Add Another F to Fees, Funds, and Fiduciary
GRANT ARENDS WAS refreshingly blunt when revealing the super-simple secret to high participant utilization for worksite financial planning.
“Does the advisor have boots on the ground doing group meetings, one-on-one meetings, and giving advice, or are they just doing plan-level work?”
“I think financial wellness is the most overused and unsuccessful phrase in our industry,” he said. “At intellicents, we’re scrapping that phrase and replacing it with the term worksite financial planning. We believe the next great employee benefit that employers will offer will be institutional financial planning.”
He also believes that advisors and recordkeepers who think technology is the prime solution for financial health are kidding themselves.
“What people need most is accountability,” he added. “It’s something only in-person professionals can effectively deliver. People, supported by great technology, is how intellicents will deliver worksite financial planning.”
Participants have access to institutional pricing on every aspect of their 401K plans, health plans, and other benefits, but not financial planning. But it’s the latter that’s so impactful.
“The main ‘F-Word’ we focus on is worksite financial planning, not just the traditional three Fs (fees, funds, fiduciary),” Arends noted before revealing a major frustration. “When I’m giving a finalist presentation, I always ask the committee how they judge the success of their plan? They answer fiduciary governance, fees, or fund performance. Just like our industry taught them to answer.”
He likened it to speaking an entirely different language, because he never gets the answer that really moves the needle in driving outcomes.
“It’s having at least 75% of their tenured employees on track to replace at least 75% of their income,” he said. “Tracking that is what intellicents does. I’ll be honest, based on that high benchmark, excluding clients with a healthy DB plan, ESOP, or an insanely high employer contribution, I don’t have one successful plan. I challenge anyone to find a quasi-successful plan based on that definition. But [darn] it, we’re working towards it.”
When focusing on fees, Arends said you get what you pay for.
“Does the advisor have boots on the ground doing group meetings, one-on-one meetings, and giving advice, or are they just doing plan-level work?” Arends asked. “Providing the labor to effectively provide the service can be expensive, but the ROI for clients that “invest” in the service can be immeasurable.”
He credited auto features for much of the 401(k) participants’ retirement plan success. And he admitted that auto features that include auto acceleration can be even more impactful in driving results vs. onsite meetings.
But the needle moves when advisors and sponsors combine worksite financial planning with traditional onsite retirement participant services.
“We recognize that people are a mess with tomorrow’s money because they’re a mess with today’s money, which obviously then impacts outcomes,” Arends concluded. “intellicents isn’t a great fit for clients who want to check the box. We’re a fantastic fit for employers that take a paternalistic attitude towards their employees. They realize their most valuable asset is their people, and if they hire us for that reason, they see incredible results.”
Grant Arends is Co-Founder and President of Retirement Services with intellicents.