Broker-dealers at convergence of wealth and retirement

Most professionals at the 50 or so broker-dealers that support retirement plan advisers are resource-constrained, especially if their primary role is helping with sales and services of defined-contribution plans.

A group of these professionals met virtually last Monday and Tuesday to highlight the opportunities and challenges they face and discuss ways to collaborate among themselves and with providers.

Some, like Edward Jones, have greater resources than most, because the company’s view of retirement includes all types of retirement plans, like SEPs, SIMPLEs and solo 401(k)s, as well as IRAs.

Regardless, these broker-dealer professionals face huge challenges to support the specialist as well as dabblers who may be forced to serve accounts with low balances, whether they want to or not — different from private client practice.

While DC aggregators have been attracting an increasing number of plans, assets and advisers, broker-dealers are more likely to be able to serve advisers’ retirement and wealth needs as the two worlds converge. Aggregators are scrambling to attract wealth managers to their groups and create an integrated platform, which is likely why firms like Hub International continue to stay with broker-dealers like LPL.


The discussion centered on the three main obstacles to truly engage DC plan participants:

1. Participant data come with access and privacy issues.

2. Regarding technology, financial wellness programs are needed, but not as a stand-alone. With each plan provider offering its own, advisers that use them must switch programs when they move clients to another record keeper.

3. “Virtual CFP” is a term coined by John Peters, senior business development consultant at Commonwealth. Traditional wealth advisers and RPAs are not able to or not interested in serving the less affluent. Is there a new, special model for younger, entry-level advisers?


Record-keeper consolidation is a fact of life. John Davis, principal of retirement products at Edward Jones, stressed the enormous amount of time and resources his firm must spend in the wake of acquisitions, such as Empower’s purchase of MassMutual’s plan business. There will be more work to come for resource-constrained broker-dealers.

Fintech consolidation is also an issue. Jon Anderson, head of retirement at Cetera, noted that just as his company was ready to onboard a new technology after 12 months of work,  the fintech was acquired and the service was eliminated.


Other than potential changes governing IRA rollovers, no recent laws or proposed legislation worried the group. Laura Kirkover, head of retirement and investment product consulting at Wells Fargo Advisors, cited concerns about the number of new laws and regulations, the short time to comply and the internal resources required. And there was a huge amount of concern about state intervention, as most firms are national, which could mean a patchwork of compliance requirements.

The consensus on multiple employer plans and pooled employer plans was cautionary, with most saying they were likely to adopt record-keeper plans even without private labeling.

More options for different plan types create an even greater need for advisers to guide clients, Edward Jones’ Davis said. However, he said he was concerned about the potential erosion of the advisers’ role in investment selection.

Few said they were concerned about the recent spike in 401(k) litigation.


With resources constrained, the group pointed to opportunities in wealth management and other resources to craft products for DC plans. There is no better example than retirement income, which synthesizes many different product types.

Davis said he was concerned about record keepers competing with his firm’s advisers, especially in insurance sales, where more information than a provider has is needed to suggest a suitable product.


There was consensus that the industry overall needs to collaborate to create comprehensive and effective financial wellness services. Though it’s unlikely that providers will come together to support one technology, they should have a common data format for plan and eventually participant data. Such an effort is being spearheaded by the Spark Institute and the Defined Contribution Institutional Investment Association.

Kim Perry, director of retirement services at Stifel Financial, said it is common for wealth advisers and RPAs to collaborate. The group agreed that a new breed of financial coaches, who are paid a salary plus bonus, is needed to serve less affluent investors. But third-party “virtual CFPs” can cause compliance issues, Commonwealth’s Peters said.

The retirement industry is solving big problems that go beyond access to DC plans at work. Improving retirement income requires the collaboration of plan sponsors, advisers, record keepers and asset managers. Getting all parties on board may be difficult, but without collaboration, helping workers with their financial issues is probably impossible.

Fred Barstein is founder and CEO of The Retirement Advisor University and The Plan Sponsor University. He is also a contributing editor for InvestmentNews’​ RPA Convergence newsletter.

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