PANC 2019: The Role of Participant Services in a Retirement Advisory Practice

Offering guidance to participants is critically important, advisers say, and can yield profitable wealth management relationships.

From left: Alison Cooke Mintzer, PLANADVISER/PLANSPONSOR; Grant Arends, intellicents; James Marshall, Spectrum Investment Advisors; and Brian Hanna, Everhart Advisors. Photograph by Matt Kalinowski. 

At “The Role of Participant Services in a Retirement Advisory Practice,” Day One of the 2019 PLANADVISER National Conference (PANC) in Orlando, Florida, advisers underscored the importance of providing financial advice to participants. The benefits are threefold: It helps the individuals, has been a differentiator for the adviser practices, and has led to profitable wealth management services.

Intellicents was founded as a bundled retirement plan service provider, so, since its inception, it has offered participant services, said Grant Arends, the company’s president. In 2015, it spun off its recordkeeping services and rebranded its wealth management services as “personal financial management”—many participants don’t think they have enough assets to qualify for “wealth management,” Arends explained. He said offering this service is important and Intellicents’ “service model has participant services engrained in every part of our firm.”

Spectrum Investment Advisors has been offering one-on-one advice for participants for the past 15 years but, in the past few years, has kicked things up a notch. It now supplies laptops and iPads in the sessions so participants can take positive action on the spot to improve their retirement savings, said James Marshall, Spectrum chairman. The firm also offers model portfolios, which helps its advisers develop relationships with participants, Marshall said.

Everhart Advisors has always offered “high-touch advice,” said Brian Hanna, an Everhart senior plan consultant. “Founder Scott Everhart saw that need. We now see opportunities for one-on-one wealth management sessions, which are now becoming their own profit center.

“We have always viewed advice as a differentiator,” Hanna continued. “We have a team of CFP [Certified Financial Planner] educators who conduct one-on-one advice, which is a unique aspect for us. It’s an essential part of our sales process. Now when we prospect for business, plan sponsors ask about our education and advice resources.”

Spectrum additionally educates its plan sponsors, Marshall said. “We are the adviser for the Wisconsin Institute of CPAs [Certified Public Accountants]. We conduct a seminar twice a year for our plan sponsor clients. Spectrum also has two coffeehouses in its office where financial education seminars are held. We then get that information out to our participants through a WebEx.”

The education offered to participants also needs to be holistic—i.e., institutionally priced, comprehensive financial wellness, Arends said. “We talk to them not just about tomorrow’s money but today’s money,” he said. “This is the place where you will differentiate yourself.”

Because Everhart Advisors provides education and advice, it asks its recordkeepers for quotes just on technology and tools, Hanna said, adding that it’s important to charge plan sponsor clients for these services. “Plan-level services are overpriced, but participant services are underpriced,” he said. “You need to underwrite that and price them accordingly. Figure out how many days on the ground it will take to offer these services. Look at the number of participants and assets. Price out the planning. Employers are starting to pay for that.”

Spectrum charges 50 basis points (bps) on assets under management (AUM) for its education and advice and carefully measures its services, Marshall said. Its goal is to have $200,000 in revenue per every employee. It has been able to offer education and advice at a reasonable cost by hiring retirees who are CFPs and bankers to work part time, he said. “They make excellent counselors as they were successful in their own right. They have the passion for the job but don’t need the job.”

Likewise, Intellicents hires CFPs to develop their own book of business, Arends said. “They are pleased to talk to participants about outside assets.”

He noted that getting sponsors and participants on board for his firm’s advice is typically a “slow roll because the education they have experienced has been ‘a dog and pony show’ from vendors who have spoken over their heads. We talk about things employees can control, such as how much they should save and how much they will need.” The word gets out, and Everhart then successfully schedules its one-on-one sessions with participants, Arends said. “They begin to realize the value.”

“Having a separate engagement with participants on wealth management is beyond ‘sugar on top,’” added Hanna. “That’s where we see significant opportunities. Our CFPs are building books of business that are highly profitable for our firm. One has built a book of business over the past 10 years that now generates $1.5 million in revenue [annually].”

As to advising participants on rolling their 401(k) assets over to an outside account, intellicents has taken “the fiduciary rule to heart,” Arends said. “We look at the various options for rollovers, and it has to justify the cost.” If the participant decides to roll his money out of the plan, intellicents has him sign a disclosure document acknowledging that his assets will now be managed in a nonfiduciary capacity, Arends said.