Recordkeepers are in a tight spot in the retirement industry. As fee compression continues to make business tougher, they are forced to look for new ways to generate revenue—and one of the main opportunities can put them at odds with the very advisers with whom they already have important relationships.
Many recordkeepers and large providers are expanding into wealth management, offering participants education and advice on what to do with their money that goes far beyond administrative tasks. But that means advisers are increasingly competing with their own partners for rollovers and participant assets.
A plan sponsor can write into the contract that the recordkeeper is not allowed to contact the employees for wealth management or rollovers—but the plan sponsor has to make that election, not the adviser, explains Jania Stout, president of retirement and wellness at Prime Capital Financial.
“That’s part of onboarding—when we bring in a new client and we go through how the setup is,” Stout says. “If the client wants the recordkeeper to have access to that, we will, of course, support that. But a lot of times, the plan sponsor hired us because we are the financial adviser that’s independent and is a fiduciary, so they would prefer anything of that nature to go through us.”
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