Greenspring views itself as an extension of its clients' HR departments, he says, working with ERISA attorneys, third-party administrators, CPAs and plan providers-and taking on the level of fiduciary responsibility the client needs.

Itzoe puts a big emphasis on helping clients gather and evaluate plan fees for competitiveness and reasonableness. "It's not enough to hand information to people. You have to explain what the numbers mean," he says.

Greenspring's average fees are two to four times more for retirement planning than for individual private client services because there's a lot more work associated with it. The revenue split between the two sides of the business is about 50-50, says Itzoe, and the two are also close in profitability.

In general, retirement planning has lower profit margins than other kinds of financial planning-which is why scale and efficiency are so important.

"If you just have a handful of retirement plans, you have to have a good wealth management practice or you're going to starve," says Gerald Wernette, director of retirement plan consulting for Rehmann Financial, the wealth management arm of Michigan-based Rehmann.

Rehmann Financial began its retirement practice by offering third-party administration services, and in 2000 it added the investment advisory component. It now provides administration to about 950 plans and advisory services to another 450.
Rehmann has grown its business by reaching out to accounting, tax and wealth management clients; by concentrating on larger businesses in its marketplace; by developing affiliations with other benefits professionals; and by asking for referrals. "Some of this stuff just sounds so simple, but so many people don't take the time to do this," says Wernette.

Recently, a CPA in Rehmann's tax division brought in a client with big income but insufficient retirement savings. The client's regular wealth advisor was so impressed with Rehmann's help that he asked the firm to help set up a plan for his own practice.

"We see attitudes changing," says Wernette. "Outside advisors realize we're not going to steal their clients. We can help them retain and grow their business."

Rehmann Financial also seeks mergers and acquisitions with advisors who have solid practices but aren't getting support from their broker-dealers. Its goal is to magnify synergies. "We're looking for two plus two to add up to more than four when we join forces," says Wernette.

He thinks Vanguard's new service could be a good opportunity for smaller plans not seeking extra hand-holding, but he acknowledges that losing business is a real possibility. Still, he's optimistic. "Maybe we can replace it with higher-end relationships. I'm willing to make that trade-off," he says.