First Allied ‘Aggressively Upgrading’ Presence in 401(k) Space

Firm plans to help advisors ensure ERISA 408(b)(2) compliance

First Allied Securities is ramping up its presence in the defined contribution plan space, said Guy Hocker, the newly hired senior managing director of the firm’s pension services division, in an interview Wednesday with AdvisorOne.

“First Allied has a vision of upgrading its presence in the 401(k) space,” Hocker said. “It’s recognition of the evolution that has occurred with defined contribution plans. I don’t have to tell you that it’s very timely to be asserting oneself in the retirement sector of the business.”

Hocker said he’s concentrating on advisor and client knowledge of 401(k)s and what they have to offer, but as a practical matter, a major priority is helping to ensure the individual advisors and affiliated RIA firms with which the broker-dealer partners are 408(b)(2) compliant.

According to the Department of Labor, in order to be 408(b)(2) compliant, plan fiduciaries are obligated to “act prudently” in selecting service providers and ensure that no more than reasonable compensation is paid for services provided to plans, taking into account the direct and indirect compensation received by the service provider.

“Thus, a plan fiduciary must have sufficient information regarding fees and compensation that the service provider receives and whether there are relationships or interests on the part of the service provider that may call into question the objectivity of the service provider in providing services to the plan,” according to DOL.

“And what’s wrong with that?” Hocker rhetorically asked. “Telling people what you will charge them and assuring transparency is a good thing. We want to be a part of what’s gaining form the legislation, rather than what’s losing.”

When asked about what First Allied does better than competitors in the 401(k) space, Hocker hesitated to answer because he is still so new to the firm.

“But with that caveat, it’s rare that you have a broker-dealer that has a consultative approach with TPAs,” he said. “That side of the business is more process-oriented, where it’s all about economies of scale and getting the lowest price. That’s not something that dovetails well with the smaller plans that most advisors align themselves with. So the consultative approach that we have with our advisors and TPAs is something that separates us.”

Hocker, 47, has more than a decade of experience as a practicing ERISA lawyer. Before joining First Allied, he was President of Benefit Planning Inc., the Los Angeles office of National Investment Managers Inc.

Hocker is a member of the American Society of Pension Professionals and Actuaries (ASPPA), the National Institute of Pension Administrators (NIPA), the Western Pension and Benefits Conference and an associate member of the National Tax Sheltered Accounts Association (403(b) emphasis). His professional designations include ASPPA Certified Pension Consultant and ASPPA Associate Professional Member.

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