1. Adapt, Grow or Perish
New Retirement Plan
Business Model
Presented by Michael Sanford
July 21, 2014

2. Analysis of the Current Retirement Plan Industry
 The retirement plans market and financial service industries are
evolving, but the industry has been slow to react to major changes:
 Passage of the Pension Protection Act (PPA)
 Numerous law suits challenging fees paid by plans
 Directional clarity on fee disclosure regulation by the DOL
 Increased reliance on Registered Investment Advisors
 Changing nature of investment options:
1. Qualified Default Investment Alternative
2. Exchange traded funds
3. Asset allocation funds (Target date funds)
4. Collective Investment Funds
 Many business models used in the trade are no longer valid
 An industry in transition, regulators will force the industry to evolve in
a direction it would not normally pursue and this will drive the industry
to contract

3. Consolidation and Restructuring
 Contraction and change will also force significant market share to change and
new services providers will emerge:
 BISYS sold its business to a private equity firm that considers the
future in this trade to be promising
 SunLife exited the business for lack of scale
 Bank of California (one of the larger bank players) also exited the business for
lack of scale
 Oppenheimer and Franklin Templeton exited the recordkeeping business to
focus on its core business of DCIO
 Merrill Lynch exited the third party business by selling that part of
The INVESCO Retirement Group sold to Merrill Lynch (BofA)
 Fiserv, Inc sold its trust/custody business to TD Ameritrade which had a strong
interest in providing such services to the institutional community – an area it
had not focused on in the past
 Broadridge Financial Solutions acquires Matrix Financial Solution
 Consolidation has been in process for years but the regulatory scrutiny will
intensify the consolidation of investment management, service provider,
broker/dealer, and the banking industry

4. Joint Distribution
 Many of the investment type providers will drop their retirement
programs and pursue “joint distribution.” Brokers dealers will merge
and many investment advisors will leave the business
 The changing environment will provide an enormous opportunity for
specialist with the right business model and vendors that support them
in their ventures
 Providers that do not embrace specialist services and leverage their
competitors via joint marketing or services could find themselves at a
disadvantage for many years
 Providers must participate in joint distribution and consolidation to grow
their business
 Most single source providers are no longer in premier positions to
continue in the industry
 Providers will be wise to incorporate (joint distribution) alliances to the
path of success

5. Path to Success
 By developing joint distribution programs, service providers will have
significant means to increase gross sales in the first year
 Keys to success and critical factors in development of a joint distribution
venture:
 Identify critical strategic partners
 Institute joint distribution program
 Begin an alliance partners program
 Develop a service and support center
 Provide a private label option package

6. Goals for Success to Increase Market Share
 Establish services as the market leader in quality and value
 Maintain good working relationships with present alliances markets by
meeting with their decision makers and designing a mutual plan for
success - get commitments for support and products that can be
marketed by their staff
 Investigate new markets for distribution opportunities. Support these
new markets with funding and materials
 Provide sales incentives to alliance partners’ staff on joint distribution
program
 Complete inspection of program’s specifics well in advance of a launch
 Provide superior services and products that will add creditability and
value to joint distribution programs, as well as establish a successful
partnership with clients, staff members, and alliance partners, that
respects the interest and goals of each party

7. Implementation of Strategic Goals
 Knowledge and expertise of alliance partners to develop joint
distribution
 Policies that are affordable and easily comprehendible and meet the
expectations of their clients
 Policies and endorsements delivered on time with minimal errors
 A commitment to an annual review for all alliance/joint distribution
programs

8. Summary
 The retirement industry is evolving in a new direction. Service
industries must seek out and acquire joint distribution relationships to
survive the changing climate. In order to be successful in a joint
distribution program, one must put in place a solid business model for
specialty services and support their ventures. The changing
environment will provide an enormous opportunity for the specialist with
the right business model and vendors that support them in their
ventures