April 25, 2006

Two Big Initiatives for SIA Group

A "tremendous opportunity" seen for independent B/Ds

Securities Industry Association President Marc E. Lackritz opened the SIA's Independent Broker/Dealer Conference in Atlanta April 24, saying that the association is working on two big initiatives this year: pension reform and management of expenses.

There is "tremendous opportunity" for broker/dealers today, especially in the retirement savings and distribution arena, Lackritz said, where some 76 million baby boomers are retiring or preparing to retire, many without a traditional defined-benefit pension plan. Now on their own as far as saving for retirement, "most people are overwhelmed by the number of choices," and "complications in trying to plan for the future," says Lackritz, adding "most people spend more time planning their next vacation than they do for their retirement." He cites the array of defined contribution vehicles, and said the SIA would like to see contribution amounts increased, and defined contribution choices refined into a "couple of simple plans."

Even individuals with company-sponsored 401(k) plans--where there is opportunity to save--are hampered by current rules on the advice issue, Lackritz says. With the current pension bill still in conference, he would ask legislators: "Would you rather that 40% of employees [with defined contribution plans like 401(k)s] get no advice? Or that there's advice with disclosure?"

On the expense management front, compliance expenses have doubled from 2003 to 2005, according to an SIA study, and Lackritz points out that it makes sense to have one rulebook, and one entity for enforcement. Recently, there has been "competition among regulators," according to Lackritz, "to see who will get the headline first." He called on broker/dealers to use technology to achieve compliance efficiently, with lower costs.

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