Outside-IN

Outside-INblog

Outside voices and views for advisers

New Year's resolutions for 401(k) advisers

The retirement crisis requires big and bold solutions from plan providers, advisers and sponsors

Jan 17, 2018 @ 5:30 pm

By Fred Barstein

Opportunities for retirement plan advisers have never been greater. But so are the challenges.

The stakes are high, given the lack of retirement plan coverage for half of America's workforce and the fact that most workers are woefully unprepared for retirement. Advisers have been thrust to the forefront, as most small and mid-size companies do not have the time or knowledge to help their employees prepare for retirement.

Here are the three biggest hurdles 401(k) plan advisers must overcome, and the New Year's resolutions they should be making to have any hope of solving the retirement crisis.

No. 1: Getting plan sponsors' senior management to really care about their 401(k) plan

At a recent educational program for plan advisers, almost all advisers in the room said they either don't have access to senior managers at the companies sponsoring retirement plans, or, when they do, that they are not confident about making a far-reaching presentation on the costs to companies if older employees aren't able to retire; instead, they focus on stale themes like "fees, funds and fiduciary."

It was an honest yet sobering discussion. While I agreed that getting senior managers — the decision-makers — to see how their 401(k) plan can affect the bottom line is challenging, and the insight is bound to often fall on deaf ears, high-value specialist advisers that can't make the argument will continue to see their fees decline while the demand for services rises. That is clearly unsustainable.

No. 2: Integrating retirement with other benefits like HSAs

Most 401(k) and 403(b) advisers like to "stay in their lane," staying clear of other company benefits. Though health savings accounts are the darlings of the 401(k) intelligentsia, most retirement plan advisers are not comfortable getting involved with any benefit beyond retirement.

Not only are there additional revenue opportunities, the integration of benefits for organizations and their employees makes too much sense to avoid. Whether through partnering, acquisition or just plain education and hard work, plan advisers need to be able to have cogent discussions about managing all types of benefits, not just retirement.

No. 3: Improving employee behaviors and moving the needle on retirement readiness

Financial wellness is currently more of a buzzword than a reality. Very little current financial education is changing behavior, while meaningful personal advice is an expensive service for which most people and organizations are not willing to pay.

One simple and cost-efficient solution can be found at the crossroads of behavioral finance and big data.

Information readily available on record-keeping systems can easily make default investment options more meaningful and create the equivalent of personal liability-driven investments. Further, companies like Yodlee are making information about outside assets more transparent, providing a true financial picture of an individual. Behavioral finance tools can automatically push, nudge or suggest better solutions while people are saving or during their distribution phase.

Advisers need to push their partners to offer these tools and make participant data more transparent while also incorporating robo solutions into their practice. They should make financial wellness a goal, not just a buzzword.

These hurdles may seem insurmountable and the resolutions overly aspirational, but the retirement crisis is real. It requires big and bold solutions driven by a coalition of enlightened providers, advisers and plan sponsors, especially their senior management. Big problems require overarching solutions.

Fred Barstein is the founder and CEO of The Retirement Advisor University and The Plan Sponsor University. He is also a contributing editor for InvestmentNews' Retirement Plan Adviser newsletter.

0
Comments

What do you think?

View comments

Recommended for you

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Upcoming Event

Jul 10

Conference

Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video

INTV

Cameras roll at Best Places to Work for Financial Advisers' awards

Advisory firm winners on the top 50 InvestmentNews list of Best Places to Work for Financial Advisers explain the significance of this recognition at the Chicago awards event.

Latest news & opinion

5th Circuit denies states' second attempt to defend DOL fiduciary rule

The three-judge panel split again, 2-1, in deciding not to take another look at the motion to intervene by California, New York and Oregon.

Pass-through tax strategies for business-owner clients

Shifting business structure, changing filing status and spinning off equipment are examples of ways business owners can take advantage of the deduction.

Finra anticipates oversight role for SEC advice rule

CEO Robert Cook says one area for examination could be the proposed requirement that brokers act in the best interests of their clients.

IBDs with the most CFPs

Here are the 10 independent broker-dealers that employ the most certified financial planner professionals.

Why we must create a more diverse and sustainable financial planning profession

CEO explains how, why a firm should commit to conscious inclusion.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print