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Lowering Costs is Rising Concern for FT Top 401(k) Advisors

By Garrett Keyes September 27, 2018

The Financial Times, FA-IQ’s parent company, has just issued the fourth edition of its top 401(k) retirement plan advisors report, and these top advisors reveal they are increasingly concerned with reducing costs.

Last year regulation was the top concern of these leading advisors, but with the death of the Department of Labor’s “fiduciary rule” – which purported to require brokers to act in the best interest of their clients but was vacated earlier this year – advisors have turned their heads to managing and reducing costs.

This year’s batch of top advisors are also increasingly using passive funds, according to Loren Fox, director of Ignites Research and head of the FT 401 ranking. Compared to 2017, FT 401 Top Advisors are using passive funds 6% more frequently in the defined contribution plans they manage.

Fox says the increased use of passive strategies stems from a desire to cut costs. The difference in management fees between using active or passive funds in a DC plan has the potential to significantly affect costs, says Fox.

This year the average FT 401 advisor manages $1.3 billion in DC plan assets and has an average of 77 DC plan clients – an increase of 26% in assets and 12 clients per FT 401 advisor over 2017.

Loren Fox

The Financial Times list of top 401(k) retirement plan advisors is made in conjunction with Ignites Research. Candidates for the list are evaluated on criteria including: DC plan AUM, DC plan growth, specialization of the DC plan, business experience, advanced credentials, compliance, and employee participation.

Read the Financial Times special report on top retirement advisors here.