TD Ameritrade Institutional Advisor Survey: RIAs See Opportunity in Retirement Plan Market but Want Guidance Navigating a More Complex Business

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 Institutional1 Advisor 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 plans

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.
2 TD Ameritrade Institutional RIA Sentiment Survey – Retirement Plan Advice Market, November 2013, conducted by Maritz, Inc. on behalf of TD Ameritrade, Inc.
3 Investment 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
4 Cerulli Associates, Cerulli Quantitative Update: U.S. Retirement Markets 2012 (Subscription required)
5 TD 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 Ameritrade”).

About TD Ameritrade Institutional
TD Ameritrade 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
Millions of 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.

Survey Methodology
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 and services.