Pandemic Accelerates Practice-Growth Trends
Through March and April, many retirement plan advisory firms said they were able to meet their existing client service demands while also maintaining fairly robust growth, thanks in large part to the fact that sales cycles in the industry are so long—many advisers had new relationships already in development when the pandemic struck.
As the months have dragged on, however, and social distancing requirements have remained in place, new plan sales have shown some signs of drying up. According to Deb Dupont, institutional retirement research director at the LIMRA Secure Retirement Institute (SRI), this trend has accelerated as the year has progressed, but it is in fact not a new phenomenon.
LIMRA SRI’s data show that, in the last three years, only 51% of “core” plan advisers, 40% of “medium” advisers, and 30% of “occasional” advisers have sold at least one brand-new plan. Core advisers are those making the majority of their income advising defined contribution (DC) plans, while medium advisers earn between 20% and 49% from DC plans, and occasional advisers earn less than 20%.
“It’s interesting to observe how, during the pandemic, the sale of takeover plans has not dropped as dramatically,” Dupont says. “For startup plans, though, we have definitely seen a drop-off in the third-quarter time frame.”
Despite the challenges, many advisers are still having success creating new plans and winning established ones. David Hinderstein, president at Strategic Retirement Group, part of OneDigital, says his firm has been able to stay on track this year in terms of its growth targets—but this has taken a lot of work and flexibility.
In speaking to colleagues, Hinderstein says, he has found a renewed focus on using referrals and centers of influence as a way to contact and get to know potential new clients.
“Telling the story of things we are doing [for] our attorney partners or our auditor partners is more important than ever, because they will often carry this story to their other clients who may need our services,” he says.
“It has become increasingly important for advisers to think about ways to build trust with new clients in a socially distanced world,” Dupont says. My conversations with both advisers and the plan sponsors they serve have revealed an impressive amount of innovation in the areas of outreach technology and communication tools.”
Workers With a ‘Planning Mindset’ Are …
more satisfied
with their overall
financial life
more apt to have a strong sense of personal control over their debt
more apt to have
a long-term plan with
overarching goals
more satisfied
with their overall
financial life
more apt to have
a long-term plan with
overarching goals
more apt to have a strong sense of personal control over their debt
more satisfied
with their overall
financial life
more apt to have a strong sense of personal control over their debt
more apt to have
a long-term plan with
overarching goals
more satisfied
with their overall
financial life
more apt to have a strong sense of personal control over their debt
more apt to have
a long-term plan with
overarching goals
In its 2020 Retirement Study, Wells Fargo, working with Harris Polls, found that among 4,950 Americans polled in August, those with a “planning mindset” seemed to be weathering the pandemic better than those without one. This was true for people whose employment was affected as well as those for whom it was not. Wells Fargo calls participants with a planning mindset those who set goals and plan for their near- and long-term financial needs.