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AdvisorNews - June 2015

Advisers Can Differentiate With Financial Wellness

Jill Cornfield

Sep 30, 2014 --- Financial wellness programs can be a value add for advisers, especially when they help drive retirement readiness and address the roots of participant inactivity. ---

Financial stress is widespread, says Matt Iverson, founder of Retiremap in San Francisco, citing a recent survey by New York Life Retirement Plan Services that indicates three-quarters of the population describe themselves as stressed or extremely stressed. The cause? More than half (60%) point to possible financial difficulties, and 47% are concerned about the possibility of potentially unaffordable medical expenses.

“We all say everyone should save more, but if you can’t afford to save more because of credit card debt, so you can’t retire at 65, these things have an effect on the employee as well as the employer,” Iverson tells PLANADVISER.

In the face of this significant stress, which does not seem to be going away, Iverson notes that the adviser is the main point of contact to address the problem with retirement plan participants, either by helping the plan sponsor implement a program to help them identify and set goals, or with phone support.

Contributing to the problem of financial stress, Iverson says, is that we live in an age of relentless marketing. People are constantly exposed to commercial messaging. “It’s hard to extract yourself from the things that provide short-term gratification,” he notes, adding that part of the adviser’s job is to frame things so people can make the right decisions.

A financial wellness program can help to create that environment and help to raise awareness around getting people to meet their goals, Iverson says. While plan design features definitely play a part in getting participants ready to retire, advisers can bring maximum benefit to the plan when they offer programs that directly address with participants the financial behaviors that can stand in their own way. “We can advocate for the participant to help get them where they need to be,” he explains.

Expensive Stresses

Some of the top concerns are skyrocketing medical expenses—probably the No. 1 expense, Iverson says—and, among other macroeconomic trends, stagnant wages. “People have to do more with less,” he observes, and within a retirement plan, an adviser might have to broaden the scope of topics to cover more than just investment options.

Moving from financial planning to workplace financial wellness programs is not a huge leap, and the impetus is in part being driven by the employer. It’s increasingly common for human resources (HR) and benefits people to see the impact of the financial stress their employees experience on work performance, Iverson says. They would like aging retirees to retire, but sometimes they cannot afford to, and continue to work at a time when their benefits and salary are more expensive—on average, about $7,000 additional for people who can’t retire. Iverson says some research puts the figure at $10,000, but his firm discounts the amount slightly because there are some advantages to an experienced workforce.

First, education must be relevant to employees’ goals. Advisers should use the communication strategies that will resonate with specific, targeted populations. A multi-channel approach that pulls in the Web, mobile devices and onsite workshops is best, Iverson says. Next, how can advisers best engage a population? What are the important issues the adviser needs to address?

In a company with a large percent of younger participants, home buying is going to be a big concern. For older employees, maxing out their retirement contributions and getting set for the next stage is the topic. Specific generations have specific issues: Generation X, for example, is anxious about creating emergency funds and paying for kids’ college, while Millennials are naturally focused on student loan debt.

Much of the communication should help them see if they are on track to meet financial goals broadly, Iverson stresses, not just for retirement, which is generally more a concern for people five to 10 years away from retirement.

Everyone Has Goals

Iverson explains that when Retiremap developed its financial wellness program with Dan Ariely, a professor of psychology and behavioral economics at Duke University, Ariely suggested that advisers ask if participants know where they are in making progress on their goals. “Not a yes or no question,” Iverson says. “You want to focus on appealing to their financial goals—and everyone has some goal, whether it’s saving more or reducing spending or dealing with credit card debt or buying a second home.”

The information gleaned from these conversations as well as data about the population is useful in designing messaging. It is typical for some of the older management members to make the decisions about how to communicate with this part of the workforce, Iverson points out, and it is critical to make sure that the methods of communication younger participants use—such as mobile devices—are utilized. “Advisers should learn to use data intelligently around communication strategies and report to plan sponsors,” Iverson says.

Advisers can leverage technology in a number of ways, Iverson notes: “You can put together a presentation, make it into chapters, and customize the messaging, with flyers and desk-drop cards.”

The initial engagement is used as a springboard to create the targeting, he explains. For example, in a school with a fairly young teacher population, where student loan debt is a big issue, Iverson suggests creating a presentation on ways to manage student loan debt that speaks directly to this group of employees. In a company where they have identified home buying as a top issue, advisers can bring in a presentation with messaging around how much you need to save to buy a home or home prices in this area. “The messaging isn’t as generic,” he says, “but more specific and more resonant.”

