Data & Research March 21, 2024

Frequent Contact, Plan Knowledge Can Help Advisers Earn Business

A YCharts survey studied how to attract and retain new clients, noting respondents’ preference for extensive communication.

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Among respondents to YCharts Inc.’s Advisor-Client Communication Survey, which sought to understand how adviser strategies align with evolving client preferences, 26% felt the adviser for the client’s employer-sponsored retirement plan was a factor influencing the client to sign on privately with that adviser.

The top three factors that influenced clients’ decisions to enlist the services of their financial advisers were referral from family, friend or network (51%), personal relationship (40%) and positive online reviews or testimonials (31%), followed by experience in an employer-sponsored retirement plan.

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“Individuals may naturally seek advice from advisers who understand the intricacies of their retirement plans,” says Kara Hughes, YCharts’ vice president of marketing. “However, frequent and effective communication is essential in adviser-client relationships, whether individuals discover their adviser through employer-sponsored retirement plans or other avenues.”

When it comes to retention and referrals, communication is of vital importance to client confidence, according to a YCharts report based on the survey. Respondents who were frequently contacted by their employer plan adviser—monthly or more—said they were very comfortable with their financial plan (71%) compared with respondents who were infrequently or rarely contacted—every four to six months—by their adviser (43%).

Wealthier clients reported a preference for more frequent communication from their advisers. Additionally, most clients with greater assets under management said they have either changed or considered changing advisers in the past year, emphasizing the importance of timely engagement, the research highlighted.

Nearly four out of five participants said that more frequent or personalized communication from their financial adviser would enhance their trust, increase their loyalty and make them more likely to recommend the adviser’s services to others. This sentiment was even stronger among clients aged 30 to 44 and those with at least $500,000 in assets under management. The research noted that providing top-tier service to your most significant clients can be difficult to sustain.

“Enter: the ‘champagne or sparkling water’ analogy,” the survey suggested. “It would be time-consuming to send a personal note to every client over any period of time. But serving those higher-value clients’ champagne (a lot of personalized communication) shows how much you value your relationship with them. Other clients might not warrant as much personalized contact but would still appreciate sparkling water every now and then.”

With new clients joining and existing ones’ preferences evolving, maintaining a consistent communication strategy is key, the YCharts report stated. This could involve setting objectives such as sharing weekly insights on LinkedIn, sending out biweekly newsletters via email, publishing monthly market updates on a blog or scheduling quarterly calls with high-net-worth clients.

The survey added that while most clients rely on their adviser or investment account platform for market updates, many also seek information from financial blogs, podcasts and social media. Clients have also expressed interest in diverse topics.

“Experiment with new communication methods in an effort to better resonate with clients,” YCharts advised. “For instance, a podcast covering market trends and news might effectively reach one group of clients, while a blog covering the latest tax planning techniques may strike a chord with older clients who are approaching retirement.”

The survey drew responses from 775 Americans who work with a professional financial adviser. The responses were sourced via SurveyMonkey in February.

Client Service March 21, 2024

Empower Announces Suite of Guaranteed Income Solutions For Retirement Plans

Empower plans to distribute the four new offerings through advisers and consultants.

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Empower today announced plans for a suite of new partnerships to offer in-plan and out-of-plan guaranteed retirement income solutions for investors saving through workplace plans available through advisers and consultants.  

Empower announced multiple options to convert participant retirement savings into an income stream, which can be customized to individual needs for guaranteed retirement income.

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Empower’s retirement business serves “smaller plans up to the some of the largest plans in the U.S., [where] the demographics [of each] are different, the needs of those plans are different, certainly preferences are different and so having a one-size-fits-all doesn’t make a lot of sense for us,” explains Tina Wilson, chief product officer at Empower.

Each of the Empower guaranteed options will be debuted on its own timeline, with all being in the market by October, Wilson adds.

“Some will [launch] within the next 90 days, but everything that [is launching] will be released by the [beginning of the] fourth quarter,” Wilson says.

A Suite of Offerings

Empower’s four new offerings include:

  • managed accounts with a guaranteed lifetime income withdrawal benefit, featuring Income America by American Century Investments;
  • a target-date fund series featuring American Funds and TIAA’s secure income account with flexPath Strategies managing the glide path allocations and the collective investment fund provided by Great Gray Trust Company, LLC;
  • Empower managed spend-down strategy and proprietary variable annuity;
  • and access to an annuity marketplace that offers a out-of-plan annuity offerings through Blueprint Income.

“They’re all insurance contracts,” Wilson says.

More than three-quarters (76%) of plan sponsors prefer to retain in their plans the assets of both retired and terminated participants, compared to 44% in 2015, according to a March 2023 Empower white paper with data from the Callan LLC 2022 DC trends survey.

“We want to make sure that we do have a range of options to help those plans and their fiduciaries make the best decisions based on their needs, their demographics, and, frankly, what’s going to drive the right outcome for their participants who we’re all here to serve,” WIlson says. “If we’re going to serve the needs of those plans and those participants, a big part of that need is to have retirement income capabilities.”

For Empower, the increased plan sponsor interest in retaining assets means greater demand for guaranteed income products, “the time is right now” to launch because participants can invest to create a stream of income, Wilson adds.  

Engineering Retirement Income in the Managed Account

Empower’s managed account, typically under the new offering, will begin to invest in the guaranteed retirement income sleeve about 15 years before retirement.

“It’s highly personalized, meaning that the individual may or may not get a recommendation around income depending on whether they need it,” adds Wilson. “A lot of people do [but also] there’s a cohort of people where guaranteed income doesn’t make sense for them.”

For participants, Empower’s “advice engine” delivers personalized guidance about how much guaranteed retirement income individuals should purchase, adds Wilson.

“We have a lot of information about [participants],” Wilson says. “Just by being a recordkeeping client, we know…your salary, we know your [retirement account] balance, we know how much you’re saving every period…we know your match, we know your plan design, so there’s a lot that we know about you without your ever giving us information. We call that passive personalization.”

Plan sponsors can also provide additional information, Wilson adds.  

Participants may choose to allocate between 0% and 30% of their assets to the retirement income sleeve for guaranteed income, according to Empower.

American Century will allocate participants’ assets to insurance products, within a collective investment trust that has investments as well as embedded insured components, Wilson says.

Empower plans to distribute the retirement income products through advisers and consultants, says Wilson.

“Income products have been around for a long time but they’ve been there as standalone products that frankly, participants couldn’t absorb on their own,“ she says. “They struggled with making the appropriate decisions, so what’s also changed is our ability to think about income in conjunction with advice.”

Empower is a retirement plan recordkeeper for $1.5 trillion in assets, for 18.5 million participants and 70,00 plans, says an Empower spokesperson.

Data from the PLANSPONSOR 2023 Recordkeeping Survey shows Empower ranked second overall among recordkeepers, serving as plans with $1.231 trillion in assets, for 16.83 million people and more than 80,000 plans on its proprietary recordkeeping platform.

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