Trend Analysis and Regulatory Impact

As our advisor partners know, the retirement marketplace is ever changing and morphing. Fortunately, APG has an in-depth and a vastly experienced team to ana- lyze these changes. Even more importantly, we are in a position to articulate these changes into predictable trends and opportunities on behalf of our advisor partners.

These changes occur on an interrelated basis typically within the regulatory agencies and vendor/recordkeeper environment. There is a classic cause and effect relation- ship once a new regulation is created, with a correlated reaction to anticipate what might resonate within the market. APG's job is to correctly interpret and forecast these correlated changes. Once this analysis is complete, there are substantial ben- efits to our advisor partners to create additional business.

From the regulatory perspective, we see significant trends emerging from the Department of Labor's Service Provider Fee Disclosure Regulations under Section 408(b)(2). Since there is now a required advisor service statement or agreement, the description of tangible quantification has emerged. One area that APG has aided our advisor partners with is their definition of a value proposition. The definition is clearly different between the RIA and broker model. Since the service model must be explicitly described, this is an excellent opportunity to promote services. Whether it may be your dynamic education services or a comprehensive fiduciary governance process, articulation to the Plan Sponsor is a definite differentiation! Because servic- es are being quantified and measured, additional trends are developing such as flat dollar fees versus basis points. Helping our advisor partners understand this issue is critical in pricing plans appropriately and maintaining profitability. One of the major hallmarks of the fee disclosure regulations is the reasonableness of compensation. Specific areas of advisor compensation such as finder fees upon plan conversion, must be carefully reviewed. Whether it is with regard to the conversion and/or education process, proper detailed documentation is warranted!

As the regulations change, we often see the recordkeeper community appropriately offer more solutions. As the fiduciary emphasis grows more intently, so does the RIA versus broker model. It is APG's goal to help our advisor partners understand where the product enhancements may benefit their particular practice, what the differences are, and how they are changing the competitive landscape. For example, emerging in the marketplace are core fiduciary services such as ERISA Section 3(21) investment advisory services versus ERISA Section 3(38) discretionary investment advisory services. Understanding the true value, differences and opportunities of these services for our advisor partners and their clients is APG's true value add. Additionally, concepts such as ERISA Section 3(16) outsourced plan administration must also be analyzed and summarized in a comprehensive fashion so our advisor partners can help plan sponsors make informed fiduciary decisions.

Lastly, the issue of offering participant education versus advice is active within the recordkeeper and advisor community. The recordkeeper platforms are offering varying solutions to accommodate this diverse issue. Understanding the fiduciary implications, the product specifics and deliverables will give our advisor partners a significant advantage, APG stands ready in helping with this process!

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