How is convergence in the 401k industry defined and what do employers want?
“Retirement advisors resisted bringing the wealth management guys in. Now they love them.”
These two important questions were asked and answered during a panel discussion of top advisors and industry experts on Saturday at the GRPAA 2022 Industry Leaders Summit.
Moderated by The Retirement Advisor University (TRAU) Founder and Executive Director Fred Barstein it featured Innovu Managing Director Francesca Messano, Woodruff Sawyer Vice President Kristina Keck, intellicents and CEO Brad Arends, and SRP Managing Director Doug Bermudez.
Barstein began by noting that employers are in a war for talent and need to figure out how to work and manage that talent remotely, as well as help employees maximize their benefits.
“There are three levels of convergence,” Bermudez explained. “At the enterprise level, we want to recruit people that have the same culture, moral compass and focus on helping participants. From an industry standpoint, what are other aggregators doing? From a client perspective, [our firm] should be diverse and we should literally speak the participants’ language.”
Arends said he sees it as the convergence of retirement, wealth, and health, and the firm’s advisors see it as making clients stickier.
“Retirement advisors resisted bringing the wealth management guys in,” Arends said. “Now they love them.”
He added that smaller firms will have trouble with aggregators because they are looking at everything within the industry and are able to give discounts. Like cable providers bundling products, the aggregators are heading in the same direction.
“American workers definitely need our help and private wealth is now stepping over them,” Arends said. “The place for them to get the help they need financially is from the workplace.”
Keck mentioned that employee benefits and property/casualty dwarf 401k business at her firm, and she received leads from both. She also speaks with client often about financial wellness and is currently conducting a pilot program with Financial Finesse.
Messano quoted an article from JAMA titled, “Waste in the US Health Care System: Estimated Costs and Potential for Savings,” that found that “Healthcare in the United States makes up nearly 18 percent of the entire gross domestic product. In fact, we spend more on healthcare in the U.S. than any other country in the world. And despite measures taken to curb healthcare costs, it has been calculated that ‘waste lies between $760 billion and $935 billion, which totals nearly 25% of the $3.8 trillion in total U.S. spending on healthcare.’”
“A 360-degree view of a business by an employer includes human capital risk management,” Messano continued. “The convergence of data and benefits at the employer level is like a balloon that inflates of one side and deflates on the other as things change. Discuss how it changes, and then talk about solutions. About 23 cents of every dollar is spent on waste and fraud. What would you do it that number was redirected?”
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.
