More advisors understand the value of a participant and the revenue and business-building possibilities that come from a post-retirement wealth management relationship. But how is comprehensive financial planning and wealth management cost-effectively introduced and scaled?
It was an important question asked and answered on Sunday afternoon at the Retirement & Longevity Summit at the historic Hotel De Coronado in San Diego.
Titled “Rollover? What Rollover?” presenters Brad Arends and Vern Cushenbery noted that the primary competitor for the rollover assets is no longer the advisor down the street but major recordkeepers and financial institutions that possess the majority of participant data. Advisors are now furiously implementing holistic financial wellness into their practices while developing personal relationships with plan participants to compete.
“More people should examine their books [of business],” Arends, Co-Founder and CEO of advisory firm intellicents said in a pre-session interview. “It gives people an opportunity to see what’s at stake, why convergence is going on, and why these 401k advisors are getting into private wealth.”
It helps with everything from fee contraction to diversification and many more of the challenges with which advisors are currently grappling. The challenges are actually enormous opportunities, Arends argued, as well as needed because 99% of the public has been abandoned.
“How are you going to do this?” he asked rhetorically. “It’s got to be a combination of people-smarts and great technology. Looking at what we’ve done at our firm, we’ve spent the last six years focusing on developing a team financial planning. We had zero Certified Financial Planners (CFP) five years ago. We have 10 today. We also added more 401k advisors and more group insurance agents. That’s putting our people together to being able to provide all three services.”
Smart technology gets smarter
Technology came in the form of “lifesteps by intellicents,” which the firm launched last week. Developed by eMoney, private labeled by intellicents, it’s currently available in app stores. Marketed to plan sponsors, the 401k advisor can take it to employers “to help get participants through retirement.”
“We take a download of census data that starts with just the name, birth date, and salary,” Arends explained. “We load that into the software, and from that, we can create a foundational financial plan that covers budgeting, emergency savings, debt load, life insurance needs, and whether they are on track to retire. It encourages them to add more data because the more data they add, for instance, assets held away, the calculations get smarter.”
Cushenbery agreed, noting that his firm, Goal Path Solutions, addresses financial planning and wealth management implementation in much the same manner.
“Our story sounds a lot like Brad’s story,” he said. “What drives Brad drives us, which is a commitment to doing the best job we can possibly do for all of our clients and ultimately the plan participants.”
Mentioning the firm’s longstanding relationship with Dimensional Fund Advisors (DFA), he recognized years ago that the defined contribution (DC) system was broken and not producing the outcomes it needed.
“We piggybacked on their intellectual property and [Nobel laureate] Dr. Robert Merton’s lifecycle research to, No.1, create a liability-driven investment solution inside of the plan, but then subsequently roll it out in half a dozen different iterations tweaked to different platforms and investments,” Cushenbery explained. “Along that journey, it became apparent to us that the way to optimize it was with a hands-on experience, and that’s evolved into what we now call ‘democratized financial planning for the masses.’”
Major marketing efforts
It includes a package of technology, which he claimed in and of itself is benign.
“Any advisor will tell you that if you roll out financial wellness technology, you’re going to get an uptake of somewhere between 5% to 15% on the high end,’ he said. “That wasn’t enough for us, so we started to tinker with some of these tech platforms, and we created what we call fiduciary-minded technology.”
Like Arends, it goes hand in hand with a CFP, and all plan participants get a calendar link to schedule one-on-one time.
“They know how the budgeting system works,” Cushenbery concluded. “They know what the investment module looks like. They can get access to a package of webinars, and then we warm it up for the employer. Any employer that’s ever tried to roll out any new benefits package knows that if you send out an email, it’s dead, so we create a pep rally-type of an environment with all sorts of internal marketing and incentives, and we gamify it, so participants get points to help them reach milestones.”
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.
