Advisors want retirement clients; aren’t sure how to get ‘em

By BenefitsPro


By Dan Berman

About 80 percent of registered investment advisors see an opportunity for growth in the $5 trillion defined contribution plan market, far fewer pursue the business, a TD Ameritrade survey found.

Shifting rules on fee transparency and the push for the Labor Department to develop a fiduciary standard give RIAs an opportunity in the retirement plan market, TD Ameritrade said in citing research by Cerulli Associates.

But advisors said they need a better understanding of the rules governing defined contribution plans as well as guidance to be able to administer 401(k) and other retirement plans sponsored by employers.

Although the vast majority of the 300 advisors surveyed by phone see an opportunity in the market, less than two-thirds (62 percent) have fewer than 10 plans as clients and 19 percent have none.

“RIAs recognize the retirement plan business is a tremendous growth opportunity for the industry and a chance to gather additional assets they are not capturing today,” said Skip Schweiss, managing director, TD Ameritrade Institutional, and president, TD Ameritrade Trust Co., in a statement. “There’s no denying the retirement business has more moving parts, but with a little help and guidance advisors believe they can assemble an important new growth enterprise.”

Obstacles to breaking into the market cited by respondents were:
  • 60 percent cited a lack of time or resources;
  • 42 percent cited compliance and regulatory requirements;
  • 38 percent said they lacked business relationships with third party administrators or recordkeepers;
  • 30 percent were not sure of the opportunity;
  • 25 percent said they lacked the tools needed to service retirement plans.
The U.S. retirement market is worth $21.8 trillion, a figure that is expected to grow by $2 trillion over the next three years.

“Imagine a business where your clients add new money every two weeks, rain or shine,” Schweiss said. “That’s what the retirement plan market is, and for many advisors it remains an untapped source of new growth.”

Originally published on BenefitsPro.com