Who Pays?

Because you have the data and the hook is more narrow, Iverson says, advisers can effectively target different groups demographically and thematically, based on what message will reach them. No matter the goals, some of the approach cuts across interests and generations. “A lot has to do with taking short-term financial goals and looking at long-term financial security,” Iverson says, pointing out that if you buy this, if you continue not to save, here’s the road you’ll be going down, and showing participants the impacts of specific financial behaviors.

But paying for these programs is a hurdle most advisers are unsure how to cross, according to Iverson. Many advisers feel such programs would be a great value add and feel their plan sponsors clients would welcome them. But they want to know if they have to increase their fees, or if it comes out of the plan sponsor’s budget.

Do plan sponsors pay the expense directly, as a line item expense? According to Retiremap’s own investigations, financial wellness programs can be paid for in several ways. In some situations, they can be paid for directly from plan assets when they are considered a necessary expense and one that meets minimum standards: helping participants understand what they should be saving and how they should be investing their savings. With 12(b)1 fees, the costs can be paid indirectly from revenue sharing.

Next, advisers don’t always know how much time and effort will go into administering a financial wellness program. Iverson recommends seeking a legal opinion from an attorney who specializes in the Employee Retirement Income Security Act (ERISA).

Financial wellness programs are definitely more prevalent in the last few years, Iverson says, and they are definitely driven by the employer and their need to control costs. While helping to achieve goals that are important to the plan sponsor, these programs also have another advantage. They are a differentiator to help the adviser expand on the services he brings to a retirement plan, beyond simply selecting plan investments and helping them provide value through reducing costs and giving a boost to retirement readiness, making sure participants aren’t financially stressed—which is what the retirement plan is really about, he says.




Want 401(k) Business? 4 Things to Know Now

by Mike Narkoff

NOV 19, 2014
11:09am ET

As 401(k) plans have supplanted pensions as the foundation of employee retirement savings, advisors too are transforming their practices to capitalize on the new growth prospects found in retirement plan advisement.

Understanding the opportunity is half the battle. But if you are looking to build out your 401(k) practice, knowing the pulse of the retirement plan space is critical to offering a competitive service.

In speaking with our retirement plan advisors across the country and surveying the data of 43,000 retirement plans, we've identified a few things we think retirement plan advisors need to know about the current marketplace.


If your personal wealth management practice is centered on helping individuals plan, think of 401(k) plans as “group planning,” to some extent.

How should you prospect for new business on the retirement plan front? It may be an obvious starting point, but look first at your own practice. How many business owner clients do you serve today as wealth management clients? If you haven't approached them about their corporate retirement plan needs, it's a safe bet your competition has.

Beyond business owners, advisors should evaluate their full client roster. Identify those that can be considered "centers of influence" at their workplaces; think upper-level management and long-standing employees.

To uncover new business leads, advisors who've already established a practice in corporate retirement plans report great success hosting educational seminars for local business owners. Retirement is complicated, so knowledge and understanding is paramount. If you can share your expertise, there may be no better way to grow your practice.


Historically, advisors received their compensation as part of the investment vehicle used in a corporate retirement plan, either in the form of 12(b)-1 fees or commissions.

With the growing emphasis on fees and transparency, however, more advisors have begun to transition their practices to a RIA model, in which they enter into a direct fee agreement with the employer.

The fee-for-service model opens up a whole new universe of investment products, such as collective trust funds, ETFs and lower-cost (institutional share class) mutual funds. Advisors also gain a completely agnostic viewpoint on the investment menu since their compensation is unrelated to the investments selected for the plan.


While employers still rely heavily on advisors for assistance with a plan's investment menu, they increasingly need help with the actual service to be provided to their employees.

As companies focus more on setting employees up for overall retirement readiness, employers want an advisor who will look beyond enrollment and help workers evaluate savings rates and asset allocation.

Helping employees create and implement a strategy designed to replace a sufficient amount of income in retirement is the big picture goal.


Employers want advisors to simplify retirement saving for themselves and their employees. The easiest way to simplify the process is by removing as many barriers as possible. And typically, the first hurdle is, "Should I join the plan?"

