Experts who served on the Prescience study panel agree that several additional trends will emerge over the next five years:

• Advisors will have established professional service standards in areas such as fiduciary practice, contracting, revenue mix and fee disclosure;
• Fee disclosure will make it difficult for plan sponsors with retirement plan assets exceeding $25 million to compensate an advisor in any way other than a direct fee for service-usually a set retainer;
• By 2015, advisors will no longer be in a position to receive compensation unless they assume ERISA Section 3(21) fiduciary responsibilities. This differs from the current regulatory framework, which allows plan sponsors to choose from other models including broker-dealer, consultant and advisor models;
• The trend toward reliance on professionals will also be seen at the participant level, as many American workers would prefer to rely on a knowledgeable expert to make their retirement plan investment decisions rather than learn about investments themselves.

The Prescience study also revealed that pressures on pricing will squeeze profitability throughout the industry. Sixty-two percent of the experts predicted that by 2015 service provider margins will fall below 11 basis points. In addition most plan sponsors will establish expense budget accounts in an effort to manage the disconnect between asset-based revenue from investment managers and the cost of services.

"Advisors, like service providers, will also experience fee compression as more business shifts from an asset-based compensation model to a retainer model," noted Laura White, vice president of Marketing at Diversified.

Mergers and acquisitions in the benefits consulting and investment consulting arenas are expected to continue. In addition, the Prescience study panel expects at least two major service providers to spin off their retirement plan service business in an effort to meet corporate revenue targets and demands for complete open investment architecture.