Advisors want to know more about forming key partnerships, additional
JERSEY CITY, N.J.--(BUSINESS WIRE)--
Most registered investment advisors ("RIAs") agree the U.S. retirement
plan market represents a tremendous growth opportunity yet relatively
few RIAs pursue this business in a significant way. What advisors want,
according to a recent TD Ameritrade Institutional1Advisor
Survey,2 is a deeper understanding of the rules
and more guidance in assembling the components needed to service 401(k)
and other employer-sponsored retirement plans.
Nearly eight of ten advisors in the survey said they believe RIAs as a
group are well-positioned to increase their share of the $5 trillion3
in defined contribution retirement plan assets, a market long dominated
by brokerages, insurers and mutual fund companies. Still, few RIAs are
competing in this marketplace today.
According to the survey, 62 percent of RIAs service 10 or fewer plans,
including nearly 19 percent who work with no plans. Additional industry
research supports that finding, indicating that only 6 percent of
retirement plan advice specialists are RIAs.4
Now, however, U.S. Labor Department rules that mandate greater fee
transparency and changes in the definition of "fiduciary" could
potentially tilt the playing field in a way that may benefit RIAs - a
group that already adheres to a fiduciary standard.4
Advisors have taken notice: nearly half of the survey's respondents see
an opportunity to expand in the retirement business and they're
currently directing time and resources towards this goal. Another 19
percent said they don't currently have plans, but they likely will in
the near future.
"RIAs recognize the retirement plan business is a tremendous growth
opportunity for the industry and a chance to gather additional assets
they are not capturing today," said Skip Schweiss, managing director, TD
Ameritrade Institutional, and president, TD Ameritrade Trust Company.5
"There's no denying the retirement business has more moving parts, but
with a little help and guidance advisors believe they can assemble an
important new growth enterprise."
The U.S. retirement market is enormous at $21.8 trillion, and is growing
- analysts expect the market to reach $23.8 trillion by 2017.4 And
that growth has in the recent past been steadier: retirement plan assets
over the past five years increased at a faster pace than non-retirement
assets4 because American contributed to their workplace plans
with every paycheck across market cycles.
Moreover, RIAs could have a substantial cross-selling opportunity when
it comes to the retirement business. Half of the advisors surveyed said
10 percent or more of their clients were business owners, a group that
potentially could steer their company's retirement plan to the RIA.
Business owners can also serve as a source of new referrals.4
Still, there are some concerns that have prevented many advisors from
capitalizing on this opportunity. According to the survey:
60 percent cited a lack of time or resources
42 percent cited compliance and regulatory requirements
38 percent said they lacked business relationships with third party
administrators ("TPAs") or recordkeepers
30 percent were not sure of the opportunity
25 percent said they lacked the tools needed to service retirement
The survey, meanwhile, underscored that RIAs don't lack for
business-owning clients nor are they worried that they lack expertise.
Still, half of the advisors said they would like to develop a firmer
understanding in the areas of retirement plan compliance and regulation.
More than half of respondents want more education about the retirement
market. About 58 percent seek referrals on which third-party plan
administrators and recordkeepers they should work with, while more than
a third would want ongoing practice management support.
With the right support and resources, more RIAs said they would be more
likely to stake a claim in the retirement market, the survey showed.
"Imagine a business where your clients add new money every two weeks,
rain or shine," said Schweiss. "That's what the retirement plan market
is, and for many advisors it remains an untapped source of new growth."
1 TD Ameritrade Institutional is a division of TD Ameritrade,
Inc., member FINRA/SIPC/NFA.
Institutional RIA Sentiment Survey - Retirement Plan Advice Market,
November 2013, conducted by Maritz, Inc. on behalf of TD Ameritrade, Inc.
3Investment Company Institute, "Retirement Assets Total $21.9 Trillion in
Third Quarter 2013," Jan. 10, 2014, http://www.ici.org/research/stats/retirement/ci.ret_13_q3.print
4Cerulli Associates, Cerulli Quantitative Update: U.S. Retirement Markets
2012 (Subscription required)
5TD Ameritrade Trust
Company is a non-depository trust company that provides custody,
directed trustee, recordkeeping, plan design support and plan
administration services and is not a member of FINRA/SIPC/ NFA. TD
Ameritrade, Inc., and TD Ameritrade Trust Company are separate but
affiliated subsidiaries of TD Ameritrade Holding Corporation ("TD
About TD Ameritrade Institutional
Institutional, a division of TD Ameritrade, Inc., is a leading provider
of comprehensive brokerage and custody services to more than 4,500
fee-based, independent registered investment advisors (RIAs) and their
clients. Our advanced technology platform, coupled with personal support
from our dedicated service teams, allows advisors to run their practices
more efficiently and optimize time with clients.
About TD Ameritrade Holding Corporation
investors and independent investment advisors have turned to TD
Ameritrade's (NYSE:AMTD) technology, people and education to
help make investing and trading easier. Our clients want to take control
and we help them decide how -- online, over the phone, in a branch or
with an independent investment advisor. We've been bringing Wall Street
to Main Street for more than 36 years. An official sponsor of the 2014
U.S. Olympic Team, TD Ameritrade has time and again been recognized as a
leader in investment services. Please visit TD Ameritrade's newsroom or www.amtd.com
for more information.
Results are based on a survey conducted
by Maritz, Inc. on behalf of TD Ameritrade, Inc. 300 RIAs participated
in a telephone survey Nov. 4 through Nov. 15, 2013. RIAs who custody
with TD Ameritrade, Inc., as well as other independent RIAs from across
the United States, were asked to share their views on the retirement
plan advice market. The margin of error is ±5.6%. This means that in
just over one case out of 20, survey results based on 300 respondents
will differ by no more than 5.6 percentage points in either direction
from what would have been obtained by seeking the opinions of all
eligible RIAs. Maritz, Inc. and TD Ameritrade, Inc. are separate,
unaffiliated companies and are not responsible for each other's products
Source: TD Ameritrade Holding Corporation