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2017 Retirement Plan Advisor Year-end Review

We asked several industry participants for their thoughts on the year’s events and trends.

It was another interesting year for developments that can impact the plan consulting business. We asked several industry participants for their thoughts on the year’s events and trends.


Wealth Management: What do you view as the key developments that affected retirement plan consultants’ work with plan sponsors in 2017?


Jordan Burgess

Head of Specialist Field Sales overseeing DCIO

Fidelity Institutional Asset Management.

We’re seeing opportunity for plan consultants who are equipped to take fiduciary responsibility off plan sponsors’ shoulders and risks for plan advisors who are unprepared for change. According to our Plan Sponsors Attitudes Survey, 76 percent of plan sponsors have hired or are considering hiring someone to help with fiduciary duties. Our survey found that 48 percent of plan sponsors expect significant impact to the management of their plan due to the potential DOL Investment Advice rule. Additionally, we found a record-high of 38 percent of plan sponsors are actively looking to switch their plan advisor, up from 30 percent in 2016 and just 9 percent in 2013. This tells us that when asked what key areas of knowledge are needed from advisors, plan sponsors cited keeping them informed of regulatory changes, consulting on fiduciary risks and responsibilities, and suggestions for improving plan performance and minimizing costs. The heightened sensitively around the DOL rule provides an opportunity for plan consultants who are knowledgeable and able to take on this responsibility.


David Eikenberg

Head of Retirement

U.S. Intermediaries

T. Rowe Price

The retirement marketplace continues to be a very competitive as it evolves and adapts to the changing plan and participant landscape. A few developments that affected how DC advisors did business in 2017 include the current secular trends, increased competitive pressures and the new regulatory environment.

The secular trends that we saw include the changing demographics of plan participants and the aging advisor workforce. Many participants are now moving closer to drawdown stage, putting pressure on advisors to provide retirement income solutions and advice. Regarding the workforce, advisors are looking for ways to expand their skillset and product offering while onboarding younger diverse talent into their business practice.

We continue to see heightened competitive pressures among DC (defined contribution) advisors with increased consolidation among both providers and advisor groups. We saw a rise in 3(21) and 3(38) service offerings, within the advisory practices and outsourced solutions. This has led many retirement plan advisors to turn to RIA aggregators to build their practices and DC dabblers to partner with specialists at many of the large distributors for scale and expertise.

Advisors continue to be concerned about how to meet the myriad compliance requirements compounded with the uncertainty over the DOL rule. Within plan line-ups, the due diligence intensity around the QDIA options continues to grow, particularly as flows increase to less transparent CITs and as additional custom modeling services are launched. This heightens the need for advisors to gain deeper understanding of the inner workings of their QDIA selections and effectively communicate them to their plan sponsor clients.


George Fraser, CRPS

Managing Director

Retirement Benefits Group

In 2017, the discussion around the DOL Fiduciary Rule is something we spent an awful lot of time on and it seems to be ongoing. For retirement plan consultants, the fiduciary rule was not an earth-shattering event. Due to my team’s focus being solely on retirement planning, and not personal wealth management, we have already subscribed to these beliefs and have been acting as fiduciaries for a long time. Good advisors, regardless of specialty, always act in the best interest of their clients. In 2017, people were just reminded of how they were supposed to be conducting themselves.


Throughout 2017 there has also been a tremendous amount of time spent on the discussion of fees. 401(k) plans went through quite a bit of benchmarking in 2017 by third-parties to ensure that fees are appropriate across the board, and that’s a good thing for both clients and advisors. Not only is benchmarking ensuring that clients are paying fair fees on retirement savings assets, but advisors win too. Interestingly enough there is now benchmarking that will determine if an advisor is being underpaid. The work advisors put forth each day changes lives for the better and this benchmarking process helps to demonstrate the value of their work to clients. Benchmarking ensures clients don’t pay unfair prices and advisors aren’t cut short.


Bob Melia

Executive Director

Institutional Retirement Income Council

Fiduciary Risk: The ongoing concern over fiduciary risk had a dampening effect on innovation, new retirement income products, and alternative investments. As a result, consultants were hesitant to propose innovative products to their clients, especially in a litigious environment. However, helpful fiduciary guidance by the Departments of Labor and Treasury regarding annuities and other income products have and will help sponsors add income strategies to their retirement plans.  Proposed positive legislation such as the Retirement Enhancement and Savings Act had and will have a similar affect in supporting lifetime income, open MEPs and other retirement security proposals.

Fiduciary Rule: The DOL decision to implement part of the rule last June while delaying other components of the rule consumed consultants, their business models and other sectors of the industry. The delay until next July allows the SEC, which announced in 2017 its own desire to implement new standard of care regulations, will influence the ultimate outcome of the final rule. For consultants, the rule and the integration of the SEC could bring further changes to business models and merger activity like we saw in 2017.


Tax Reform: The possibility of “rothification” as part of tax reform caught the attention of consultants. This would have created significant opportunities for consultants, sponsors and service providers to educate participants on tax planning and the retirement readiness effects of Roth.  As it stands, lower tax brackets for individuals slightly marginalize the tax deferred benefit of deferred savings.  Additionally, lower pass-through tax rates on sole proprietors and other small businesses could have a dampening effect on retirement plan formation.  In 2017, consultants began to study how tax reform will affect the retirement industry and specifically their practice.  This effort will continue in 2018.  


Margaret Rux

Principal and Head of Strategic Retirement Consulting

Vanguard Institutional Investor Group

Plan design continued to be a top priority for plan sponsors and consultants in 2017, with a focus on helping participants achieve the best possible retirement outcomes while also minimizing administrative and investment costs. Automatic enrollment and automatic savings increases have become best practices in recent years, and more sponsors are implementing “sweeps” to include participants that might have missed out on these beneficial plan design changes. For example, sweeps can re-default participants not saving enough to a higher savings rate and also re-adjust extreme asset allocations by re-investing them into a more age-appropriate, diversified strategy such as a target date fund. In addition, there was an increased interest in financial wellness tools, and how they fit into the broader financial wellness umbrella for employees.


We saw a continuation and expansion of class action law suits against plan sponsors related to excessive fees within retirement plans. As such, there was ongoing interest from sponsors and consultants alike for deeper discussions around fiduciary best practices on the litigation front, and more broadly in relation to plan oversight.  


A topic that was top of mind for many plan sponsors in 2017 was the Fiduciary Rule. Most recently, the Department of Labor issued an 18-month delay for certain requirements to manage conflicts of interest from its revised definition of fiduciary investment advice. These conditions, which originally would have been effective on the first of the new year, are now delayed until July 1, 2019, while the DOL considers potential changes. Vanguard encouraged the DOL to adopt this delay to allow a more orderly review of the rule and a more reasonable timeframe to transition to any new conditions.

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