The focus of discussions in the defined contribution/401(k) world seems to have shifted overnight from process to outcomes.

With DC plans promising to be the main pillar of the three-legged retirement stool which also includes Social Security (hopefully) and outside assets, the industry and plan sponsors are beginning to focus on whether their participants are properly prepared.

While great responsibility (and sometimes liability) is being placed upon the shoulders of advisers - many of whom are trying to step up to meet the challenge - the reality is that they need the right partners to have any chance of being successful. An adviser can be the general contractor, but without the right subcontractors and partners there is really no way that any adviser can accomplish the goal of helping prepare participants for retirement.

Some of the partners and the roles they can play include the following:


Broker dealers

For registered reps, their broker dealer can be the most helpful partner, even if they do not have all the necessary resources in-house. They can marshal the many resources available in the DC industry as well as provide the right environment to support both experienced DC advisers - recognizing, for example, that most will have to be able to act as a fiduciary and offer fee-based services - as well as budding advisers by providing the right avenues to get properly trained and credentialed.



Both DC recordkeepers and investment-only management firms (DCiOs) are perhaps the greatest resource available to DC advisers with a wealth of people, resources and capital.

Many DC recordkeepers employ armies of wholesalers, most of whom are very qualified and can provide expert guidance on many issues as well as tools and services to help advisers build, grow and manage their practices. They can also supply and support ongoing training and credentialing programs.

While DCiOs have fewer wholesalers, they have recently stepped up support of advisers by leveraging and building practice management tools. With just over 40 national recordkeepers and industry consolidation expected, be careful to partner with the providers that have the assets, participants, brand, distribution, technology and, most importantly, the people to be competitive.



The use of third party administrators who supply consulting or compliance services in conjunction with national recordkeepers like ING and John Hancock has become the fastest growing DC service model for plans under $10 million. These TPAs are a great source of technical expertise, especially for advisers representing smaller companies where the owners or executives need help to maximize deferrals.

For budding advisers, TPAs can teach them the technical side of the DC industry while busy experienced DC advisers can lean on the their TPA partners to help with complicated cases or support the growing number of plans they need to manage to be successful. One caution: some TPAs also act as advisers, known as producing TPAs. Make sure you and your producing TPA partners have a clear understanding and respect each other's business models.


Centers of influence

Almost every adviser worries about their prospect pipeline. Centers of influence, or people that employers know and trust, are the greatest source of new business for the most successful DC advisers. These centers of influence include attorneys, CPAs, other investment professionals not focused on the DC market, providers, TPAs, head hunters, local HR and industry associations, P&C firms and group benefit advisers.

Most advisers will spend too much time chasing long-shot prospects that they cold called and not nearly enough time cultivating and networking with centers of influence.

Almost all DC advisory shops have limited resources with only a few qualified professionals, even if they are part of a bigger group. Building and maintaining all the resources necessary to support a successful DC practice is almost impossible and perhaps even foolish. DC advisers that create a virtual back office with the support of the right partners will be in a better position to deliver on the promise of a secure retirement for clients.

Barstein is the founder and the executive director of The Retirement Advisor University at the UCLA School of Management Executive Education. He can be reached at

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