While traditional employee education and enrollment meetings can work, increasingly advisors are starting to embrace automatic enrollment to overcome this initial hurdle. The average employee would rather be told what to do rather than being asked. With automatic enrollment, employees still have decisions to make, but advisors can put them on a positive course by defaulting them into the plan; they have to make a conscious decision to opt out.

Another by-product of automatic enrollment is the impact on the overall plan participation rate. According to our data, plans with automatic enrollment average 21% higher participation compared to plans without it.
You may also want to encourage employers to default their employees into the plan at more aggressive savings rates -- in the range of 6% to 10%, for instance, rather than the current average 3% default setting.

Auto-escalation is another successful strategy that can boost savings incrementally, helping employees reach necessary savings rates without drastically impacting take-home pay all at once. If you think about benefits in general, there is a general understanding that the costs of benefits tend to increase every year. So why shouldn’t the “cost of retirement” -- the employees' savings rate -- also go up? Auto-escalation is a great way to help employees ease into higher savings rates.

The retirement plan industry continues to evolve at a rapid pace. Advisors looking to engage in the retirement plan market need to keep apprised of changes to stay competitive and contribute to employers and employees goals of retirement readiness.








Five Reasons to Consider Teaming with Local TPAs

Deb Rubin, senior vice president of TPA and specialist adviser distribution for Transamerica Retirement Solutions

Jul 28, 2014 --- Successful financial advisers who work primarily with employer-sponsored retirement plans, also known as specialist advisers, guide plan sponsors through the sometimes-complicated landscape of managing their company retirement plan. ---

Specialist advisers work with retirement plan providers that they like and trust to handle their clients with care. Advisers can choose to work with “bundled” providers that provide recordkeeping, investment platforms and administration, or opt for an “unbundled” solution by adding a local third party administrator (TPA) into the servicing mix.

Third party administrators (TPAs) add value for plan sponsors, participants, and especially for financial advisers—both during the sales process and over the life of a plan. I spoke with some extremely successful specialist advisers to learn how working with TPAs adds efficiency to their business models and provides customers with a higher level of expertise.

Here are five reasons you may want to seriously consider working with a TPA:

TPAs have specific expertise that will benefit your clients.  

TPAs are, by definition, administration and retirement plan design experts. Plan advisers typically have different areas of expertise, with many concentrating on investments, direct client servicing, and participant education. So there’s sometimes the temptation to minimize the importance of good plan design, as if that’s a commodity. Many savvy advisers feel the investments are the same wherever you go, but really good, insightful plan design is a rare find.

“Every provider has good funds and every provider has terrible funds. Plan design makes a plan work or not,” says Robert Sweat, CFP of Principal Financial Group, a veteran financial adviser with more than a decade of experience in the defined contribution market. “In my experience, funds just don’t help to differentiate one plan from another. Because every client is different, making a plan work comes down to plan design.”

There’s also a benefit to showing prospective clients you have the wherewithal to assemble a team of experts, all on their behalf. “I don’t want to be perceived as a jack of all trades,” says Sweat. “I want the client to know the TPA and I have different roles—my job is to recognize the set of facts for a given plan, so I know which expert I want to bring in.”

In a sales-driven environment, the value of administration is often overlooked, according to Charles Williams, a financial adviser with Sheridan Road Financial, LLC, a leading investment consulting and retirement advisory firm. “Most clients focus on investments, and don’t really value the administration component,” says Williams. “But let’s face it, administration is not the exciting part of a plan…until you find a TPA who does an excellent job, then you see how clients react when their plans outperform their initial expectations.”

TPAs can improve outcomes for both sponsors and participants.  

Part of the reason I love working in the retirement plan business is because you can see a tangible result of your efforts in the form of participant outcomes. Sure, there are times when we can also help save plan sponsors money for their companies—but it’s helping participants that provides me with a tremendous amount of satisfaction.

Many financial advisers feel the same way. “Personally, I’ve made a conscious decision to work with smaller companies and provide more value. That way, your impact can be seen and felt,” says Aaron Taylor, a registered representative with Lang Financial Group, Inc. in Cincinnati, Ohio. 

“Our TPA partners are of the utmost importance,” continues Taylor. “We do a lot of work with plan design, profit sharing allocation methods, cash balance plans—whatever a client needs to maximize the retirement benefit for themselves and their employees. To that end, a proficient TPA is absolutely invaluable.”

