For example, a number of FIA institutional clients have asked the firm to handle the personal assets of employees. In addition to target-date funds, many of FIA’s clients are considering some sort of managed account program for their plan.
“Their needs vary from investment advice and retirement planning to broader financial planning. We currently provide investment advice, but are considering adding more planning services,” said Wetzel. “And what’s needed at the individual level is different than what is needed at the plan sponsor level. We realize the advisors that can service the space would be those with individual consulting skills, such as CFPs and CPAs.”
In response, the firm, with $24 billion in institutional assets and $500 million in individual assets under management, is expanding its individual advisory practice.
“We’re trying to bring on a couple of new advisors or acquire a small firm to service the individual marketplace,” Wetzel said.
In the last 18 months, Wetzel and one of his partners, Christopher Rowlins, are increasingly seeing institutional clients require their advisors to declare their fiduciary status.
“Disclosure on fiduciary status within the institutional space is an impetus for the consolidation. It’s more complex to stay on top of the rules and regulations and signing on as a fiduciary will force some advisors to re-evaluate their business model,” Rowlins said. “It has become an absolute baseline requirement. Advisors that don’t want fiduciary status will get out of the industry.”
With the defined contribution market poised to increase to $3.5 trillion in 2015, a decrease is anticipated in the number of individual practices that are part-time focused on retirement.
“Advisors will have to decide whether they want to be an institutional provider or focus on individual wealth management because it will be more difficult to do both over time,” said Dalessio.