Adviser Planning Alert

No one enjoys “being wrong.” Does the risk of that keep you out of the planning process? Is it a comfortable way to disassociate yourself from the results of the future? Does refusing to plan comfortably insulate you from the discrepancy between predicted and actual year-end comparisons?

Most using the moniker of retirement plan adviser are in this business with an eye toward making a difference. The follow-up to that is, “OK. How?” How do you plan to make a difference?

Your business represents a number of interests. Stakeholders consist of your clients and family and regulators. You also have your own individual concerns. The question remains: Do you take an active role in shaping your own destiny by planning your future, or are you merely a casual observer? In observer mode, you watch your business roll into the future, take whatever comes—and then react.

Shape Your Future

There are three primary and easily discernible paths to making a difference for the benefit of your stakeholders: 1) Deliver premium service; 2) Exploit efficiencies that others cannot conceive; or 3) Innovate. Said differently, you can do it best, you can do it more proficiently, or you can do it first. Each can serve as your road map in nudging your business toward your destination.

Your options are countless and limited only by your imagination. The retirement industry seems to be in endless pursuit of the next big idea to free the masses from retirement peasantry. Will behavioral finance be the saving grace for our industry? Will a new brand of education help you differentiate your firm? Are you capable of being substantially more efficient than your competition? Can your team do more with less, thereby boosting your margins from good to obscene?

Limited by paper and ink, I can list just a few of the options. However, we can drill farther down into three examples to help you jump-start your own creative process:

• Premium pricing. Just as there is always a place for Walmart pricing, there is also always a buyer for the Ritz-type experience. If you have built up a reputation to support premium pricing, keep going! Many advisers can support a higher price structure by being leaders in education. This business model stimulates these advisers to do more with and for their clients because they possess the knowledge base to do so. If you are worth it, don’t back down. You may need to justify your premium price before you have the business, but once you’ve gained it, you should never be in the position of justifying your fees. The level of education you deliver can become your brand.
• Delivering efficiency. To own this space and to use it as the linchpin of your firm’s future, you must accept that you cannot be all things to all plans. Variation erodes margins. If you are choosing to compete on efficiencies, then you will need to refine and narrow the types of plans and participants you serve. Doing this is actually a simple task, but it is never easy to sever business relationships where everything seems to be going well. However, it may be necessary to do so.
• Innovation as a strategy. This can be a costly strategy to implement, and it can leave advisers guessing as to the next move. It can also be an uncomfortable approach if you desire structure, certainty and consistency. But it can also be highly lucrative if executed well. Innovation doesn’t always mean going first; being first can be extraordinarily expensive. But being second—ceding first place to the true pioneers and letting someone else lead the way—is easier, safer and may be better suited to the adviser’s needs. For example, is it vital to develop the next hand-held enrollment device, or is it preferable to be the first to offer such technology in a specific market? As fiduciary definitions are being rewritten toward the end of 2013, how might you use those new rules as tools of innovation for your business?