Fact: 62 percent of advisors recommend rolling assets into their own solution; 14 percent recommend the money stays in-plan.
Industry leaders anticipate rollover activity out of retirement plans will slow and more money will stay in-plan for 2017. This belief is tied directly to fee compression and litigation risks related to fees but doesn’t contemplate how services and client needs impact rollover activity. As we know, institutional, in-plan pricing is consistently lower than retail IRA products. Money staying in-plan when a person retires or terminates employment generates a whole new series of challenges and opportunities for the marketplace to solve.
Contrary to the discussions about money staying in plan, a majority of advisors told Ann Schleck & Co. they anticipate IRA rollover activity will increase in 2017 (Webcast poll with 198 advisors, November 2016). To protect themselves from risk, top advisors benchmark their advisory fees and services, show clients how the recommended rollover option compares to what the client is receiving in plan, and they document client priorities and discussions during the decision making process. This due diligence activity is built into a step-by-step process within Ann Schleck & Co.’s new IRA Fee/Service Reasonability Evaluator guide. The Evaluator will be available to advisors second quarter 2017.
In order to build true competitive perspective for the Evaluator, advisors are providing data about their fees, products and services for their last 10 rollovers. Currently, 62 percent of advisors who have responded recommend rolling assets into their own solution and 14 percent recommend money stay in plan. They’re also sharing their expectations for the future and which exemptions they anticipate using.
Ann Schleck & Co. is studying the activity, bringing the results back to advisors who participate via a complimentary summary report. The information you provide will be kept strictly confidential and used collectively for comparison purposes.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.