Rising RIA interest has resulted in a 106 percent increase in the number of advisors using TD Ameritrade’s Retirement Plan tool according to the firm’s internal numbers, says Newman, “The amount of activity we’re seeing is quite extraordinary.”
Newman says that the number of proposals from independent advisors to defined contribution plan sponsors using the Retirement Plan tool has also doubled, and that the number of advisors who have won new business with TD’s retirement solutions has increased 238 percent year-over-year.
“The firms that have won new business with us have an average assets under management of $350 million,” says Newmans. “The larger firms are the ones on the forefront of jumping on the retirement plan opportunity.”
A third of the internal survey’s respondents serving retirement plans say they are a profitable client segment, and 36 percent are growing this area of their business.
Newman says that most of the plans provided by RIAs on TD’s platform have between $1 million and $10 million in total assets, “We’ve helped advisors compete for plans as high as $80 million to $100 million in assets,” with medical groups and accounting firms among the most popular prospects.
The new business is changing the look of these RIAs, says Newman.
“When they decide to get into the plan marketplace, they’re often hiring one to two new advisors who are already specialists in the area,” Newman says. “Those advisors begin to form a small subgroup within the firm that targets and grows the retirement plan business.”
The internal numbers complement a survey of plan sponsors released in December showing that while only 28 percent were currently using an RIA to advise their defined contribution plan, most were willing to at least consider switching plan providers to seek lower fees, more investment options and greater access to planning tools and advice.
“The services that advisors offer in terms of education and support for the sponsor are the services that sponsors want,” Newmansays. “It’s a good alignment.”
Newman says that retirement plans began to shift towards RIAs following the passage of the Pension Protection Act in 2006, which began the movement towards improved fee disclosure for retirement plans.