BlackRock Beefing Up Retirement Plan Business

With regulatory reform bringing a wave of changes to defined contribution plans, advisors need to be even more conversant in the ins and outs of legislative requirements and other complexities. Which is why BlackRock is beefing up its commitment to advisors who work with these retirement plans.

“It’s a changing environment out there,” said Joseph P. Lee, Director and head of Advisor-Sold DC Distribution with BlackRock's U.S. Defined Contribution Team, in a phone interview on Wednesday. “With increased scrutiny comes increases risk. And when you have increased risk you need someone who’s a specialist to mitigate that risk.”

BlackRock, Lee says, is a firm that is based on risk management: “We want to give financial advisors the tools and solutions they need to help the 50 million-plus workers reach their retirement goals.”

Americans have come to depend on defined contribution plans to fulfill their retirement dreams. But over time these plans have had to change. The fact is people are living longer and they are experiencing two stages if life: the accumulation stage and the distribution stage, said Lee.

Yet, Lee points out, defined contribution plans only cover about 75% of those who are eligible, signaling a huge opportunity for advisors. The Pension Protection Act will help bring about a lot of critical changes: more participants will be auto-enrolled in plans and there’s been more discussion and legislation around fee transparency and disclosure requirements, as well as changes to the government filing of 5500 forms. “There are a lot of nuances an advisor needs to stay on top of, from how plans need to be designed to the growing complexity of plans due to increases in regulation,” explained Lee. “There is a demand for a high degree of complexity from advisors.”

So how can BlackRock help?

BlackRock has doubled its team since 2009 from four to eight employees who, Lee says, truly understand the defined contribution business. This eight-person team has talked to advisors, plan sponsors, and participants and knows how these plans work and how to make them better, he said. “Plan sponsors need to understand they are fiduciaries on the plan in helping employees make decisions,” Lee said.

BlackRock will also distribute white papers, guides and even a defined contribution magazine and advisor newsletter as well. All of these materials will help advisors trying to understand the DC business and help answer questions, such as “What’s different from the past; where can advisors find information and how should they interpret what the information is saying.”

The challenge, especially for independent advisory firms, is to find the time and resources to recruit new clients and send out materials explaining their value proposition. “We are looking to be an extension of their team,” said Lee. “We are looking for ways to help advisors get the resources they need.”

 

 

 

For reprint and licensing requests for this article, click here.
Practice management Retirement planning
MORE FROM FINANCIAL PLANNING