Brightwork Perspectives
Beyond Rollovers
Topics in 401(k) Distribution: Fifth in a Series Rollover IRAs are by far the most important practice focus for most 401(k) advisors, apart from 401(k)s themselves. SEPs, SIMPLEs, single-person 401(k)s and other business services sold to decision makers at plans they advise aren’t far behind. What does this tell us about 401(k) advisors? It tells […]
Revenue Realignment
Topics in 401(k) Distribution: Fourth in a Series TPA firms which administer 401(k) plans live mainly on 401(k) billed service fees, that’s not startling information. What is perplexing is that after growing steadily for years, the share of TPA firm revenue associated with these fees has declined slightly since 2016. In the nine years to […]
Why 20 Percent Matters
Topics in 401(k) Distribution: Third in a Series Close to half of all 401(k) advisors are all but ambivalent when it comes to business development; half say their prospecting activity today compared to a year ago is about the same, nearly half (46 percent) say as much for their proposal activity. In fact, with respect […]
Steady Habits in the Land of TPAs
Topics in 401(k) Distribution: Second in a Series One enduring habit of TPAs who administer 401(k) plans is just how steady their habits really are. In this our sixth study of TPAs going back to 2004 we find, for example, that: • The median number of plans administered, 260, is virtually unchanged since 2012 (although […]
The End of Trend?
Topics in 401(k) Distribution: First in a Series For more than a dozen years RSI studies have traced the inexorable march of 401(k) advisors as they converged around three interrelated principles: 1) being fee-based; 2) writing business as a Registered Investment Advisor or Investment Advisor Representative and 3) acting as a fiduciary. This year all […]
Who Sells Big Plans?
Topics in 401 (k) Distribution: Fifth in a Series Specialist or “Heavy” advisors, of course, those deriving almost all of their professional income from 401(k), right? Well, only partially. To be sure, Heavy advisors are about twice as likely as all advisors to sell larger plans, say $10M+. But flip the axes and a slightly different […]
The Twilight of Active Management?
Topics in 401 (k) Distribution: Fourth in a Series Unsettled though advisors may be about what their broker/dealers will require of them under the fiduciary rule, they are nonetheless utterly clear-headed about where their investment recommendations are going. More than half (52%) expect to begin recommending passively-managed funds or to increase the number of such funds […]
Defined Contribution Participant Perspectives: Fifth in a Series
With the final compliance deadline for the DOL fiduciary rule now pushed out to July 1, 2019 it may still be too early to say how advisors are reacting. But some early signs are telling. Most advisors have already made one or more changes as a result of the DOL fiduciary rule… More than […]
Deductibility Matters
Defined Contribution Participant Perspectives: Fourth in a Series In the heat of the tax reform debate last fall one trial balloon hovering over Capitol Hill was the full or partial “Rothification” of 401(k) contributions. ‘Nobody maxes their contributions,’ the argument went (close to true, it’s under 10%) and ‘Nobody will notice if they are contributing […]
Paint my Retirement
Defined Contribution Participant Perspectives: Third in a Series How do active DC participants envision their retirement? Of eight retirement scenarios tested, “working at least part-time” is by far the most prevalent at 49%; only 24% of today’s participants expect to be in a position to travel extensively, for example, while barely a fifth (21%) expect […]
Retirement Confidence Ebbs
Defined Contribution Participant Perspectives: Second in a Series With (generally) frothy equity values, sizzling GDP growth, improving labor force participation rates and buoyant participant economic attitudes, DC participants should be cruising into a golden age of confidence and engagement. It may be coming, but we haven’t seen it yet. On the contrary, the same participants […]
Happy Days are Here Again (?)
Defined Contribution Participant Perspectives: First in a Series When it comes to the big economic picture, active DC participants today are happier and more secure than at any point in the seven-year history of these measurements. The proportion of participants expecting a recession has declined steadily over the years; at 16% this level is about […]
Service Model Stasis?
Topics in 401(k) Distribution: Second in a Series Advisors are about equally likely to recommend each of three service models tested in Retirement Services Intermediaries (RSI) studies: the traditional completely bundled service model (think Fidelity or Principal, 63%); the TPA interface service model (think John Hancock or Nationwide, 55%) and what we call a completely […]
Do Medium Advisors Deserve More Respect?
