Almost invariably, change in any business brings with it a new set of challenges, and that's certainly true of the new fee disclosure regulations scheduled to take effect in July. The flip side of change, however, is that it also creates golden opportunities-for those astute enough to spot them and agile enough to act on them. Opinions vary across the board about just what impact fee disclosure will have on the industry, but at least some advisors view it as a chance to burnish their image and make client welfare the primary goal.

The big winners will be fee-based advisors, predicts Rick Tonkinson, CFP, the president of Miami-based Tonkinson Financial, a practice focused on working people and their families. "The new fee-disclosure requirements are going to cast a bright light on the difference between product pushers and real independent advisors," he opines.

Part of the reason is because plan participants don't currently see how they are being charged. "There is a widespread perception among working people that the 401(k) is a free lunch, because they don't see fees itemized as deductions from their paychecks. I think this will be a wakeup call that will energize and motivate many of them to begin shopping around, maybe consider doing an in-service withdrawal that they roll over into an IRA, where they can get real objective advice and research."

Tonkinson, who's been proselytizing for greater transparency in fee disclosure for many years, manages more than $210 million, much of it in retirement funds from Florida Power & Light Co. employees. He points out that the average mutual fund fee is 1.6%, according to Morningstar, and that some financial services firms have been charging as much as 3.5% in fees on group annuities, (though most have ratcheted those fees down in anticipation of the disclosure regulations).

His firm charges a flat 1% management fee, with no additional cost to get in or out of funds. Tonkinson keeps a tight rein on overhead, spending just 15 cents on the dollar in an industry where the average break-even point is 40 cents. "I am hoping that small investors get upset when they realize what they have been paying in fees all along," he says. If that happens, he believes, firms like his stand to benefit from a big increase in new business.

Tonkinson's argument makes a lot of sense, and the success he's had with his practice demonstrates the viability of the low-fee, highly transparent business model he's embraced for many years. But some industry participants see a range of other possibilities flowing from the new disclosure rules. "We applaud transparency, and we applaud low fees for value," says David Musto, the CEO of J.P. Morgan Retirement Plan Services LLC, "but I think the market is sort of missing the point-and the opportunity."

In the middle, large and mega-segments of the retirement plan market, the vast majority of sponsors are already being assisted by some kind of retirement advisor or consultant, Musto points out. The appetite for cost-effective programs is not a new phenomenon suddenly springing from fee disclosure or transparency.

"This process has been under way in our marketplace for the better part of a decade," he says. "I think where folks missed the point-and the opportunity-is that it's not just about fees. When you think about the diversity of plan design and the different types of customized communications and investment alternatives being used across programs, it's not as simple as just looking at fees and comparing them to some industry average."

Instead, Musto proposes, advisors can get ahead by educating plan sponsors and helping them design benchmarking processes that compare apples to apples. When comparing against averages, inevitably, some plans are going to stand out as being "crazy expensive," he notes, but those plans often have a more complicated design that does more things for participants and perhaps facilitates better results. "I would view that as a good thing, not a bad thing," he says. "I think the best retirement advisors get it, but I think others are missing the boat here."

He argues that there are areas in the new rules where the best advisors are really positioned both to help clients and be successful themselves. One is benchmarking their fees and value against plans of similar design.

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