With regulatory reform bringing a wave of changes to defined contribution plans, retirement plan advisers need to be even more conversant in the ins and outs of legislative requirements and other complexities. Which is why BlackRock is beefing up its commitment to advisers who work with these retirement plans.
“It’s a changing environment out there,” says Joseph P. Lee, director and head of adviser-sold DC distribution with BlackRock's U.S. defined contribution team. “With increased scrutiny comes increases risk. And when you have increased risk you need someone who’s a specialist to mitigate that risk.”
BlackRock, Lee says, is a firm that is based on risk management: “We want to give financial advisors the tools and solutions they need to help the 50 million-plus workers reach their retirement goals.”
Americans have come to depend on DC plans to fulfill their retirement dreams. But over time these plans have had to change. The fact is that people are living longer and they are experiencing two stages if life: the accumulation stage and the distribution stage, says Lee.
Yet, Lee points out, DC plans only cover about 75% of those who are eligible, signaling a huge opportunity for advisers. The Pension Protection Act will help bring about a lot of critical changes: more participants will be auto-enrolled in plans and there’s been more discussion and legislation around fee transparency and disclosure requirements, as well as changes to the government filing of Form 5500. “There are a lot of nuances an adviser needs to stay on top of, from how plans need to be designed to the growing complexity of plans due to increases in regulation,” explains Lee. “There is a demand for a high degree of complexity from advisers.”
BlackRock has doubled its team since 2009 from four to eight employees. The team has talked to advisers, plan sponsors and participants, and knows how DC plans work and how to make them better, he said. “Plan sponsors need to understand they are fiduciaries of the plan helping employees make decisions,” Lee said.
The challenge, especially for independent advisory firms, is to find the time and resources to recruit new clients and send out materials explaining their value proposition. “We are looking to be an extension of their teams,” said Lee. “We are looking for ways to help advisers get the resources they need.”
Ackerman is an online editor at Financial Planning magazine, a SourceMedia publication.
