“If we think about the 401(k) differently, it can be a huge driver of employer performance, as well as financial wherewithal for employees,” HUB Retirement and Private Wealth (HUB RPW) Senior Vice President Rocke Blair said.
Many 401(k) advisors point to a paternalistic/maternalistic attitude on the part of business owners and executives for the retirement security of their employees. Yet, Blair argued it isn’t as big of a driving force as many believe.
“They don’t give a rip,” he said. “They say saving isn’t their problem, it’s the employee’s problem.”
It’s why positioning the 401(k) with CFOs should be rethought, something he’s doing and finding success.
“For example, before tax reform, if they built a manufacturing facility, it could be straight-line depreciated over 30 years because it had 30-year life,” Blair explained. “Second, they could start a funded-depreciation account to pay for the maintenance and, ultimately, replacement of that facility. What’s another asset they have with a 30-year lifespan? Their employees. What’s the funded depreciation account? It’s the 401(k) plan. The good thing about it is they have leverage because they can use employee money to buy them out.”
It’s a different thought process, one that clicks because CFOs typically don’t value the 401(k) and therefore turn it over to their HR departments.
“We’re trying to show the CFO that it’s a very valuable instrument, and they should use it differently. There are tools our industry can bring to them to help drive their business. And I hate to say, ‘drive the business,’ but if you talk their language and explain how it will increase EBITDA and they’ll do well by doing good for their employees, it’s a win-win.”
Too many advisors lead with the “Triple F” (fees, funds, and fiduciary), which, again, CFOs ignore. To gain their attention and trust, ask them instead about their business and explain how 401(k)s can solve multiple issues.
“I’ve had 401(k) advisors want to fight me when I tell them this,” Blair said. “It’s contrary to what they grew up learning. It makes them think differently, and it stretches their muscles. But if it’s not us, then who will it be? We’ll be supplemental 401(k) advisors if we don’t watch out.”
Conceding that Triple F still matters, it’s now table stakes and far from a differentiating factor.
“If we can speak the CFOs language about healthcare, safety, workers comp, and productivity engagement that financial wherewithal brings to the table, that’s a different conversation,” he concluded. “Now we’re business consultants using our skills as 401(k) advisors to drive the conversation.”
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and 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. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.