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.


What do you think?

View comments

Recommended next


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 It'll help us continue to serve you.

Yes, show me how to whitelist

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


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print