Slideshow 5 top trends facing financial advisers

  • November 30 2011, 3:31pm EST

As 408(b)(2) disclosure rule deadline approaches, advisers are expanding their efforts

Currently the economic environment has reinforced plan sponsors’ concerns regarding the competitiveness of their fees relative to the services they receive. Advisers view their role as helping to educate their plan sponsor clients so that they clearly understand plan fees.

Market volatility has intensified the importance of improving participants’ retirement readiness

The recent years of economic challenges continue to bring concerns about retirement readiness to the forefront, and employees’ preparedness has become a hallmark of success for many plans.
Advisers are helping sponsors with plan design options such as auto-enrollment in order to improve deferral rates and participation. Advisers are helping sponsors develop and sometimes implement participant education strategies. In addition, advisers are partnering with providers that offer participant education campaigns which can be delivered through a variety of different channels.

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Advisers and clients are seeking greater flexibility and customized “value for service”

Plan sponsor clients look for consultative advisers and plan providers that can provide value that is specific to the plan’s needs. Plan design consulting, for example, can lead to increased participation rates, while administrative service support or certain fiduciary services can reduce a plan sponsor’s liability. The ability to create and deliver customized and flexible services is key to demonstrating strong value to the client.

Advisers are helping sponsors evaluate their plan’s success through annual reviews, industry benchmarks

Once advisers have determined how their clients define a successful plan, they can work to establish measurable goals based on the metrics that matter. Many advisers are providing their plan sponsor clients with an annual check-up on key plan metrics such as deferral rates, average account balances, plan fees, participation rates and match, vesting and loan provisions.

Advisers may redefine their fiduciary status in advance of potential regulatory changes

The U.S Department of Labor is expected to re-propose its rule on the definition of “fiduciary” for retirement plans in 2012. Regardless of if or when this rule is formalized, advisers are currently in the process of deciding whether or not they are allowed to acknowledge this status. The advisers who will not act as fiduciaries will most likely seek the support of a third-party fiduciary service, reveals the Transamerica Retirement Services survey.