John Hancock Financial Network

7 Key Attributes to Identify in a Highly Effective Defined Contribution Firm

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Over the next five years, U.S. retirement assets are poised to grow to over $20 trillion.* However, complexities resulting from recent industry rules and regulations are driving a number of financial institutions to minimize their efforts in this area. In fact, many are leaving this market altogether.

So where does a qualified financial advisor with an established 401(k) practice turn? How do representatives who want to go deeper into this attractive, yet challenging market access the expertise they need?

Because of the regulatory requirements that govern the defined contribution market, a financial professional working in this space may want to affiliate with a broker/dealer that provides a different level of support than one that’s focused on investments. Here are seven traits to look for when evaluating how a financial institution can support your retirement-focused practice.

A dedicated 401(k) effort: Recent regulatory changes make it more critical than ever that your firm has a strong commitment to and deep knowledge of this business. Of course, you want structure and support, but don’t underestimate the importance of a culture that promotes business success and practice development.

Supportive senior management: Be sure your firm is in this for the long haul. Does senior management strongly back this effort? Are they willing to commit the resources it takes to help advisors grow their business over time?

An established fiduciary program: If you currently have or are planning to establish a 3(21) Fiduciary practice, make sure that the investment adviser provides the resources you need. Do they offer professional development support to help you acquire the Accredited Investment Fiduciary® (AIF) designation? What kind of investment selection and monitoring tools are available? Do you have the flexibility to offer a range of fee options?

Best practices forums and events: It’s important to learn whether or not your firm provides opportunities for you to learn from industry experts and share information with your peers. Are there regularly-scheduled educational opportunities and ongoing communications to help you keep up with product enhancements, industry trends, and regulatory changes?

Experienced sales consulting team: Navigating the numerous offerings from different providers can be a challenge. How do you find the products that best meet your clients’ needs? What’s the best way to prospect for new business? Your life is much easier if your firm has a dedicated defined contribution sales team you can rely on for everything from product advice to client acquisition tips, and who will act as your advocate within the organization.

Recruiting support: When you’re ready to expand your business, or move into new specialties within the defined contribution sphere, will your firm be able to assist you in identifying and attracting top talent?

Practice management systems: Make sure your firm offers resources that make it easier for you to do business in the defined contribution market. Do you have access to state-of-the-art systems that simplify investment selection, monitoring, and benchmarking? What about tools that automate RFP and investment policy generation?

The answers to these questions will go a long way toward helping you determine whether your financial institution has the traits necessary to act as a highly effective partner in helping you grow your defined contribution business.

*Source: The Cerulli Report, 2011.


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