Make it real, make it granular and make it specific. It was a key point made at a Tuesday morning session at the annual Excel 401(k): The Advisors’ Conference in Las Vegas.
“Participants are being told to focus on the wrong issues for retirement and they are,” Ed Dressel, president of RetireReady Solutions, bluntly said.
It was part of a larger discussion about methods to effectively combat fee compression, reduced margins and many of the other problems plaguing plan advisors, best combatted through differentiation, unique value propositions and demonstrable participant and plan success.
“In the 2017 Fidelity Plan Sponsor Attitudes Survey of what sponsors want, unsurprisingly, the No. 1 item was help with fiduciary issues. That’s why they hired advisors.”
In 2018, he continued, that dropped to No. 3, and the No. 1 reason plan sponsors now hire advisors is to help effectively prepare employees for retirement.
“Are we effectively doing that? Most advisors are not, because, believe it or not, that’s not their strong suit,” Dressel (somewhat controversially) said. “They like working with plan sponsors, but not as much with plan participants.”
But by more directly working with participants, he argued, “not only is there an opportunity to grow the number of plans you have, but also an opportunity to grow the amount of wealth you manage. In any given-sized population, you are going to have people with outside assets that are not being managed well or there are higher fees. This is the opportunity to engage them and talk to them about exactly what is happening inside their plan.”
How specifically do you that?
“Tell stories, don’t tell facts. Advisors are dealing with numbers all day long, but if they stand in front of a room and talk numbers to anybody, they will, of course, disengage.”
Make the stories short and ask questions, he recommended.
“It can even happen at the group level. Ask a few questions and get the group interacting. Avoid generalities, because no one is generic and everyone is specific, especially when planning for retirement.”
Also avoid phrases like, “The average person …,” because no one considers themselves average (even if they are).
Specific to retirement readiness, how much does someone need to save?
“Most people will figure how much they need in take-home pay before making that kind of decision,” Dressel concluded. “Telling them they need to save an additional 1 percent or 5 percent or 8 percent doesn’t mean as much to them as saying $20, $50 dollars or $100 from their paycheck.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.