Business Development


RIAs Roll Into 401(k)

RIAs—both “pure” RIAs and dually-registered reps—are playing an increasingly prominent role in providing advisory services to 401(k) plans. It’s a two-way movement with RIAs expanding into the 401(k) world from wealth management and longstanding 401(k)-focused advisors reorienting their practices to become fee-based formal fiduciaries. This convergence represents recognition from both sides that clients have to be served differently in a changed world. Fully 42% of active 401(k) advisors report doing at least some business as a RIA. Among Heavy advisors (those with 60% or more of their total practice revenue derived from the sale or service of 401(k) plans), that jumps to 66%.

Write 401(k) Business as a RIA

By 401(k) Share of Income

Do you write any 401(k) business as a Registered Investment Adviros or RIA or not?

A closer look at the RIA 401(k) advisor reveals that 13% of all advisors can be categorized as “pure” RIAs (up from eight percent three years earlier) and an additional 29% as “hybrids” or dually registered advisors (sums to the 42% of advisors writing any 401(k) business as a RIA). These hybrids are a particularly interesting and attractive segment of the 401(k) advisor population with average AUM and new asset sales higher than “pure” RIAs and much higher than non-RIA advisors. Hybrids are disproportionately likely to be affiliated with specialty retirement BDs and IBDs, less likely to be affiliated with wirehouse- and insurance-affiliated BDs.

401(k) AUM

By RIA Statues

  Share of all 401(k) Advisors Average 401(k) AUM
All 401(k) Advisors 100% $76M
Hybrid RIAs 29% $132M
Pure RIAs 13% $89M
Not a RIA 58% $47M

RIA advisors have distinctive preferences when it comes to selecting and evaluating a 401(k) provider. The must-haves include open architecture, complete fee transparency and relatively low costs (investment costs and total costs) followed by flexible advisor compensation arrangements and the ability to create custom portfolios. RIA advisors place less value on due diligence investment platforms, sales support (including both the internal desk and field wholesalers to help with case-based sales), enrollment support, fiduciary warranties, IRA rollover capture programs and the provider’s brand.

About the Research

These findings are based on telephone interviews with a representative crosssection of 628 advisors deriving income from 401(k) plans conducted in waves between June, 2010 and May, 2011.

About Brightwork Partners, LLC

Delivering both multi-client and custom studies, Brightwork is a research-based consulting firm with a special focus on investment, product and distribution issues in the retirement services industry; .

For more information: Merl W. Baker or Ronald L. Bush, 203.487.2000; ,







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