Many RIAs weigh expanding deeper into the retirement plan business, but decide it might not be worth their while. Often they think that increasing the number of plans they service might take away from the productivity and profitability among core advisory clients; many also believe that it's not a profitable business.

Indeed, Fidelity's research from 2014 finds that 91% of advisors currently offering retirement plans, such as 401(k)s and 403(b)s, are only accommodating the business as part of their broader wealth management practices.

These are not necessarily surprising views. When I first began working in financial services 25 years ago, I had similar ideas about retirement plans and the opportunity (or lack thereof) that they present

But as I've spent more time in the field working with RIAs, I have uncovered some unexpected truths that suggest to me that there's a valid opportunity for RIAs to enter the retirement plan space.

I'm biased, of course -- my job centers around growing Fidelity's retirement business for RIAs -- but I believe RIAs are in a great position to capitalize on a few current market trends.


Plan sponsors are faced with mounting fiduciary responsibilities, and both sponsors and participants crave advice. Both those trends give RIAs a fiduciary edge in seeking growth.

According to Fidelity's 2014 Fidelity Retirement Advisor Research Study, 90% of plan sponsors, who are faced with mounting fiduciary responsibilities, relied on an advisor in 2013. That's up 15 percentage points from 2012.

And those RIAs who were already servicing plans expected to double that part of their practice in the next five years, according to Fidelity's research.

The truth is that, for many, simply accommodating the business is potentially what's causing it to be less growth-oriented.


At one point in time, we at Fidelity characterized any RIA firms that managed more than a dozen plans as retirement plan "specialists." But then they began walking in the door to our Retirement Plan Growth Strategies workshops -- regional workshops aimed at helping RIAs learn more about incorporating retirement plans into their practices.

It turned out that these so-called specialists craved education on expanding their retirement business. Frankly, we wondered why. Shouldn't a firm with dozens of plans under its belt know the ins and outs of growing their retirement plan business?

What we learned was that retirement plan expertise may not have anything to do with the number of plans that a firm services. It may have to do more with whether or not the involvement in retirement plans is intentional.

We found that many firms, regardless of previous retirement plan experience, wanted to become more deliberate about expanding their retirement plan business: A simple accommodation strategy no longer made sense for them.


Small plans may need the most help; they're also a natural target for many RIAs. According to research from Guardian Retirement Solutions, 80% of all 401(k) plans are in the so-called micro small plan market -- defined as those with less than $2.5 million in assets.

We've seen the RIAs we work with thrive in the small plan market -- their average plan size is about $2 million in assets. A truth about small plans is that they often require customization, and RIAs are in a unique position to customize. It is this position that makes the retirement plan opportunity that much greater for RIAs.

RIAs have a few competitive advantages.

  • Their fiduciary capabilities are a great fit with the needs of plan sponsors.
  • Expertise in investing may enable them to offer a tailored approach to a portfolio by leveraging one of their core competencies.
  • In addition, many RIAs have relationships with several recordkeepers -- the firms that maintain records of the plan and of participant accounts -- through their custodian.

In fact, our research shows that 69% of RIAs currently in the retirement plan space offer both bundled approaches -- with one vendor providing all investment, recordkeeping, administration and education services -- and unbundled options, in which the plan sponsor provides these services through a combination of vendors.
Doing so allows advisors to work with the plan sponsor to help choose the plan administrator that best suits the individual employer client's needs and objectives.


Many RIAs may already be convinced of the opportunity retirement plans present, but they get stuck wondering how to incorporate the service efficiently into their existing offering. Advisors should ask themselves a few key questions: Do they have the capabilities or expertise in-house? If not, do they have the resources and relationships they need with recordkeepers and plan sponsors?

In truth, there is not a defined, one-size-fits-all way to incorporate retirement plans into an existing practice. There are many levels of engagement with retirement plans.

Among the various strategies advisors might consider:

  • Some RIAs -- especially those just entering the space -- may want to leverage their investing knowledge to act as investment manager to a plan.
  • Others with more plan expertise may want to provide both investment advice and plan design.
  • RIAs with more resources may want to consider a full plan consultant role, advising both the plan and participants.

Ultimately, I believe there's one truth that matters: Retirement plans present advisors with opportunities that are worth a second look.
Meg Kelleher is an executive vice president and head of the Retirement Advisors and Recordkeepers segment for Fidelity Institutional Wealth Services.

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