The Small Market 401(k) Opportunity
We recently interviewed Craig Howell, who heads up Business Development for The Online 401(k), which is a recordkeeper focused on plans that are typically 25 employees or smaller.
We talked a lot about the business opportunity for advisors in the small plan space and how they’re trying to make 401ks more compelling for the 90% of businesses that don’t have one. Craig had some great insights on what’s happening in that space. Here they are:
If you serve the small plan space, what have you found to be the biggest challenges?
What’s the Value of a 401k Study Group?
In this short interview with Chuck Hammond, President of RRG and co-founder of the 401k Study Group who built his broker-dealer’s study group from 8 to 70 members in three years, we discuss:
- The value of a 401k Study Group
- The lessons Chuck has learned through the Study Group
- Top 401k tools for advisors
How Providers Can Grow Advisor Share
As retirement plan advisors become increasingly important sources of distribution, virtually all providers want to know how they can grow their share of advisors.
In this short video clip, Jason Chepenik, who in 2010 was named the Top Advisor in the Mid-Market Retirement Plan space by the 401kWire, explains some of the steps providers can take if they want to deliver real value to advisors like him (scroll over “Playlist” to view more videos):
Why Income Products Matter
One of the coming trends in the retirement plan space is the “DB-ization” of defined contribution plans.
In this short video clip, Jason Chepenik, who in 2010 was named the Top Advisor in the Mid-Market Retirement Plan space by the 401kWire, explains why the next generation of retirement income products from leading fund companies matter:
Jason Chepenik: Succeeding in the retirement plan industry
As part of a new video series interviewing advisors and other folks involved in the retirement plan industry, Jason Chepenik, CFP® AIF® who is a Managing Director at Chepenik Financial, offered to kick things off.
If you haven’t already heard of Jason, in 2010 he was named the Top Advisor in the Mid-Market Retirement Plan space by the 401kWire and is a frequent speaker at conferences. More importantly, Jason is fun to watch on video (though we did edit out his on-air sneeze).
Plan Advisors: Retiremap’s Key Benefits
For top retirement plan advisors, Retiremap helps them differentiate their services when it comes to engaging participants and delivering education. At the same time, Retiremap measures their impact on plan outcomes by boosting participant savings rates and reducing plan sponsors’ fiduciary liability.
For producing advisors, Retiremap provides them with access to participant level data in order to better serve participant needs in less time.
Unlike providers’ tools, Retiremap is advisor centric and offers a holistic participant assessment by analyzing their short term goals and household profile. This short six minute video provides an in depth overview of the benefits and how the software helps top advisors win more plans.
***To download this video for your iPad, tablet or computer, click here***
Plan Sponsors: This Is How Retiremap Works
If you’re a plan sponsor and want to see how Retiremap works to engage participants and reduce your fiduciary liability, just watch the video below. Retiremap was developed with a leading behavioral economist to be highly engaging, while reducing fiduciary liability through pushing education out to all participants and offering verifiable 404(c) disclosures.
To download a copy of this video onto your iPad, tablet or laptop, just click here.
Here’s how it works:
Jason Chepenik and Boulevard R Partner for Webinar on “How to Win More Retirement Plans”
Boulevard R is happy to announce the sponsorship of a Financial Planning Association® webinar with Jason Chepenik, CFP®, AIF® on Wednesday, May 25 at 2pm Eastern.
To register on FPA’s website, click here.
The webinar, designed for financial advisors, is entitled How to Win More Retirement Plans and will cover:
- How the retirement plan industry is changing and what that means for fiduciaries and non-fiduciaries
- How fee disclosure and increased demand to improve plan outcomes is creating opportunities for financial advisors
- How you can use some of the same prospecting strategies and tools that top plan advisors employ to win new plans
We’re very fortunate to have Jason running this webinar. Recognized as one of the top advisors in the country, Jason is a Managing Partner at Chepenik Financial. Jason’s professional highlights include:
- 16 years Investment/Retirement Industry Experience
- Named to 2011 The 401kWire 60 Most Influential DC Advisors
- 2010 Top Advisor in the Mid-Market Retirement Plan space by the 401kWire
- 2010 401kWire “100 Most Influential People in the Defined Contribution Industry” Recipient
- 2009 401kWire “Top 40 Defined Contribution Advisor” Recipient
- 2009 Institutional Investor “Rising Star” Recipient
- 2007-2009 PLANSPONSOR “Most Successful Retirement Plan Advisors” Recipient
- BlackRock Defined Contribution Council Member (2010)
- Prudential Financial Advisory Council (2010 Member)
- Putnam DC Advisory Council (2010 Member)
To sign up for the webinar (free for FPA members) visit:
http://www.fpanet.org/professionals/Learn/VirtualLearningCenter/ClassDescriptions/MoreRetirementPlans/
Schwab’s New 401k Play
At the 401kWire Influencers Summit we were treated to a presentation by Schwab’s Jim McCool on the next (4th) generation of the 401k. Jim is the EVP of Institutional Services at Schwab and his presentation was about the evolution of the 401k indsutry as Schwab sees it.