Topics in 401(k) Distribution: First in a Series For almost as long as Brightwork has segmented 401(k) advisors by the share of their practice income deriving from 401(k), providers have ignored Medium advisors (20% to < 60% of income, 29% of advisors) and focused instead on 401(k) specialists, or Heavy advisors (60% or more, 27% […]
Graduating to Higher Ed, the New Focus of 403(b) Advisors
Topics in 403(b) Distribution: Third in a Series To the litany of 403(b) advisor transformation over the past five years add shifting plan sponsor focus. As occasional 403(b) advisors have been displaced by more committed practitioners and retail clients have been displaced by institutional clients, so too have 403(b) advisors reordered their prospecting priorities. The […]
Losing Lights: 403(b) Distribution Gets More Serious
Topics in 403(b) Distribution: Second in a Series Five years ago the 403(b) distribution channel resembled 401(k) in that about half the advisors were “occasionalists” (Lights in our parlance) and about a quarter were specialists or Heavies. Transitional or Medium advisors made up about a quarter of both the 401(k) and 403(b) channels. Those proportions […]
Vanishing Distinction: 403(b) Advisors Take on Other DC
Topics in 403(b) Distribution: first in a series 401(k) advisors troll the for-profit ponds while 403(b) advisors cast their lines into not-for-profit waters, right? Well, not exactly. Updating our seminal 2012 study of advisors who sell 403(b) plans, we once again find that 403(b)-active advisors actually derive a significantly greater share of their income from […]
The Elusive Value Add of Practice Support
Topics in 401(k) Distribution: ninth in a series Providers often focus on practice support as a strategy to attract, retain or deepen relationships with advisors. Advisors often take a jaded view of these initiatives, not least because there are so many of them out there. We use the term broadly to cover everything from practice […]
Preferred Provider Programs: Beyond Compensation?
Focus on Retirement Plan TPAs Institutional retirement services firms that partner with local and regional TPA firms have long used preferred provider programs to attract and build loyalty among the most attractive TPAs. Do TPAs care? Which program components do TPAs value most—and least? Our new New Brightwork research shows that TPAs in fact do […]
Measuring Plan Effectiveness
Topics in 401(k) Distribution: eighth in a series When plan sponsors, providers and advisors talk about plan health or plan effectiveness, what’s driving their view? Is it familiar, conventional plan metrics, participant outcomes or some blend of the two? Over three research waves since 2012 we’ve seen a fairly stable blend of both perspectives with […]
The Agile RIA
401(k) Distribution: The Decade Just Ended – seventh in a series Although more than one in five 401(k) advisors (22%) describe their primary affiliation as a registered investment advisor, a total of 57% write at least some business as an RIA (or as investment advisor representative (IAR) under a corporate RIA). This ranges from 73% […]
Back to Fully Bundled?
401(k) Distribution: The Decade Just Ended – sixth in a series Until 2011 it was an easy call. The once unstoppable TPA interface service model (think John Hancock or Nationwide) was imploding in the face of a new, completely unbundled service model—which we defined as advisor-selected funds on a trading platform paired with an independent […]
Where do 401(k) Advisors Live?
401(k) Distribution: The Decade Just Ended – fifth in a series Remember insurance-based 401(k) advisors? Paragons of proprietary funds and group annuity contracts they may have been, but they ruled the roost only a decade ago, often with large and stable books of business. In 2005, fully 37% of 401(k) advisors identified themselves as affiliated […]
Triumph of the Heavies?
401(k) Distribution: The Decade Just Ended – Fourth in a Series A decade ago, Heavy advisors (those deriving 60% or more of their income from 401(k)) constituted 18% of the channel and accounted for 55% of asset sales. Last year they constituted 26% of the channel and commanded 63% of the asset sales. They are […]
It’s About the Investments, Right?
Topics in 401(k) Distribution – Third in a Series Not necessarily. Advisors are investment pros so it follows that 401(k) fund advisors see their value proposition mainly in terms of supporting investment and investment manager decisions, right? True, for some advisors, some of the time. But for two-thirds or more of all 401(k) advisors, annual […]
Fiduciaries Topping Out?
401(k) Distribution: The Decade Just Ended – Second in a Series With the Department of Labor’s proposed fiduciary rule still under consideration, it’s informative to step back to see how 401(k) advisors themselves describe their responsibilities. Last year, two-thirds said they think of themselves as a fiduciary on the plans they sell. Conveniently, if perhaps […]
Forever Fee?
401(k) Distribution: The Decade Just Ended – First in a Series In 2005 more than six 401(k) advisors in ten (61%) described their practice as mainly commission-based; only 24% described their practice as mainly fee-based. Today the figures are almost exactly inverted with 59% of advisors calling themselves mainly fee-based and only 29% describing themselves […]