“What is the participant worth?” Plan Design Consultants’ J.D. Carlson asked intellicents’ Brad Arends at the outset of a Monday morning session at Wealth@wor(k) 2021 in Nashville.
It’s an increasingly important topic given ongoing territorial battles between recordkeepers and advisors, and one the industry odd-couple tackled directly.
Arends said he asked his tech team for a deep dive into intellicents’ data to determine monthly and annual revenue from each client in each business line.
He found that the recurring revenue intellicents realizes from a group plan participant averages $17 per month and $200 per year. A retirement plan participant delivers roughly the same; $16 per and $195. Yet, the personal financial management client brings in $250 per month and $3,000 per year (assuming $300,000 in AUM).
“I challenge you to do this with your own book of business,” Arends advised. “I’m in the middle of the country, so the numbers will be different on the coasts.”
Carlson said analysis of this type is essential because of the challenges facing advisors.
“I hesitate to say sell, sell, sell,” he said, “but with fee compression and other issues, I want to see advisors succeed, and this is the way to do it.”
Employing a gas station analogy, Carlson noted it’s not only the gas but ancillary services like car washes that sell because it’s something drivers need.
“J.D. brings up a good point,” Arends conceded. “We want to be good business people, but the average American was extremely exposed [financially] during COVID. They desperately need our help, but go to a wealth management conference today and they refer to them as the underserved because the current wealth management model is built for the C-suite.”
Raising a different analogy, Arends noted the bundled services that occurred with cable T.V., phone, internet, etc. They now own that customer entirely, something similar he sees with recordkeepers, which he said is a data issue because they have it on the customer.
“They don’t believe you can deliver financial planning services on a large scale, which is not easy,” he added. “Think about doing financial planning for 37,000 workers or even 370 workers. You can get over skis pretty quick. To do it well, you need tech.”