Now that the “convergence” of wealth management and retirement planning benefits is here, what does it mean for industry advisors? And what is the best avenue to achieving a successful merging of the two?
Those were just some of the questions Fred Barstein, founder and CEO of The Retirement Adviser University, posed in the opening session during the Viking Cove Institute’s Industry Leaders Summit in the historic Arizona Biltmore in Phoenix on Friday, validating what many in the industry already know: wealth management is officially infiltrating the retirement planning practice.
While some may believe the best path to this confluence is through mergers and acquisitions (M&As), and rightfully so given the number of high-profile unions, Strategic Retirement Partner’s Jeff Cullen notes it’s the “right messenger” dedicated to tailoring wealth management strategies who will be successful.
“It’s not enough to have the right message, the messenger is the one,” Cullen said. “Step one to the convergence is wealth and retirement, but the path is not to partner. It’s all about personalization.”
As a result, he expects to see a higher volume of practices insource their wealth management services rather than look to third-parties, highlighting that the data involved (client investment behaviors, financial history, risk factors, and more) is key to reaching better client insights and maximizing profits.
This idea could increase the number of mergers between registered investment advisors (RIAs) and firms, he added, noting that CAPTRUST has so far bought more wealth managers than retirement practices.
Rob Madore, vice president of Financial Advisory at MarshBerry, likens the wealth management movement to the banking evolution, where big-named tech giants like Paypal and Amazon usurped traditional banking practices. “When you think about the opportunity you have in building a successful practice, you have the same type of opportunity to dismantle that system,” he said.
It’s especially true as Millennials and Gen Zers emerge in the industry, both on the advisory and client side. Whereas previous plan sponsors were patriarchal with their workplace plans and participants, Millennial employers now look to advisors in every aspect of financial and even holistic benefits. “[Plan sponsors] want you to service the hell out of their clients,” Cullen emphasized.
Younger participants will have a different outlook on how they service their financial planners, as well. Whereas seasoned clients would expect a weekly in-person meeting or at the very least a phone call to discuss finances, newer clients will rely on how advisors and wealth managers are leveraging technology to boost their portfolios. “It’s a great opportunity if you’re working in retirement consulting and with participants,” Madore added.
On the advisory side, instead of looking for successors in wirehouses or within insurance companies, more advisors may consider licensed financial coaches. Madore notes that one of the largest challenges in the wealth management space is replacing older partners, as these professionals were hired to hit the practice’s scale and not the business. Now, working with a coach who holds influence could boost this business.
“To say you’re going to a financial coach, with a captive audience, is something that people want to do and work with,” he said.
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