Financial advisors are interested in building their retirement practices and serving more of the 401(k) market, but a recent study shows they might be going about it all wrong.
When it came to growing their retirement practice, almost one-fourth of 352 advisors who sell retirement plans said managing scale was the biggest hurdle they faced, according to the first annual Retirement Trends Report by Vestwell. But when asked what their biggest priorities were in 2018, only 7 percent said “better leveraging technology platforms.” They were most focused on growing their client base (57 percent) and servicing and retaining clients (22 percent).
Technology in the wealth management industry has dramatically improved and made advisors more efficient than ever. But few advisors seeking ways to manage scale and grow their business are prioritizing improvements to the technology platforms, which is perplexing.
In a somewhat self-serving note in the report, Vestwell Founder and CEO Aaron Schumm said that when it comes to the 401(k) market, advisors aren’t the only ones to blame. “Disparate providers, lackluster technology, and conflicted investment options” have kept the business from being scalable, which Schumm said is the reason he started Vestwell.
“Advisors need help growing and scaling their retirement businesses, especially in light of their fears around price compression, market saturation, and tax and fiduciary liabilities,” the report said.
The report also included survey results of more than 50 plan sponsors representing over 50 companies that said filings, taxes, compliance activities and administering payroll were their biggest pain points—all things technology might be able to improve.
