Convergence of retirement planning and employee benefits is here

Advisers that leverage this trend will reap the rewards

Feb 13, 2019 @ 3:23 pm

By Fred Barstein

Ten years ago, only a small percentage of financial advisers offered fiduciary advice services, either because their broker-dealer would not allow it or because there was more money in selling commissioned products. Now, more advisers than not — especially in the 401(k) world — act as fee-based advisers.

Coming soon: the convergence of employee benefits, retirement, wealth management and insurance, equating to total human-capital risk management. This is not only appealing to employers, but also offers better outcomes and access for workers.

Perhaps unsurprisingly, then, insurance and benefits firms such as Hub International, with 240,000 corporate clients, are aggressively pursuing retirement practices, evidenced by that firm's recent purchase of Sheridan Road Financial, a large national retirement advisory practice.

Why is the convergence of corporate benefits, retirement and insurance happening now? And how should retirement advisers and wealth managers leverage this opportunity?

Part of the reason is technology, according to David Reich, national president of retirement for Hub.

"Ten years ago, the technology was not available to analyze data and create models to guide employers on how to best spend their benefits dollars," he said.

Retirement advice firms also see cross-selling opportunities. For example, Daniel Bryant, co-founder of Sheridan Road, said his team had been exposed to 40 cross-selling opportunities within weeks as part of Hub.

"Retirement advisers have large client lists," said Hugh O'Toole, CEO of Innovu, a data analytic firm, and former head of sales for MassMutual's retirement division. "They often have deeper access to the C-suite while benefits have higher margins."

Stuart Simchowitz, a retirement plan adviser with RMR Wealth, believes it's easier to access C-suite executives through benefits rather than retirement conversation.

"Retirement still does not register on the P&L for smaller firms," he said. "Benefits currently do because of out-of-pocket costs."

Other firms like NFP, Lockton and Gallagher have seen the opportunities possible in combining insurance, benefits and retirement for years. Now new firms like Hub are entering with mandates from their owners to grow.

"Cross-pollination can increase revenues by 30%," Mr. O'Toole said. "Firms may see only 10% growth without it."

What's the outlook for retirement advisers who do not offer benefit services to their corporate clients?

At a 2018 InvestmentNews event attended by RIA aggregators focused on the retirement market, executives were asked whether retirement specialists can survive without joining a larger firm like Captrust or SageView. They can survive, the executives said, but significant growth will be difficult.

That may also be true for all retirement advisers (not just specialists) or any adviser who works with corporate clients but does not offer benefits or partner with a firm that does. And it's not just because of growth opportunities.

Employers see the upside for them and their workforce in combining insurance, benefits, retirement planning and wealth management in the form of finance wellness services to their workforce. An adviser that offers all four services will be more likely to be hired, usually at the expense of those who ignore the coming convergence.

Fred Barstein is 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

Sep 10

Conference

Denver Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six 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

Female leaders highlighted as future of financial advice

InvestmentNews recognized 20 Women to Watch for their efforts to advance the financial advice industry.

Latest news & opinion

Finra panel dismisses $100 million case involving drop in Merrill Lynch stock

Former brokers bringing charges related to stock losses during financial crisis have had 15 cases proceed, four stopped so far.

Principal-Wells Fargo retirement deal would be among largest ever

Acquisition would be in line with trend of record keepers seeking to gain scale to combat fee reduction.

Finra panel dismisses $100 million case involving drop in Merrill Lynch stock

Former brokers bringing charges related to stock losses during financial crisis have had 15 cases proceed, 4 stopped so far.

ESG options scarce in 401(k) plans

There's growing interest among plan participants, but reluctance to add funds that take into account environmental, social and governance factors persists.

Ameriprise getting ready to launch its bank

Firm's advisers will soon have access to lending products such as mortgages.

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