The convergence of wealth management and retirement planning, along with the its accessibility to more investors, were key themes this year at the NAPA 401(k) Summit in Nashville, Tennessee.
As retirement plan advisors incorporate wealth management services to their practice, studies show that a growing number of plan sponsors are demanding their advisors provide this feature. Research from Fidelity Investments shows almost half of plan sponsors are looking to change their plan professional because the advisor did not help participants with wealth management needs.
Panelists in day two’s session, “Wealthy ‘Whys’: How to Apply a Wealth Management Approach to Your Retirement Plan Clients,” recognized how the retirement planning industry has changed over time to emphasize financial wellbeing and management rather than just retirement advice.
“It’s focused on helping [individuals] be less stressed about their finances. It has to be unique to the individual, that’s scalable, and that’s appropriate to participants at this point in life,” said Jon Anderson, head of Workplace and Retirement at Cetera.
Wealth management services are a growing demand as more participants obtain higher levels of wealth while simultaneously having less children. Earlier in the day, attendees heard from economist and Vice-Dean at the Wharton School Mauro Guillén, who noted that the number of millionaires has more than doubled since 2007.
Guillén also underscored the gender dynamics played in this new wealth accumulation, especially among women as more choose to move up in their careers and become the primary wealth accumulators.
It’s no wonder a higher number of workers are seeking wealth advice from their financial professionals, as more plan sponsor clients demand the services from their partners. “The world has turned dramatically,” added Kim Cochrane, director of Retirement Services at HUB International, in another panel. “Coming from the advisor side, where the focus used to just be investments, it has really morphed. We’re becoming the end all consulting arm that the clients need.”
Advisors wanting to implement wealth management into their practice could duplicate services offered by traditional firms like tax or estate planning, among other topics.
“It’s such a tremendous opportunity to help so much more people,” said Anderson at the earlier panel. “Advisors can replicate services and offer them across the board.”
The need for wealth management services doesn’t just cover high-net-worth clients, either. Panelists highlighted the importance of working with participants through their short-term financial barriers first. Eventually, once hurdled, participants will turn to advisors for their retirement planning and wealth management needs, said Benjamin Levine, chief of staff and Data Science head at student debt solutions firm Candidly.
“If you can get to these folks and solve their problem first, its an opportunity to maintain that relationship as they pay off their debt and transition to retirement planning, and ultimately, wealth management,” he said.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
