The 20 Rising Stars of Retirement Plan Advisory 2008

SPONSORED ARTICLE significant transitional changes occurring in the retirement business that present dramatic opportunities for certain advisors. It seems that retirement-focused advisors will have a clear advantage over those advisors who are general practitioners as assets transition from retirement plans into individually managed accounts. This advantage begins with the changing demands and qualifications for those advisors who provide services to retirement plans. Historically, it seems as if each of the approximately 250,000 advisors in the U.S. provided some form of advisory service to at least one retirement plan. However, this dynamic is changing with the heightened regulations imposed by the Department of Labor and ERISA. More and more plan fiduciaries are seeking the services of a true retirement-focused advisor who has the knowledge and experience to truly guide and support the fiduciary and plan participants. Does this mean that all plans in the U.S. will be advised by the top 3,000 institutional retirement plan specialists? No, but these advisors will have the best opportunity to grow their practices over the next five years within the retirement plan space. As this ‘flight to quality’ continues, the best advisors will be able to position their practices to provide plan level services to more companies. Even more importantly, these practices will be in a position to be endorsed by the plan sponsor fiduciary (replacing the plan provider) as the true advisor ‘at the exits’ as employees retire. Few argue that the advisor is best positioned to provide this service to the plan and to the participant, offering a solution rather than a product. During the accumulation period, the participant has had the opportunity to develop a relationship with the advisor through education and enrollment meetings and most likely is positioned in knowing the client’s situation before and after retirement. The execution of this ‘instividual’ strategy by advisors requires a broker-dealer partner who truly understands both the institutional as well as retail sides of the retirement business. This begins with the supporting and embracing dual registration. There is a place for both fee- and commission-based solutions, and the best advisors are positioning their practices to provide for both. Advisors also need support tools and services, as well as a strong back office solution for maximum efficiency. Ultimately, building a solution that allows the advisor to efficiently position his practice ‘at the exits’ and build a rollover to retail operation is what will ultimately distinguish the most suitable broker-dealers. It is interesting to reflect on the strategy seemingly adopted by many of the large wirehouse firms in anticipation of this changing dynamic. It is likely that the wirehouses were advised by very smart and well-paid consultants to focus their efforts where the money is going to be. Many of these firms had built dominant institutional retirement practices, with a large corporate operation supporting the acquisition and servicing of retirement plans by their advisors. SEPTEMBER 2008 Over the past five years, many of these firms have re-tooled their operations to focus on the advisor’s role in capturing the IRA from the individual, not necessarily from the retirement plan. Wayne Gretsky, arguably the best hockey player of all time, would have agreed with this strategy. As the all-time leading goal scorer in the NHL, Gretsky always tried to skate to where he “thought the puck was going to be.” If Gretsky applied this strategy to the retirement business, he may not have had the same success. Although it is true that trillions in assets will ultimately flow from retirement plans to individual accounts, more and more plans will position their trusted plan advisors ‘at the exits,’ asking them to provide exit counseling for their employees. That is where much of the business will be done. In light of the projected money flows both into and out of retirement plans, retirement-focused practices are well positioned to dramatically grow their base of institutional clients, as well as their retail practices. There is no better platform for advisors than to provide services to plan fiduciaries and their employees to capture rollover assets leaving plans and build an overall wealth management practice. Many of the traditional wirehouses and insurance companies may have done a good job in capturing IRA accounts, but one could argue if they truly have provided financial planning tools and services to build a solution most suitable to each individual’s needs. In today’s economic environment many employees are lured into taking a taxable withdrawal of all or a portion of their retirement balance when switching jobs or retiring, as noted in a 2007 Spectrem Group survey. The survey cites that 25% of ‘job switchers’ withdraw their retirement balance, proving the importance of providing true advisory resources that will positively impact an individual upon retirement. About the Author: Debbie Vince is a senior vice president and director of member firm services at National Retirement Partners. She can be reached by phone at (949) 488-4015 or by email at dvince@nrpfinancial.com. About the Company: National Retirement Partners is the premier retirement plan consulting, wealth management and distribution company in the United States that is built by advisors for advisors. NRP is dedicated to building the largest network of independent advisors who deliver the highest quality products and services to retirement plan sponsors and participants. It currently has more than 120 member firm offices in more than 39 states, comprised of independent advisors that provide plan consulting, fiduciary best practices and investment due diligence to retirement plan sponsors and their participants, as well as comprehensive wealth management tools. Through Member Firm Services, it provides advisory services to more than 6,000 retirement plans with assets in excess of $60 billion. RETIREMENT PLAN ADVISORY RISING STARS 17

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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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