Todd Timmerman didn’t mince words in Monday’s presentation at Excel 401k: The Advisors’ Conference about how advisors can thrive under the new fiduciary rule:
“This is a once in a career opportunity for advisors to up their game and win new client engagements,” he said.
He added that the fiduciary rule effectively puts generalist advisors on notice to incorporate significant capabilities — typically used by specialists — into their practice to excel in this new, post-rule world.
Timmerman noted that 98 percent of plans are under $10 million and that 91 percent of plans are working with a generalist advisor.
Timmerman predicted that “these advisors will likely need to sell their practice and join a different team or buy and build out a solution or work with a record keeper that has fiduciary support solutions to come alongside their services.”
As managing director of Retirement Plan Analytics, he founded the firm in 2015 to leverage his nearly three decades of retirement advisory experience.
His firm will be rolling out Fiduciary-Plus early next year which provides 3(38) services and support with fiduciary governance training, fiduciary vault for documentation, annual fee benchmarking as well as advisory fee benchmarking.
There are many 3(38) solutions but very few that offer support and back-end services to equip advisors to enhance their services allowing them to maintain their relationship with key stakeholders but better serve the plan, he said.
Timmerman offered that Fiduciary-Plus is the type of solution you’d see in the $100 million-plus plan market and that by offering the solution to recordkeepers, local advisors will be able to offer it to all markets.
Timmerman shared several key trends that advisors need to understand during this time of change:
- Out of approximately 600,000 advisors in the U.S., roughly 10,000 have more 10 plans and 300,000 advisors have between one and 10 plans.
- There’s a restlessness in the marketplace, and he cited a Fidelity study that found that 38 percent of plans are looking to change advisors in the coming year.
- Fee litigation will continue to be an issue. He recalls a recent meeting with a CFO of a small plan and barely into introductions, “he asked me three questions about risk mitigation”.
- Generalist advisors have high trust relationships with their clients and the generalist advisor has an opportunity to “up the game” with fiduciary solutions offered on recordkeeper platforms.
Timmerman said his firm “partners with great advisors who do not specialize in retirement plans though they have built trusted relationships with clients” and is already partnering with almost 100 advisors across the country
Advisors are in a crucial time to make the right partnerships and find the right fiduciary solutions.
“Equipped advisors are going to gain a lot of clients and unequipped advisors are likely about to lose a bunch of clients,” he concluded.