PLANADVISER - July/August 2017 - 48

micro scope
The Best Path Forward
A
How advisers focused on micro plans grow their business
dvisers who specialize
in the micro retirement
plan market-i.e., in plans
with $10 million or less in assets
under advisement (AUA)-say
that fee compression has made
it more imperative than ever
that they grow by expanding the
number of clients they serve and
their AUA.
Steve Ulian, head of institutional
sales and relationship
management
for Bank of
America Merrill Lynch in New
York City, calls this strategy
" critical. It is becoming increasingly
hard to make money
given the fee pressures " and the
growing demands of sponsors-
including those on the low end of
the market, he notes.
When advisers who specialize
in the micro-plan market are
asked whether they would
prefer to grow their business
by taking on more clients or
moving upmarket, many say
they want to remain focused
on smaller plans because of the
close relationships they have
with their clients, the lighter competition they encounter
and the greater impact they can have on smaller vs.
larger plans.
In fact, the 2016 PLANSPONSOR Defined Contribution
(DC) Survey found that only 60.7% of plans with $5 million
to $10 million in AUA have an adviser, compared with
78.9%% of plans with $50 million to $100 million-meaning
there is significant opportunity for skilled advisers to win
new business without competing against each other.
It may make sense for an adviser focused on micro plans
to move upmarket if he is a registered investment adviser
(RIA) and works alone rather than being part of a team that
supplies deep investment, educational and communication
support to bring to the client, Ulian says. " If you are
unable to scale that across many plans, you may be better
off having fewer plans with greater assets, " he says.
But adviser sources for this story who focus on micro
plans prefer to remain in that space. " It's a better customer, "
says Jim Sampson, director of retirement advisory services
at Hilb Group Retirement Services in Warwick, Rhode Island.
" You actually have a relationship because you are dealing
with the owner or owners of a small private business as
opposed to boards or committees that turn over every three
years. It makes for a longer-term client, and there is not as
much competition for the business. "
" Plans with $3 million to $50 million in assets don't have
staff dedicated to the retirement plan, need a lot of help, and
are willing to pay for that service, " agrees Vincent Morris,
president of Bukaty Companies Financial Services in Overland
Park, Kansas. " Once you go bigger than that, it becomes
very competitive, " with many people vying for the business.
Moreover, it cannot be overlooked that 98% of businesses
in this country are small businesses, says Tom
Foster, national spokesperson with MassMutual Retirement
Services in Enfield, Connecticut. " There is much more
opportunity " for retirement plan advisers willing to work
with smaller plans and companies.
Tyler Harrison, managing member of Efficient Plan in
Denton, Texas, argues that margins are higher when serving
smaller plans. Additionally, he says, if he had larger clients,
48 | planadviser.com july-august 2017 Art by Sonny Ross
http://www.planadviser.com
PLANADVISER - July/August 2017

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