TIAA Study: Target Effectiveness of Retirement Planning Advisors


Retirement planning advisors will face an uphill battle over the next few years as they seek to maximize operational efficiency while also offering a broader range of products and services to plan sponsors, according to advisor conversations hosted by TIAA. It is said that it will be forced to

When we asked more than 60 retirement planning advisors about their priorities for the next three years, they listed the following in order of importance: Grow and sustain your business. improve our product and service offerings; According to his October and November 2022 study by TIAA and Chatham Partners, efficiency is improving.

TIAA’s head of consultant relations, David Swallow, says the combination of these priorities has advisors looking to both reduce costs and find new revenue streams.

“Looking across the market, we see a lot more competition in advisory services,” says Swallow. “They are bringing additional products and services to market. They are looking for other ways to grow their revenue. We offer a very wide range of services.”

Swallow points to the recent trend of retirement advisor consolidation, where professional advice is being bought up by large aggregators who offer more services to their clients.

“The reality is, if you can’t scale and you can’t be more efficient, then the question is, ‘Should I join a larger force that can build all the infrastructure and provide all the services for me? ’ Are you still doing what I love?” he says.

Swallow believes some boutique shops are finding it harder to compete with big aggregators. “Because of what it can do in terms of its size and pricing, and the breadth and depth of its differentiating services.”

Participant engagement

When asked what they think plan sponsors need most from retirement plan providers, advisors cited subscriber services and education as areas of greatest need. This preceded plan management support and strong customer service, which Swallow sees as a new sign of the times.

“What we hear is that there is a real desire among project sponsors to involve residents,” Swallow said. “Consultants and advisors have heard this from their clients and in many cases are now offering these services.”

He notes that typical scheme advisors have historically not been very involved with participants, often leaving them to record keepers or another third-party provider.

Some retirement consulting firms now offer this service, while others do not, but as long as the needs of a particular plan sponsor are met, it’s good for the market, Swallow said. says.

Focus on fiduciaries

When asked to speculate on their clients’ key priorities over the next three years, retirement consultants led compliance and governance, then maintaining and delivering competitive benefits, and then participant engagement. pointed out.

Swallow doesn’t necessarily think its customers themselves rank compliance and governance high. But he believes advisors see their fiduciary role as an important part of delivering value, both in plan-driven investment decisions and in broader areas such as SECURE 2.0 regulation and opportunity readiness. I believe.

One area the advisors specifically talked about was preparing clients for the Loss Catch-Up Contribution for High-Wage Employees, which will take effect in 2024. This is especially true in the non-profit sector, where TIAA focuses most of its business. According to Swallow.

“A significant number of our clients do not have Roth today,” he says. Advisors have an opportunity to “make sure their clients are ready for next January.” Because then you need to incorporate sources of losses into your plans to allow catch-up of funds.

When asked about key trends across the retirement advice industry, advisers said financial health, retirement income and fee compression were the top areas to watch. Swallow said he was pleased that TIAA came in second for retirement benefits. He said the company has long focused on retirement options, such as annuities, in its 403(b) plans and has recently focused on adding it to its 401(k) plans. rice field.

Overall, the Chief Consultant Relations recommends that advisors seek to anticipate the major trends in the industry and the needs created by pending legislation to nurture the business.

“It appears [clients] You learn your worth and the importance of being in front of these things,” he says.

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