Taylor shares a specific example to drive the point home. “One of our recent clients, a large manufacturing company, was struggling with how to reduce spending. We helped save them over $80,000 in just six months. Plus, they didn’t cut any services to their employees, nor did their employees have to pay more. This wouldn’t have been possible without the work of our TPA partner.”

Local, personalized service makes clients very happy and also benefits your business.  

The more advisers I talk to, the more I see that those who have tried working with TPAs tend to stick with it. “I try to work with a TPA in almost every situation,” says Todd Colburn, CFP, a wealth management adviser from Nashville, Tennessee. “There are two reasons why. First, I prefer a component-based approach, where any underperforming role—including mine—can easily be replaced without disrupting the roles that are working well, and second, TPAs are just more capable of conforming to the needs and requests of my clients.”

In some cases, winning a new plan comes down to hands-on service. And there’s nothing that plan sponsor clients like more than an administrator who’s accessible and lives in their own backyard. “Bundled providers may do a fine job, but our clients like to work with someone on a local level,” says Sweat. 

Local TPAs who are readily available for client meetings can be a distinct advantage. “The bundled plan administration might be just as good as a local TPA, but if they’re not here on the ground then it isn’t helping me that much. They can’t be in the meetings, but a local person can. Something I thought couldn’t be done, it turns out it could be, and that’s all because the TPA was local and able to be in the room with me,” says Sweat.

Local service is nice, but the crux of the matter is about building relationships—and that’s just easier when you can meet face-to-face once in a while or quickly if a need arises, according to John Spach, AIF with 401k Advisors & 403b Advisors out of Los Angeles. “TPAs need to have real relationships with clients; they’re not just there for compliance testing.” Quite the contrary, says Spach, “TPAs are the frontline staff, and as such need to develop relationships.”

TPAs can help you close sales.    

When I was in a sales role, I would always bring a local TPA to a finals meeting. Not only could they answer very technical questions and make specific recommendations about plan design right on the spot, but they made me look good. And frankly, they could zero in on issues and concerns that I couldn’t have done by myself.

Seasoned TPAs know the right questions to ask on a sales call, says Taylor. “TPAs really understand client needs—and once we start talking about plan design, a good TPA is asking questions about the questions.” Those insightful questions can really give a prospect the impression of how thoughtful a partner this TPA can be. “Sometimes that can make all the difference to winning a plan,” he says.

A successful TPA partnership can help your business grow and thrive.    

John Spach has a wonderful relationship with a long-time TPA partner and they’ve struck a nice balance as true professional partners. “When we first started working together in the old days, [my TPA] would spew out pension terminology and I would generate the IPS, but it’s as if we were speaking two different languages,” Spach explains. Over time, however, that relationship grew into a successful symbiosis. “Through the years, we moved from being reactive to client needs to being on the same page about how to approach a case. Now, we both enjoy leading with automatic enrollment and automatic escalation recommendations to win business and design plans that produce results.”

Finding Your TPA Partners

  • Get recommendations from your colleagues or wholesalers you trust, such as other plan advisers.
  • Set up a face-to-face meeting; rapport is everything and you’ll also want to envision the TPA in front of your clients or prospects.
  • Spend time discussing your respective values – chances are, if your outlooks about the business are in sync, then you’re more likely to succeed as a team



Investors in U.S. With 401(k) Value One-on-One Advice Most

by Lydia Saad

PRINCETON, N.J. -- U.S. investors who have access to a 401(k)-type plan at work consider live meetings with human advisers -- particularly one-on-one meetings with a financial professional -- to be the best way to get information about how to manage their retirement plans. Far fewer say sending information through mobile messaging or posting on social media is "highly effective." Various forms of written communication fall in between.

These findings are from the Wells Fargo/Gallup Investor and Retirement Optimism Index 2015-first quarter survey, conducted Jan. 30-Feb. 9. For this survey, investors are defined as U.S. adults who have at least $10,000 invested in stocks, bonds or mutual funds. About three in four employed investors report they have access to a 401(k)-type retirement savings plan at work. Beyond standard 401(k) plans, that could also mean 403(b) plans commonly used by teachers and other public employees.

According to these investors, one-on-one meetings with a financial professional are the best way employers can provide employees information about managing their 401(k)-type plans, with 71% calling these highly effective. Employer-sponsored seminars or formal presentations rank second, at 46%, followed by information posted on a company website, at 40%. Confidence drops to 33% for written material such as brochures, 21% for information sent to employees' mobile devices and 11% for information posted on social media.

