Over the past several decades, retirement plan advisors have done a commendable job assisting plan sponsors with their duties to oversee their retirement plan’s funds, fees and fiduciary governance—the “triple F’s” of our industry. Consequently, investment menus have improved, and plan costs have come down.
RPAs have also assisted plan sponsors with progressive plan designs, making “auto” a standard feature for their 401(k) and 403(b) clients. And those RPAs that include coordinating participant services in their offerings have further improved outcomes for the American worker by teaching them how to effectively use the plan to accomplish the ultimate goal of achieving a “permanent vacation” known as retirement.
Accomplishments aside, we cannot yet be done. Our efforts to date have focused on getting participants “to retirement.” We cannot abandon the American worker whose poor overall financial health has been exposed during the pandemic as they have struggled with an enormous debt load, no emergency savings and nonexistent budgeting skills.
The wealth management industry is addressing these same issues for owners, upper management and the affluent. But this same industry acknowledges it has little time or interest in providing this service for the American worker it openly refers to as “the underserved.”
It is up to RPAs to develop a platform to also get the American worker “through retirement.” Our biggest challenge will be participant engagement, and it will take both people and technology to develop the relationships with them to succeed.
From a people standpoint, a team of retirement, wealth and health professionals must converge to provide one resource for all participant questions, many of which will be financial planning issues. Consequently, RPAs must recruit Certified Financial Planners, using their participant base to attract them. They then must be seamlessly integrated into a service package where the RPA assists the participant with plan questions and guidance to help get them “to retirement,” while the CFP assists with comprehensive financial issues and planning to get them “through retirement.” The progressive RPAs will also add group insurance professionals to their team to assist participants with benefit questions and Medicare enrollment at retirement.
For supporting technology, in addition to robust investment/asset allocation, financial planning, CRM and call center tech, the RPA must implement a data repository where it can collect and house participant data provided by the plan sponsor, the plan’s record-keeper and the plan’s participants.
The most logical solution would be a participant app sponsored by the RPA that immediately engages them, motivates them to add additional information, delivers timely targeted messaging and provides direct access to the RPA’s professional advisors and CFPs for actual advice when desired.
Plus, the plan sponsor must have access to a dashboard providing an aggregate view of the overall financial health of their workforce and easy-to-read utilization metrics.
The RPA must then complement its people and technology with an education campaign to meet participants “where they are at,” including onsite group meetings and one-on-ones, videos and webinars, emails and an 800-number financial hotline addressing:
- Budgeting
- Debt/credit management
- Emergency savings
- Life insurance
- Retirement planning
- Retirement income planning
- Social Security/Medicare
- Investment management
- Major expense planning
- Tax planning
- Estate planning
- Employee benefits
- HSA maximization
- Charitable giving
And finally, for those participants who desire to fill in all the financial details, the platform must be able to provide the entire workforce a personal comprehensive financial plan and ongoing support services including advice.
If the RPA industry does not build this, the record-keepers will. In fact, it’s already being done by four of the largest record-keepers.
It is up to us. We have done this before when we found solutions to poor 401(k) participant engagement. Nobody has better access to them than us.
Brad Arends is the co-founder and CEO at intellicents.
