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Advisors Care About Simplicity and Compensation

by Anu

Last month I was fortunate to moderate a panel at DST's annual Retirement Forum. On a brilliant day in Chicago, three seasoned, top producing advisors instructed asset managers on the challenges of selling 401k plans to small business owners.

I re-learned three important lessons:

1. Finding leads is hard. These advisors are constantly hustling and exploring all avenues in order to grow their businesses.

2. Compensation is shifting. Compensation needs to be fee-based and not commission-based for new and small plans. Two of the advisors thought that $800K was the bar before commissions could even be considered. Those advisors referenced a Capital Group plan that compensates advisors more fairly by providing compensation floors in case commissions are insufficient.

3. Entrepreneurs do not ask for specific funds. Their clients are not looking for any specific fund manager or set of choices. Primarily, they want two features:
- Easy-to-use Web site for plan participants
- Low, low cost

As the Defined Contribution Investment Only business grows, asset managers should look to the lessons above and follow the mantra: Simplify the advisor's life, ensure that compensation is fair.