First Allied, LPL aim to sell customized 401(k) plans for the small business market

A few months after LPL Financial made a big move in the 401(k) industry niche, First Allied Securities Inc. has hired a top ERISA lawyer to expand its presence in the market, too.

The San Diego-based First Allied, which has 900 advisors (of which 40% oversee qualified plans other than IRAs), hired Guy J. Hocker as senior managing director of its pension services division.

Hocker’s primary objective will be to help custom design 401(k) plans for the independent broker-dealer’s reps to sell to business owners. Custom-designed, rather than boilerplate plans, are a key differentiator in the market, which grows more competitive by the month, says Adam Antoniades, president of First Allied, who made the hire.

LPL acquisition

Antoniades called attention to the fact that he’s not alone in his strategic orientation – after all, the move comes a few months after LPL announced plans to acquire National Retirement Partners Inc. (NRP), a national network of more than 150 advisor member firms in 39 states focusing on retirement plans.

Based in San Juan Capistrano, Calif., National Retirement Partners provides plan consulting, fiduciary best practices and investment due diligence to retirement plan sponsors and their participants, according to the company’s website. Meeting fiduciary needs is becoming big business. See: Why the DOL’s proposed 401(k) rules could ding brokers and leave the spoils to RIAs

Getting proficient in this endeavor is necessary for the industry, Antonaides says.

“It’s a compentency that broker-dealers are going to have to deliver. We’ve done it for three to four years and we think it’s going to get bigger.”

Guy Hocker: My marketing model and
growth strategy has always been advisor-centric.

Yet growing a 401(k) business is a balancing act for IBDs, according to Sean Cunniff, research director in brokerage and wealth management for TowerGroup of Needham, Mass.

“Everyone is looking for new sources of revenue and this is a new market but because of all the complexity of the ERISA regulations, it can be high risk so they say: if we’re going to do it, we’ve got to do it right.”

First Allied’s Hocker, 47, has more than a decade of experience as a practicing ERISA lawyer. Immediately prior to joining First Allied, he was President of Benefit Planning, Inc., the Los Angeles office of National Investment Managers, Inc., [OTCBB: NIVM] a publicly held company.

Marketing model

“My marketing model and growth strategy has always been advisor-centric and I’m thrilled to see the same focus in First Allied,” Hocker said in a prepared statement.

First Allied has 45 people on its Consulting Group staff doing this kind of work on about 1,000 retirement plans and has billions of dollars in qualified plan assets under administration though it declined to specify how many.

“We see it as a significant play for the future,” Antoniades says. “The addition of Guy Hocker to our already seasoned staff of in-house subject matter specialists raises our offering to our advisors and their clients to new heights.”

See: Why gathering big-time 401(k) assets — and charging regular fees — is well within reach for most experienced RIAs

First Allied is aiming its offering at advisors serving both the defined benefit and defined contribution space.

Critical tax management

The former plans are critical tax management solutions for small business owners, said Matt McGinness, managing director – advisory consulting services for First Allied. “We find that advisors typically need a great deal of support in profiling opportunities in this space and making a presentation to an existing client.”

First Allied places specialists at the advisors’ disposal, he said. First Allied also has a third-party administrator, he said.

Because so many assets are parked in defined contribution plans, he said, accumulating assets depends on winning that business.

Matt McGinness: Advisors typically need a
great deal of support in profiling
opportunities in this space.

“We also provide specialized accumulation and income plans for business owners that address the structure of their assets, risk management/insurance, portfolio design, and estate planning,” he said.

Greenbook

First Allied’s initial big move into the 401k market came in 2006 when its parent, Advanced Equities, acquired Greenbook Financial Services, Inc. and its CEO, Robert S. Holcomb became chief marketing officer of First Allied. Hocker reports to him. Greenbook was best known for servicing physicians practices and it also handled other small businesses with a hunger for 401(k) plans.

LPL’s deal with National Retirement Partners, meanwhile, was scheduled to close during the fourth quarter. LPL did not comment about it citing continuing quiet-period restriction from its IPO, but said in an earlier statement that the new unit will be called LPL Financial Retirement Partners; William Chetney, NRP’s founder, CEO and president, will head the unit.

The attractiveness of the 401(k) business lies in one of the larger macro challenges faced by investors in the United States, Antoniades says.

“We see retirement of the mass affluent as a significant challenge,” he says. “This is a giant asset-gathering mechanism for financial advisors.”

And one side of the retirement business feeds the other, according to McGinness.

Unlocking assets

“Winning the accumulation business is the best way to set yourself up to address the retirement income needs of clients with substantial assets locked up in defined contribution plans.”

But retirement plans are an area of complexity requiring people with sophisticated training and experience.

Hocker is a member of the American Society of Pension Professionals and Actuaries (ASPPA), the National Institute of Pension Administrators and an associate member of the National Tax Sheltered Accounts Association with an emphasis in 403(b) plans. His professional designations include ASPPA Certified Pension Consultant.

Hocker earned his law degree from William Howard Taft University and his bachelor’s degree in business administration from the Walter Haas School of Business at the University of California, Berkeley.