The industry is changing fast, and retirement planning is becoming a big part of wealth management. Advisors who tap into this shift can expand their services and provide more value to clients.
With the growing demand for holistic financial strategies, now’s the perfect time to dive into retirement planning. As highlighted in Betterment’s first annual advisor survey last year, “Retirement is critical, not optional, business. More than 80 percent of surveyed advisors manage 401(k) plans, and of those who aren’t, the majority intend to.”
The regulatory landscape is pushing businesses – especially small ones – toward offering retirement plans. Nineteen states have implemented state-facilitated retirement programs, with 16 requiring auto-IRAs. And with federal legislation such as a potential SECURE 3.0 on the horizon, more businesses will likely be required to offer retirement plans in the near future. This trend is creating a growing demand for advisors who can step in and offer expert guidance.
By partnering with growing companies on retirement plans and benefits packages, you can seamlessly tap into a new client base – one that’s often in the midst of their peak earning years and actively seeking guidance on securing their financial future. This isn’t just a chance to expand your practice; it’s an opportunity to engage with the next generation of wealth.
Here are four key steps to help you get started:
Before jumping in, take time to really understand how retirement planning works. This knowledge will give you the confidence to serve your clients well and meet their needs.
Depending on a client's goals, they could be suited for one of several plan categories: including defined benefit plans, defined contribution plans, non-qualified or deferred compensation plans, and cash balance plans. Additionally, clients may want to venture into investment accounts, which include qualified default investment alternatives, target date funds (the most popular default option), managed accounts, capital preservation, alternative investments, and retirement income.
A strong client pipeline is crucial for growing your retirement practice. When you’re building it, focus on prioritizing clients based on potential. While most participants may not have significant assets yet, retirement plans open doors to working with individuals who are “high earners, not rich yet” (HENRYs). These clients are likely to grow their wealth over time and can become key players in your practice.
By targeting this group, you can also expand into high-net-worth, mass-affluent, and hidden wealth clients down the line. To stand out, offer a tailored approach that includes education, guidance, or advice depending on your client’s needs. This way, you can provide meaningful value and turn participants into long-term clients. As your relationships grow, you’ll also be able to offer a variety of wealth services under this umbrella – including IRA rollovers, tax-deferred options, debt management, financial planning, retirement account consolidation and more.
You don’t have to do everything yourself. Developing relationships with like-minded companies to provide outside expertise can offer tremendous growth support with the potential of connecting you with new business leads. Consider outsourcing things like fiduciary services, record keeping, and third-party administration. This will free you up to focus on what you do best – building strong client relationships and fine-tuning your retirement services.
When working with businesses on retirement plans, be prepared to address their concerns – especially around costs. Many employers hesitate to offer defined contribution (DC) plans, but you can help them understand that the right plan can actually save them money in the long run. A key advantage of DC plans, compared to healthcare plans, is that participants typically cover most of the expenses themselves. And businesses that don’t offer a DC plan are at a recruiting disadvantage in today’s job market.
Advisors who embrace this shift can strategically leverage their expertise, industry relationships, and deep understanding of financial planning to provide enhanced value and comprehensive solutions. While navigating this transition may appear complex, it is a pivotal opportunity to strengthen client relationships, differentiate service offerings, and drive long-term business growth.
By taking a strategic approach to your client pipeline and offering targeted services, you can unlock new growth avenues and build lasting relationships with the next generation of clients. It’s about meeting clients where they are, guiding them through retirement options, and providing value that positions you as their go-to advisor.
As you build relationships with participants, particularly those with larger account balances and higher earning potential, you’ll begin to identify more savvy investors. And with the right partnerships, this can only lead to more opportunities in building assets under your advisement.
Thomas Moore is Head of Betterment Advisor Solutions, a leading, all-in-one custodial platform for independent RIAs.
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