PANC 2018: Now What?

How retirement plan advisers need to function as business owners in order to grow their practices.

SeaPort Group, Morgan Stanley Institutional Wealth Services, is a five-person team operating out of the Pacific Northwest whose focus is retirement plans, said Josh Ulmer, senior vice president, speaking on the “Now What?” panel at the 2018 PLANADVISER National Conference.

The practice serves 44 retirement plans with $1.2 billion in assets. “In the past 12 to 18 months, we have used our presence to try and expand,” Ulmer said.

After working as a recordkeeping wholesaler for 15 years, a few months ago, Chris Miller joined aggregator Pensionmark Financial Group as managing director. The firm has 105 producers and $52 billion in assets under management (AUM), Miller said.

Ulmer said that he has come to realize that if a practice wants to grow, “you have to function as a business owner” as opposed to merely an adviser. “The skillset may not come naturally, but in order to compete at the highest level, I made sure I had a firm understanding of our deliverables,” he said.

Pensionmark focuses on “people, process and product,” Miller said. “With technological advances and increasing competition in the retirement planning industry, there is more focus on participants than ever,” he said.

Ulmer attributes SeaPort Group’s success to “understanding how to create scale with service providers and investment solutions.” With respect to achieving the former, the practice only works with specialist service providers and acts as a relationship manager for those organizations. With regard to making the most of investment solutions, SeaPort Group “studies data,” he said. Ulmer has come to the conclusion that “few active funds add value.” The firm has also streamlined investment solutions across its client base.

Another thing that has helped SeaPort Group grow, he continued, is that the “team has clearly defined roles.” But one thing that is not scaleable is one-on-one meetings with participants, he said.

Pensionmark offers efficiencies for its affiliates in terms of client service, technology and investments, Miller said. “We handle all back office functions.” It also uses Payroll 360, middleware that can analyze retirement plan data in order to help advisers serve sponsors and participants better, he said.

While Ulmer is the only adviser on the SeaPort team, he said he realizes he may need to change that in the future. “If I want to continue to grow, I need to create career paths for my team to become advisers, and to give them the ability to win and retain clients,” he said.

Asked what he thinks are the leading sources of disruption in the retirement planning industry, Miller said it is the prospect of open multiple employer plans (MEPs), managed accounts and social media. He said it is imperative for practices to embrace social media, as many Millennials and Gen Xers communicate through those channels, as opposed to e-mails.

It is also important for advisers to address people’s financial concerns outside of 401(k)s, Miller said. Ulmer agreed that advisers need “a more holistic deliverable,” as well as to address “retirement income and distribution planning.”

An additional disruption that Ulmer thinks is taking form is “client expectations on how we use data specific to their plans, to improve outcomes and make better decisions. In order to get at that data, we need to know each recordkeeper’s capabilities, and they vary. Digital and automation will also disrupt our industry,” he predicted.

Pensionmark has gone beyond recordkeeper data on plans and participants to create its own aggregation tool, Miller said.

Asked what the biggest challenges in the next 12 to 18 months will be, Miller said one is “navigating all of the new technology products from the recordkeepers” and another is “building efficiencies to make practices better.”

Ulmer said he sees three challenges, with the first being the ability of retirement plan advisers to articulate how they truly differentiate themselves from their competitors. A second will be “demonstrating your value, actually showing sponsors how you impacted plans.” 

Thirdly, Ulmer expects equity market volatility could return over the next 36 months. With the bull market having lasted a decade, retirement plan advisers will find themselves working with “a whole generation that has not seen volatility,” he said. “This will be a great way to differentiate yourselves.”