Partnering On In-Plan Advice

Recordkeeper Empower and two large RIA advisories discussed why they’re partnering on adviser-managed accounts geared toward plan participants of all asset levels.

As retirement industry players seek ways to further customize 401(k) savings beyond the target date fund, a recordkeeper and two large retirement plan advisories say they view adviser-managed accounts as a promising option.

Representatives from Empower, OneDigital, and Sageview Advisory Group discussed what they see as the benefits and promise of the in-plan investment advice vehicle in a session held at the National Associations of Plan Advisers 401(k) Summit in Nashville on Monday.

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Empower noted it started offering managed accounts solutions inside retirement plans via a partnership with Morningstar Inc. back in 2022. Then, about five years ago, it started partnering with registered investment advisories on adviser managed accounts; that offering now has about $28 billion in assets and 19 partner firms, with 5 more expected in 2024.

“Customized outcomes we think are the future—[the question is] how do you get there? And we think that you get there by partnering,” said Joseph Smolen, senior vice president, core and institutional markets for Empower. “The value that we bring comes from our employee communication and education and partnering with OneDigital and SageView and their boots on the ground doing the same.”

OneDigital and SageView, which both have retirement plan advisement and wealth management practices, are using adviser-managed accounts as a way to provide personalized advice for individuals who may not be working with or be able to afford a full-time financial adviser.

The participant connection starts, however, with financial education and communication with participants dealing with problems ranging from simple questions to whether they should up their deferral rates, or more complex issues such as estate planning, said Vince Morris, president, OneDigital Financial Services. 

“You’ve got to have some sort of communication and education platform,” Morris said. “We have created digital capabilities that can reach into the plans and connect with individuals.”

Education First

Jon Upham, president, head of institutional retirement at SageView Advisory Group, said his firm has seen increased interest from plan sponsors in recent years in offering a more customized participant offering.

“I think for a lot of years many of us in the adviser space were providing education and trying to work with plan participant at scale,” he said. “But I think all of a sudden the plan sponsor community is really ready to engage with us in this space, and what they always say to us is ‘how are you going to meet the needs of all the people in the plan and how are you going to provide this guidance that everybody is talking about?’”

Upham said that adviser-managed accounts is one method of doing that because it leverages technology to reach more people than they could with individual advisement.

When the audience asked about the additional fees of the AMA on top of 401(k) fees, Empower’s Smolen noted that it depends on the product provider and setup, with partner organizations potentially getting discounts from Empower’s offering as they are helping enroll and educate participants.

Morris said he views the AMA offering as “getting a wealth management service at institutional pricing.” He notes that, when an AMA is done correctly it can adjust to the “actual data points that is within the DNA of the investor.”

Upham added that the setup should come with additional services, such as the ability to speak with a financial coach and “comprehensive solution as opposed to just relying on the technology of the managed account structure” for the added fee.

The group also noted that other customized options are on the table depending on a participants need. Those include offering participants a self-directed brokerage account that they can partner with a financial adviser, as well as technology offered by companies such as Pontera, which connects financial advisers to an investor’s 401(k) assets for management.

Dynamic QDIA

All agreed, however, that their firms will continue to lean into AMAs as a customized option for large groups of participants.

Empower’s Smolen noted that the most popular structure Empower has is the dynamic qualified default investment alternative, in which a plan sponsor chooses an age when their participants are automatically put into an AMA when they are closer to retirement.

Morris said that the retirement industry is working on these personalized options amid one of the “greatest transfers of wealth in history” that will see many people seeking options for management of their 401(k)s and individual retirement accounts. Advisers, he said, are “in the right seat at the right time to help many, many people in different ways.”

Una Morabito, vice president sales and retention, large and NFP & PEO markets at Empower, noted research showing that 87% of retirement providers offer some kind of managed account, and 54% of plan sponsors offer them to their employees.

“It’s here and it’s here to stay,” she said. “This is a place where everybody needs to be comfortable and talking to your providers about how to help those plan sponsors with the customization that they are looking for.”

Talk Less, Listen More

When conducting a finalist plan presentation, it’s more important for advisers to listen to the plan sponsor than get through the pitch deck, according to a panel of expert practitioners.

A good retirement plan finalist presentation is less about how much information an advisory brings as it is about how well they can listen and respond, according to a group of expert practitioners speaking Monday at the National Association of Plan Advisors 401(k) Summit in Nashville.

The experts agreed that one key to a good finalist presentation is not trying to impress a potential client with all you know and can do, but rather, showing them what you can do to solve their most pressing needs.

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“You think the plan sponsor cares about what you care about—they don’t,” said Don Barden, CEO of The Perfect Plan. “Employee benefit heads are thinking about how they can retract and retain talent and how they can improve their business.”

Barden, who has led numerous finalist presentations and wrote a book on elite sales practices, says advisers can go into a presentation with too much information and a “vomit of words.” He noted that it’s crucial first to listen, and then to focus the conversation on three core ideas; any more than that, and the audience may tune out.

“Pick two or three things that they want to talk about, and if they want to go off on tangents, then do it,” he said. “Please don’t go into a finals presentation looking to impress yourself or your team—impress the buyer.”

Know Your Audience

Josh Itzoe, founder and CEO, FiduciaryWorks, often sits on the other side of the table by assisting plan advisers with finalist decision-making. He noted that, although it can be hard for advisers to imagine, many finals presentation are very similar.

“A lot of advisers are married to their pitchbook—they are married to their agenda,” he said.

Itzoe recommended “setting your agenda aside” and building a relationship with the people in the room by posing the question: “what is the most important thing that you need to hear from me about how we can help?”

Just raising that question can help an advisory team identify the most important decision-maker in the room. Often, a leader, such as a CEO or CFO, may turn to someone else to answer, identifying that person’s key role in the selection process. After that discussion, which can sometimes take  20 to 30 minutes, an adviser can turn to the presentation to pinpoint the most relevant areas for the potential client, Itzoe said.

“Once they can start envisioning you working with their employees and how that will look, that is really, really powerful,” he said.

Individual Attention

Jeanne Sutton, managing director, Strategic Retirement Partners, said her team focuses on building a strong relationship and rapport with a potential client along with making sure that the focus is on them, not their own advisory firm.

“Get rid of your pitch deck,” Sutton said. “Build a custom deck for each client.”

Sutton noted that when SRP goes into a finalist presentation, they create a deck in the plan sponsor’s colors and feel of the firm so they already “feel like part of the team” before they even start working for them.

Barden noted that the employee benefits team is often the actual decision maker, whether a chief human resources officer or benefits head. About 74% of those leaders, he said, are women, who will be very influential in making retirement plan decisions for employers in coming years.

He also believes about 75% of finals are not a fair fight, but rather, a way for a plan sponsor to convince themselves of a decision they have already made. When going into a finalist presentation, he would often congratulate the plan sponsor on their decision-making so far and note that no matter which firm they choose, they will do well for their employees.

“That usually takes a lot of pressure out of the room,” he said. “They think, ‘this person told the truth, and we can just relax and see who we want to do business with.’”

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