most of the plans are moving to 401(k) specialists,” she said. “Because of that, our team is growing. A lot of plan sponsors are looking for someone really qualified at this; someone who knows compliance and provider landscapes.”
The fact that plan sponsors are actively searching out skilled 401(k) advisors is a recent trend, she said.
In the past, plan sponsors could practically ignore their plans. The 401(k) was a relatively small employee benefit that was overshadowed by time spent working with health care benefits. Now, because of litigation and regulatory scrutiny of plan fiduciaries, chief financial officers are realizing they can’t just turn to their golf buddy as a plan advisor.
There is a big gap between the advisors who are real experts in qualified plans and newer advisors who are on the learning curve while trying to amass clients, said Jason Grantz, an institutional consultant with Lexington, Ky.-based Unified Trust Retirement Plan Consulting Group.
To address that, some advisors are beginning to partner with those who have the expertise. “They are splitting accounts instead of competing against each other,” Grantz said.
That trend will continue as greater regulatory attention is paid to qualified retirement plans.
The industry has evolved much in the past 15 years. The 401(k) plan, designed as a supplemental retirement vehicle to Social Security and pension plans, is now expected to shoulder most of the retirement load. This evolution has led to more regulation to make sure participants are treated fairly, are offered the best benefit and that conflicts of interest are vetted and corrected as soon as possible, Grantz said.
A lot of new regulations have been adopted in the past few years and more are coming including changes to the Securities and Exchange Commission’s and Department of Labor’s fiduciary standards.
That will have the dual effect of keeping many out of the business and boosting demand for those with the right skills.
Linda Leitz, chair of the National Association of Personal Financial Advisors, or NAPFA, said her organization hasn’t seen a lot of certified financial planners jumping in to work in the 401(k) space, and a big reason for that is the regulatory environment.
“ERISA said that anyone advising on a plan is a fiduciary and needs to take a fiduciary stand in dealing with people,” she said. “I don’t see CFPs leaving because of that. Many are saying they are not going to have that relationship with 100 different participants in a plan.”
Stout, for one, nowadays looks at junior brokers at wire houses who want to transition to a fee-based or fiduciary advisory model. It also has looked at professions that have the necessary skills to be an effective plan advisor, people like teachers and military veterans.
“So much of our job is educating plan sponsors on regulations or how fees and revenue-sharing works. Being a good communicator is really important,” Stout said. “We look at industries people haven’t thought of before.”
Originally published on BenefitsPro.com
The views expressed here are those of the author and not necessarily those of ProducersWEB.
Post Press Release
Reprinting or reposting this article without prior consent of Producersweb.com is strictly prohibited.
If you have questions, please visit our terms and conditions