Banks and other financial services providers are increasingly viewing financial advisers as an important conduit for selling wealth management products, according to several industry players.
A study released last Wednesday by Fidelity Investments said that 94% of advisers believe retirement income planning services will spur growth in their businesses during the next five years.
The adviser channel is becoming a key point of entry to the retirement market as investment offerings become more complex, prompting both institutional and retail investors to seek customized advice, said Joseph Ready, the director of Wachovia Corp.'s retirement services unit in Charlotte. Products such as lifecycle funds and target risk funds have compounded investors' confusion, he said.
Wachovia expects advisers to see a surge in retirement plan business within two years, he said, particularly for small to middle-market plans with $1 million to $30 million of assets. "Companies have said, 'Gee, I need some help to work through all these complexities.' They've logically started to turn to advisers," he said.
"When you look at who's going to put business on the books, it's going to be the smaller plans," said Frank Bruno, a senior vice president and the national sales director at TruSource, an arm of San Francisco-based Union Bank of California that focuses on distributing retirement plans for insurance companies, mutual fund families, and other financial services providers. "They feel comfortable with an adviser who's going to hold their hand."
Advisers are beginning to make the transition from accumulation-focused advice to guidance to help investors secure a steady stream of income in retirement, said Robert Reid, the president of Wachovia's newly created retirement and investment products group, which targets retail investors.
"Historically, financial advisers were asset accumulators and investment advisers," Mr. Reid said, "and what we're preparing to do is to continue that but expand that skill set to include life-goal planning."
"It's a very small group of players who are focused on that income planning/decumulation side of the business," he added. "It's a relatively new trend, and I don't think the market has jumped on that yet. Two years from now, it will be more apparent."
"It's a focus on income and retirement versus 'Save blindly and hope you have enough money,' " Mr. Ready said.
"I think retirement planning is now the challenge," said Geoffrey Bobroff, the president of Bobroff Consulting in East Greenwich, R.I. "The big question is, 'Do people have sufficient income to meet their needs in retirement?' " Mr. Bobroff said banks that have invested substantially in expanding the adviser channel are well poised to tap the retirement income planning market in coming years and other banks will probably stay on the sidelines.
Wachovia says it sells about 40% of its retirement plans through advisers and expects the channel to grow substantially in the next two years
Wachovia's services for advisers selling retirement services include personalized advice platforms for plan participants and individual investors, along with analytical investment tools such as Morningstar and Lipper and educational articles on industry trends.
The wave of baby boomers approaching retirement age presents significant opportunities for advisers and the institutions that sell wealth management products through them, said Marty Willis, an executive vice president at Fidelity Investments' institutional services unit.
"They have seen this with their own books of business," Ms. Willis said. "They are waking up the American public to the need" for retirement income planning.
Nearly one-third of 700 advisers surveyed by Fidelity said they expect their business to at least double in the next five years. The survey took a random sample of advisers both inside and outside Fidelity's network.
