The More Things Change, Will They Remain The Same?

It seems to me that our industry has rewarded us all well when serving our clients throughout the years. The same landscape is changing as we face technological advances, the demand for greater regulatory oversight, and the compression of our market space.

I believe it was Bob Dylan¹ who recorded the song "The Times They Are a Changing," and they are. If that is the case, what as advisors and as an industry should be our response? I once heard it said that the way we do things will change daily, but why we do those things should never change? After 41 years in this industry, I still believe that, as do most of us today. But we cannot ignore the changes and how they impact our marketplace. We can complain and concede; or we can propose and participate as new challenges emerge.

We watched the 403(b) regulations come and had no answer except to respond to the changes. As a result, we saw market share decrease and many clients left underserved. We saw the fiduciary rule come and go (to some extent), but the message was clear. In the 403(b) industry, we seem to be the culprit for what ails consumers to adequately plan for retirement; it’s all about fees. The focus seems to be on the costs of the products we deliver more so than on the services we provide. Are there abuses and “bad apples”? Of course, as is the case in any industry. We would do well to remember that cost is an issue in the absence of value for any product or service delivered in the marketplace today.

If we are destined to deliver our service with wholesale pricing it is possible our marketplace may be changed forever — and for the worse. That does not mean price is not important; but the value is usually in the eye of those who receive the service. Our marketplace is unique. We assist educators and public sector employees in accumulating additional assets to supplement their retirement. In most cases, it is in a non-ERISA world with no employer match and sold one person and kitchen table at a time. In other words, RETAIL delivery.

The point is we need to stay focused on what we do, and never forget why we do it. As our industry faces more and more scrutiny, it is important to have our interest and the interest of our clients understood by those who want to minimize our value in the client-advisor relationship. That is called advocacy. That takes time and resources. So in a changing landscape, let’s remember as well to support those efforts and let’s propose to put our money where our mouth is — or risk having no voice at all.

Frank Owen is President of FR Owen & Associates.

¹ https://en.wikipedia.org/wiki/The_Times_They_Are_a-Changin%27