Advisors who work with retirement plans will see double-digit growth in the next three years. According to a new study by Diversified, a large retirement plan provider, mandated fee disclosures and health care reform will fuel the growth for these individuals as practices transition from regional to national and merger and acquisition activity increases.
According to the report, the market share of professional retirement plan advisors in the $10 million to $500 million market will grow to 40 percent from 25 percent and the number of plan advisors will increase by nearly 50 percent during the next three years.
To support this growth, firms will need to focus on recruiting and developing talent, as the pool of qualified candidates may not be large enough to meet demand.
"Thousands of advisors generate some revenue from retirement plans, but the number focused primarily or exclusively on mid to large plans is estimated at approximately 550 professionals," said Joe Masterson, senior vice president and chief sales and marketing officer of Diversified. "With an increasing number of health and welfare advisors and wealth management advisors poised to migrate toward this market to enhance their practices, the industry is about to embark on a new era of growth and development."
The Advisor Practices of the Future 2012-2015 study is based on insights from Diversified and more than 50 retirement plan advisors, consultants and practice leaders.
The study also predicted that advisors would put a greater emphasis on participant outcomes in the next three years. As the transition from defined benefit pension plans to defined contribution plans continues, plan sponsors interest in measuring participant retirement readiness will surge.
There will be a major consolidation of regional firms into national practices, with 90 percent of advisors expecting merger and acquisition activity to increase in the next few years to achieve economies of scale.
The study found that the percent of plan sponsors in the $5 million to $500 million asset range who rely on an advisor, paid on retainer, will increase to 49 percent in 2015 from 33 percent in 2012.
"Change is inevitable for professional retirement plan advisor practices," continued Masterson. "The Advisor Practices of the Future 2012-2015 report aims to help advisors anticipate the new challenges and opportunities that will surface as the industry is transformed."