Call it a case of supply and demand. John Hancock Financial Network's latest survey of retirement plan advisors finds 85 percent of them are performing the same duties as plan fiduciaries, but only 34 percent actually has an Accredited Investment Fiduciary (AIF) designation.
It's a reflection of "the pressure plan sponsors are exerting on advisors to bear some of their fiduciary responsibility," says Bruce Harrington, head of retirement sales and strategy, John Hancock Financial Network. More than 80 percent of advisors responding to the study say what they want most from their broker-dealer is fiduciary guidance.
Accordingly, the figures coincide with a new JHFN program to help retirement plan advisors team up with fiduciary specialists so they can call themselves "co-fiduciaries."
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And why not? Isn't that the way things are headed anyway? Greater transparency and making things easier for the plan sponsor is worth the extra paperwork, Mark Quinn, chief risk officer with First Allied Securities, told Benefits Pro last week.
Great for investment advisors, but what about the brokers abiding by a less-stringent suitability standard?
There's fear they could get squashed. That's why Merrill Lynch adjusted its policy to allow some advisors to work as fiduciaries, a move to hedge DOL proposals and keep themselves in the retirement plan game.
Another likely major shift is toward fee-based business, according to JHFN. Eighty-six percent of the plan design/ERISA experts it surveyed regard new fee disclosure regulations as an opportunity for future business growth. While advisors of record reported that 31 percent of their current business is fee-based, in the future, they expect that number to double to 60 percent.
"The anticipated increase in fee-based business is also understandable given the impending regulatory changes, increased complexities, and pressures from plan sponsors. A shift in that direction will also require additional fiduciary support from a broker-dealer," says Harrington.
The fee-based, fiduciary approach has worked well for registered investment advisors. They had a banner year in 2010, with average profits surging 45 percent and AUM growing twice as fast as wirehouses, according to Charles Schwab's annual benchmarking study. It seems the financial meltdown was good for this crop; Firms are also managing 13 percent more clients than before the crisis.
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