In terms of the total percentage rating each approach at least somewhat effective, all but social media (at 35%) receive majority confidence, ranging from 92% for one-on-one meetings to 56% for information pushed to mobile devices.

Employed 401(k) investors give their employer generally positive reviews of the job it does in providing employees with information about managing their plan, with about three in four rating it excellent (31%) or good (43%). However, one in four indicate their employer could be doing much better, rating its performance only fair (19%) or poor (6%).

401(k) Investors Need More Help in Picking, Changing Investments

Close to two-thirds of employed investors who currently have a 401(k)-type plan say they can manage their plan by themselves, but 35% say they need advice. Given five areas of investing to choose from, most in the latter group identify knowing which funds to invest in (32%) or knowing when to reallocate funds (29%) as the area they most need help with. While relatively few choose knowing how much to contribute, understanding the tax advantages or tapping retirement money early, 24% say they need help on all or multiple issues.

Bottom Line

Although sponsored by employers, 401(k)-type plans put the onus on workers to save and invest for their retirement using these tax-advantaged accounts. Most investors indicate they are pretty comfortable managing their plan on their own, but a full third say they need advice. A natural place to get that advice is in the workplace, where the employer serves as the intermediary between the investor and the company managing the funds. Most investors are complimentary of the job their employer does of helping workers with the important task of managing their 401(k). But one in four think their employer is not doing a very good job, representing an important information gap that warrants attention.

In December, the Wells Fargo/Gallup Investor and Retirement Optimism Index survey found just 18% of U.S. investors saying they want more financial advice from their employer, per se. Likewise, most employers probably do not want to take responsibility for advising employees about critical financial decisions such as what to invest in and when to reallocate investments in response to market conditions. But given investors' reported needs and views about various sources of information, employers could do more to connect workers who are seeking advice with financial professionals who can personally guide them.



6 Core Components of Your 401(k) Business Plan

Written By: Chris Barlow
Date: April 2015

Building a business plan to guide your 401(k) sales and services activities will improve your probability of achieving your goals. I see it every day working with Advisors like you. There are six core components to your 401(k) business plan. Your business plan can include many more, but the purpose of this article is to focus on the core components.

1) Value Statement

Your Value Statement is your “workhorse” throughout the sales cycle. It is used in marketing collateral, sales presentations, and service initiatives. Your Value Statement answers the question prospective plan sponsors want you to answer, the “Why You?” question. Your Value Statement will inspire you and keep you focused on what makes your business uniquely valuable to you and your stakeholders. Developing a Value Statement forces you to think about the direction of your business and to commit yourself to certain courses of action.

2) Description of Target Prospect

You don’t need to pursue every available prospect in order to accomplish your goals. You should start and stay choosy as to which plans you pursue. Know why you are choosing a particular prospect. What industry, number of employees, years in business, number of locations and value of the plan to name a few descriptors. It has never been easier to obtain specific information to screen your target companies.

3) Prospect Stage Definitions

Defining the stages of your prospects will allow you to monitor your progress and better predict your future acquisition outcomes. Having prospect stage definitions will also allow you to monitor your or a team members activities. Definitions for Cold, Qualified, Appointment Candidate, Warm and Hot prospects are developed in your plan.

4) Goals

If your new client hasn’t already stated them to you, one of the first questions when first meeting with them is, “What goals can I assist you to achieve?” And if they stumble in addressing their goals you assist them to define them. Do the same for your business. Goal setting covers the “why” you are doing what you are doing.

5) Activities

Activities are the actions you take along your journey toward accomplishing your goals. It’s not so much what you accomplish, as it is what you did to achieve it. There are two phases to the 401(k) sales cycle and therefore two categories of activities you execute to accomplish your goals. They are Acquisition Activities and Retention Activities.   Acquisition activities take place during prospecting, profiling, and sales presentations. Retention activities include implementation and ongoing service. Define and execute your activities persistently over a prolonged period of time and you will improve your probability of achieving your goals.

6) Monitoring

You hold yourself accountable to executing your activities when you monitor them. Execution is the number one issue I discuss daily with Advisors. What does a great day, week, month, quarter, and year look like for your Acquisition Activity outcomes? As you begin your journey, frustration can become your greatest impediment to your long-term success. Monitoring your activity shows you the progression you are making daily and inspires you to carry on.