We’re at a tipping point (or very close to it) with two important retirement plan topics—collective investment trusts and financial wellness—according to Bill Chetney, and a run-through of each explains his trademark enthusiasm for where we’re headed as an industry.
“Thirty years ago, no one knew anything about 401ks or what they were,” Chetney, founder of GRP Advisor Alliance, says from his northern command in the decidedly non-financial hub of Haines, Alaska. “Today, everyone goes ‘of course retirement savings is about the 401k’ and expect it from their employers.”
The same will soon happen with CITs and financial wellness, he argues, using Malcolm Gladwell’s breakthrough bestseller to make his point.
“Plan sponsors are finally getting it (although plan participants aren’t there yet), but the uptake will still require some time. If sponsors are spending $500 or $700 per employee on investment and record keeping fees each year, why not throw in an extra $20 on a program to ensure people are that much better off in their financial wellness?”
More specifically to Gladwell’s thesis, Chetney sees the mavens—or in this case product and service providers—as the early adopters that are already on board with both CITs and wellness.
The connectors are those that galvanize and bring people together, and Chetney obviously counts himself as one.
“The connectors like me are starting to get it out there, and as adoption proliferates and reaches Gladwell’s third group, salespeople (or those that make change through persuasion), then CITs and financial wellness are going to tip.”
The reason CITs and financial wellness aren’t more prevalent now in retirement plans can be blamed on a common and well-publicized adversary—inertia. Yet 401k advisors are currently leading the charge for change, Chetney concludes.
“The fact that $20 or $30 can result in real financial wellness value, or that you can reduce fees by 20 percent, 30 percent or more with the same investments in CITs, these are simple notions and the math is just too profound. It’s just a matter of defeating inertia for the tipping point to happen.”
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.