The 20 Rising Stars of Retirement Plan Advisory 2008

The Post-PPA Bounce In the wake of the Pension Protection Act, compensation and hiring prospects for industry pros are expected to grow By Jon Jacobs, Staff Writer, eFinancialCareers.com Better disclosure will place the different advisory players on a more level playing field, said Sarah Simoneaux, a pension consultant and former president of the American Society of Pension Professionals and Actuaries (ASPPA). At present, brokers aren't required to tell sponsors or plan participants the commission amounts they receive from fund companies whose products go into an employer's plan. That would change under a proposed rule the Department of Labor expects to finalize by the end of this year. A Focus on Pros Disclosure rules represent just one segment within a shifting competitive landscape among retirement plan advisors. "The plan sponsor market is seeking out the good pension pros," said Robert Francis, chief operating officer of National Retirement Partners. Based in San Juan Capistrano, Calif., NRP is a network of 120 advisory firms located across the U.S., most of them independently owned. “Member business is growing quite considerably because they're bringing in more clients,” he added. “There is consolidation to the pension pro." The average firm affiliated with NRP earns $650,000 in annual gross dealer commissions plus advisory fees. A firm that size typically has two partners plus two or three other employees. Industry-wide, retirement plan advisors' gross revenue is thought to average around $250,000, or 0.25-0.28% of assets managed. Francis predicted that compensation earned by partners at NRP firms will grow at least 20% over the next 12 months, unless asset prices fall substantially from current levels. Paying Up For Top Managers Meanwhile, stepped-up competition for business is boosting salaries of plan sponsor relationship managers employed by recordkeepers. These tend to be big brokerage houses or investment managers that record the contributions, fund choices and account balances of each plan participant and maintain the data needed to comply with the bewildering array of tax and labor regulations that govern group retirement plans. Relationship managers represent a bridge between the plan sponsor and the vendor that provides a retirement plan's administrative infrastructure. Salaries for top relationship management professionals have climbed 20-25% in the past two years, McCabe noted. He expects the uptrend to continue, notwithstanding difficult conditions in the financial markets. Demand, he stressed, is outstripping the supply of individuals who have deep knowledge of ERISA rules and/or investment and portfolio management. "The recordkeeping business is very competitive, and they want the best talent they can get” he said. “From a recruiting aspect, the demand for great talent overrides economic limitations." Relationship managers are either generalists, who deal mainly with technical and compliance issues in plan administration, or investment managers, who usually have a CFA charter and concentrate on the plan's fund choices and asset allocations. SEPTEMBER 2008 L EGISLATION AND REGULATION ARE RESHAPING the playing field for retirement plan advisors, promising to shake up compensation structures even as they open new opportunities and bring new skills to the fore. The Pension Protection Act of 2006 brought momentous change to what had been a maturing industry. Although regulations to implement the law are still being worked out, it's already having a broad impact on the industry's expected direction and growth, on how fees will be disclosed and, ultimately, on how they'll be set. "In the last year or two, I've seen more changes than I did the previous seven or eight," declared executive recruiter Joe McCabe, vice chairman of CTPartners. Pending efforts by regulators to make plan providers fully disclose fees are expected to compress fee rates. However, independent advisors expect to make up any shortfall on volume, by taking business away from captive brokers associated with big investment firms. 10 RETIREMENT PLAN ADVISORY RISING STARS http://www.eFinancialCareers.com

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The 20 Rising Stars of Retirement Plan Advisory 2008 Contents Doing Well By Doing Good The Post-PPA Bounce Automatic Enrollment vs. Managed Account Unfair Advantage? You Bet The New World Order 20 Rising Stars of Retirement Plan Advisory Mentors’ Page

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