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August 31, 2016 at 02:28 AM
There is an exceedingly rare three-headed new trend in client and asset gathering in our investment advice world right now.
In my 33 years as an investment advisor and 17 years working on individual company 401(k) retirement plans, I can’t recall a timelier, more unprecedented prospecting opportunity.
The trend’s first force of nature is the growing avalanche of company 401(k) retirement plan lawsuits. From Fortune 500 companies to colleges and universities, the list of class-action lawsuits grows longer every day.
Even some insurance companies and brokerage firms are being sued for excessive investment fees and poor investment performance by their employees. How is that even possible? That’s like a doctor suing his medical group or hospital.
I knew the company retirement plan lawsuit headlines were ringing loud and clear for individual investors the day that my son called me from his college. “Hey Dad,” he said, “did you hear that my university is being sued over its retirement plan today? Isn’t that the same thing that you help people with?”
The second force of investment advice news began in April. (Have you read or heard anything about the new Department of Labor Fiduciary Rule, and when was the last time that the investment advice industry rumor mill was geared up to the current level?)
The new DOL Fiduciary Rule is the most significant change in the history of ERISA— or more importantly, since you have been an investment advisor.
The heightened concern and awareness of a fiduciary standard of investment advice creates a huge client and prospect asset-gathering opportunity. Your individual company 401(k) retirement-plan clients are finally getting legislation to provide for their best interests. You need to get to the front of that line.
The third force of change in the investment advice world is the impact of a recent study by Casey Quirk by Deloitte. A link to the study can be found here.
The results of the survey reveal the stunning revelation that $7 out of every $10 invested in mutual funds in 2015 was invested in a passive mutual fund.
The survey clearly summarizes the individual investor investment product trend that some individual investment advisors would like to ignore. That is, their individual investor clients are becoming increasingly skeptical of actively managed mutual funds, the high annual investment costs and the lack of investment returns.
