In a recent episode of 401(k) Real Chat, Fred Barstein, CEO of TRAU, TPSU, and 401KTV, interviewed Mike Shamburger, Head of Core Markets and Retirement Plan Sales at T. Rowe Price, about the shifting dynamics between advisors and record keepers in the defined contribution (DC) space. The discussion focused on how industry consolidation and the convergence of wealth and retirement planning are reshaping the retirement landscape—introducing new challenges and opportunities for advisors.
Key Trends Shaping Retirement Advisory
Mike Shamburger identified several key trends influencing the advisor landscape. First, advisor consolidation is driving changes in business models, as many advisors are joining larger firms through acquisition. This is pushing advisors, particularly those specializing in retirement planning, to expand their services and explore new revenue streams to stay competitive.
Next, Mike emphasized the convergence of wealth and retirement services, which is transforming how advisors and record keepers collaborate. T. Rowe Price’s comprehensive offerings, spanning wealth management, record-keeping, and DCIO services, allow it to support advisors across the full financial spectrum. This convergence presents a significant opportunity to deliver holistic financial solutions to clients.
Lastly, Mike highlighted consolidation on the record-keeping side as another factor causing disruption. As record keepers merge and reduce fees, advisors are being pressured to adapt their strategies to maintain stability in an increasingly competitive and fluid market.
Managing Conflicts and Building Partnerships
Fred raised a critical point regarding potential conflicts between advisors and record keepers as both seek to engage plan participants. While they traditionally partnered at the plan level, the growing overlap between wealth and retirement services has led to competition for participant engagement.
Mike acknowledged that fee compression has affected both record keepers and advisors. Some record keepers have responded by expanding into wealth management to secure new revenue streams, leading to friction with advisors. However, T. Rowe Price’s business model remains unique, as it focuses exclusively on record keeping and investment management. This conflict-free approach allows T. Rowe Price to collaborate closely with advisors and support their strategic priorities without competing for wealth management services.
Read the Full Transcript Here:
Fred Barstein:
Greetings and welcome to 401(k) Real Chat, where we interview leading and innovative DC industry leaders. My name is Fred Barstein CEO at TRAU, TPSU and 401KTV, and contributing editor at WealthManagement.com’s RPA omnichannel. Today we are chatting with Mike Shamburger, head of core markets and retirement plan sales at T. Rowe Price. Welcome, Mike.
Mike Shamburger:
Thank you. Thanks for having me, Fred. I appreciate it.
Fred Barstein:
So Mike, the relationship between advisors and record keepers is changing and evolving. Can you discuss how that is changing, especially with the convergence of wealth and retirement at the workplace, as well as industry consolidation?
Mike Shamburger:
Yeah, I think there’s several trends, Fred, that I think are changing and evolving how advisors engage in the retirement sector. I think one important trend that we’ve both seen is advisor consolidation. So a lot of advisors are joining new firms that are being acquired, which is changing their model a bit. And a lot of the strict retirement-only advisors that we’ve worked with for years and years now are looking for ways to develop additional revenue streams for their practice, and they’re almost being required to do that by their new ownership.
So I think that’s an evolution point or trend that we’re seeing in the marketplace. I think secondly, the convergence of wealth and retirement, as you mentioned, it’s happening everywhere, and I think T. Rowe Price puts us in a very unique position, I think, because we have very strong businesses that serve the advisor across the full spectrum of the practice from wealth all the way through to record-keeping, and then DCIO, which is kind of in between.
So we’re a little bit unique in that sense. So I think that’s a trend that creates some opportunity. And then lastly, the other trend I think advisors really need to be tuned into is the consolidation on the record-keeping side, which we anticipate will continue, and that creates a lot of disruption for advisors as they built a successful book of business. It puts a lot of pressure on their business and on their associates when those acquisitions begin to happen, and there’s a lot of change in turmoil there.
So all three of those I think, are changing the way advisors need to operate when it comes to the record-keeping space and the things that they need to think about.
Fred Barstein:
Yeah. One of the things Mike, I’d like to hear from you is with that convergence, previously the advisor and the record-keeper partnered on the plan level, but now with the participants, sometimes they can be in competition, and that can be a difficult situation with the advisors. How do you see that happening and evolving?
Mike Shamburger:
Well, I think it’s being the record-keepers, it’s funny you ask, so the record-keepers, I think, have experienced that in the past due to fee consolidation, right? We’ve continued to have our fees reduced. Now, I think financial advisors are beginning to feel some of that challenge as well, so their fees are being reduced there. So I think going forward, what that’s creating is a little bit of conflict, I think at times between certain record keepers, depending on their business model, of course, but many of the record keepers out there have a need now to generate additional revenue. So the question for them becomes, do I need to tap into the wealth opportunity to try to support my participant base differently and cross sell into that base, or do I want to align with the advisor and can I support the advisor in their efforts to draw on that same revenue?
The unique thing for T. Rowe Price is we’re not in that position. Our business model’s unique to many of the record keepers in the industry in the sense that we do two things and we do them really well. We record keep, we provide great record keeping services to our clients, and we combine that with exceptional investment management. When we can put those two things together, it creates a conflict-free business model. So it allows us to sit on the side of the table with the advisor and really understand their strategic priorities and figure out how can we assist them through our record keeping capabilities.
Fred Barstein:
Great. Thank you, Mike.
