Although the unemployment rate in the U.S. is 9%, three-quarters of broker-dealers and registered investment advisors plan to hire in the next 12 months, and they plan to boost their staff by an average of 30%, Fidelity Investments found in a survey.

Sixty percent said that adding new clients is their No. 1 driver of profitability this year, up from 43% last year.

Forty-three percent plan to hire advisers or brokers who have an existing book of business, and 19% plan to train existing staff to assume an adviser or broker role. Although 62% said that ongoing industry consolidation has had no impact on hiring, 32% said it has made it easier to recruit.

"Growth is top-of-mind for many broker-dealers and RIAs-something that we heard loud and clear from the hundreds of clients we just hosted at our conference," said Scott W. Dell'Orfano, executive vice president of sales at Fidelity Institutional Wealth Services. "A strong focus on recruitment, especially as a component of a broader client acquisition strategy, is extremely good news for the industry and speaks to an overall confidence for its continued growth and success."


Margins Tick Down To 30.5% in 1Q11

Operating margins of publicly traded asset managers ticked down to 30.5% in the first quarter of 2011, from 31.4% in the previous quarter, Kasina said. Net margins decreased from 23.4% to 22.1%.

"Firm profits are slightly off a three-year high reached in the fourth quarter of 2010," said Steven Miyao, chief executive officer and founding principal of Kasina. "However, this is consistent with what we saw in the first quarter of 2010, as well, where assets grew but margins did not keep page. This year, firm operating margins are down from their fourth quarter peaks despite overall asset growth of 3%."

Among large asset managers, those with the strongest margins are Franklin Templeton, BlackRock and T. Rowe Price.


Bill Would Limit 401(k)

Loans to Three at a Time

Senators Herb Kohl (D-WI) and Mike Enzi (R-WY) have proposed the Savings Enhancement by Alleviating Leakage in 401(k) Savings Act (SEAL), which would limit the number of loans that participants can take from their 401(k) to no more than three at a time.

Currently, an employee with an outstanding loan who loses their job must pay back the loan within 60 days. The SEAL Act would give them until their tax deadline for that year to repay the loan and allow them to deduct the early withdrawal penalty from the loan balance.

Further, while those who have an outstanding hardship withdrawal against their 401(k) currently may not contribute to their 401(k) for six months, SEAL would lift that ban.

"While having access to a loan in an emergency is an important feature for many participants, a 401(k) savings account should not be used as a piggy bank," Kohl said. According to Aon Hewitt, 28% of 401(k) participants had an outstanding loan in 2010, up from 22% in 2005. The average loan was $7,860.



Quote of the Week

“With all of life’s uncertainties, planning not to retire is simply not a viable retirement strategy. It’s important that workers save and invest for retirement and have a backup plan if they are forced to retire sooner than expected.”

- Catherine Collinson


Transamerica Center for Retirement Studies

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.