A Friday morning panel discussion on fintech in the 401k advisor space at the GRPAA Finnovation Conference in San Diego detailed the challenges and opportunities currently available and, in keeping with its general theme, took a look at what’s just around the corner.
Moderated by Matrix Financial Solutions (now part of Broadridge) founder and current EdgeCo Holdings CEO John Moody, the panel, titled “Bringing Silicon Valley to the Retirement Plan Industry,” featured a who’s-who of 401k advisors and personalities.
“Retirement decisions involving DC plans are made at work, but employees are now looking to the worksite for other decisions—including loans, student debt, etc.” Fred Barstein, Founder and CEO of The Retirement Advisor University (TRAU), noted when asked about 401k tech trends. “If you’re only focusing on the three Fs (fees, funds and fiduciary), it will be difficult. You must better leverage the participant and their needs, which will involve the use of tech.”
Barstein claimed “Robo advisors are dead,” before adding, “Long live the digital advisor!”
‘I have a dream’
Intellicents’ CEO Brad Arends said that four years ago, his firm decided to “take a traditional advisory firm and completely rebrand it.”
The focus would be on outcomes, which was always core to its mission, but it had to have a financial wellness component.
“The financial needs of most Americans are addressed at work,” Arends argued, echoing Barstein. “They include income obviously, as well as the most expensive insurance you can buy, which is health insurance, and dental, vision, etc. But participants have no experience with any of it—none.”
Raising a challenge, he said his firm combined people smarts and tech, but has eight pieces of technology software for participants alone.
“I use the made-bed analogy,” Arends said. “It looks good on the surface but lift the duvet and the sheets underneath are a mess. So, I have a dream, for one comprehensive system.”
Better communication
Another challenge is the alignment and integration with recordkeepers, Kathleen Kelly, Managing Partner with Compass Financial Partners, noted.
“A major issue is what we provide as a firm and the technology that the recordkeeper is developing and offering,” Kelly said. “Participants come in and say, ‘This is happening with at the recordkeeper,’ because the recordkeeper is also communicating with participants, and we must be aware of that and well-versed at the participant-level, as well as the plan level.”
Payroll companies
Emphasizing that technology is not a threat to advisors, because it provides underserved populations with access to a retirement savings plan, EvoShare CEO and Co-Founder Eugeny Prudchyenko said that whatever technology is developed, however, must meet the expectations of the participants, sponsors, advisors, and recordkeepers and must align with payroll companies.
“Recordkeepers didn’t initially embrace EvoShare, but the payroll companies did, even though the recordkeepers are now increasingly on board, Prudchyenko concluded. “The point is that the decision-making process in financial services is longer than the lifecycle of many tech startups, so decisions are ultimately made based on who the survivors are.”
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.