Jim is a great platform guy and he gave a presentation that highlighted the need for two things:
- Low cost investment options (in Schwab’s case, their own ETFs)
- Better advisory services for participants
This is not Jim McCool and probably not a financial advisor either. Good chance he
Thankfully, Jim kept the slides simple and visual (it was post-lunch) and his presentation used the concept of “piloting participants,” which came naturally for him since he is, in fact, a pilot. As most presentations do, Jim started off with the pain points, which are pretty familiar:
- 3 in 4 Americans are not on track for retirement
- More participants think their 401k plan is more complex than their healthcare plan
- Only 1 in 10 participants receive advice, though when they do, their outcomes are dramatically better
Then Jim got in to some numbers that I thought were interesting (being a recordkeeper, Schwab must have access to current data)- for a mid sized plan (I’m guessing around $20mm), the all-in cost for services is 55-95 BPS. If you add advice to that, the cost for the same plan can almost double (+60 BPS) to 115-155 BPS.
Jim then cited a report from Financial Engines and Hewitt on the impact of receiving help through a retirement plan. It’s a pretty fascinating report that you can download at http://corp.financialengines.com/employer/DCHelpReport_Jan2010.pdf. One of the key findings Jim highlighted illustrated the potential outcome of a “Help Participant” versus a “Non-Help Participant” after 20 years, where each invests a lump sum of $10,000 at age 45:
- Where will all the advisors come from?
Will Schwab repurpose their existing brokers through education (TRAU, for example) so that they’ll be qualified to work with participants and plan sponsors? The acquisition of NRP by LPL made sense as a way to create a pipeline for the 12,000 independent LPL advisors into the workplace. Where will Schwab get the bodies? Will they set up a similar referral strategy to what they’ve created with wealth managers? - What role does independence play in this model?
Besides fee transparency and improving plan outcomes (a topic of discussion since the inception of the 401k), independence is a key trend. Though it will take a while, the shift is clearly toward the independent fiduciary advisor in the 401k industry (though as the person sitting next to me during the 401kWire event pointed out, what happens when smaller independent advisors who do not have significant financial reserves start getting sued by plan sponsors and/or participants? Insurance I guess…). How does Schwab’s model account for independence? I’ve had a Schwab account in the past and found that the advisor that was assigned to me only gave me fund tips based on what was performing at the time. I didn’t have a real connection with this guy and he didn’t deliver any real value, short of saving me 30 minutes of research time on their site (30 minutes that I had to spend traveling to their office). How deeply will participants trust their advisor if they know the advisor isn’t an independent? - Who will pay for the extra BPS?
Do plan sponsors want to add on 60BPS (if that’s what it’s going to cost) in order to have an advisor deliver advice in a workplace setting? That seems like a bit of a hard sell in this environment and I don’t think plan sponsors will care that much unless they are mandated to improve their outcomes. What technology innovations will Schwab leverage to bring down the costs? On the back of a recent Schwab publication, I saw Charles Schwab sitting in a chair with an iPad in hand. Is that a hint?
Making It Easy For Advisors
Having worked with financial advisors for a few years now, we recognize that they are a busy bunch often running in many different directions.
To make things easier for them, we are formalizing the Retiremap sales and implementation process so that all they really have to do is come up with a list of plan sponsors who would be interested in improving plan outcomes and reducing fiduciary liability and then make the introductions. We’ll take it from there. Of course, the advisor is always part of the process, but they do not have to drive the process and we make sure to stay in regular contact.
This flow chart helps make Retiremap’s sales and implementation process more clear for advisors, so that they better understand all the ways that the Boulevard R team provides support. Our mantra is:
“You make the introductions and we will do everything else.”
In addition to creating a landing page like this for advisors (you can request your own landing page here), we will also create a powerpoint slide deck that you can present on its own or we can incorporate it into your Overview of Services presentation. Here is a firm-branded version of the presentation:
Finally, to make things even clearer, here are some common FAQs that advisors have about implementing Retiremap:
How do we get participants to use it?
Boulevard R helps you actively promote plan education and engage participants through unique delivery options that include:
- Webinars
- Email activation links that originate from the benefits contact, but are sent by Boulevard R on their behalf
- Mobile computing (eg. iPads)
How do we roll it out?
Once the agreement has been signed, Boulevard R will work with you and the plan sponsor to create a timeline for an initial participant webinar, as well as presentations and email campaigns. Our support team is also available to do presentations throughout the year and can coordinate email campaigns or tablet (eg. iPad) deployments based on your schedule.
What if I do not meet with participants?
Retiremap offers more personalized educational value to participants than most plan education meetings and in significantly less time. For participants seeking advice or financial planning assistance, you can refer them to a qualified advisor you trust through your Advisor Management Interface.
