In a feature story in the Fall issue of NAPA Net the Magazine, Judy Ward looks at the battle between recordkeepers and advisors over financial wellness business.
There’s a lot of talk these days about how plan advisors—and recordkeepers—are aiming to take the lead in helping American workers with financial wellness and planning.
“It is the topic du jour,” says Thomas E. Clark Jr., chief operating officer and partner at Boston-based The Wagner Law Group. “Part of it is that there is this incredible clamoring from participants for help. And part of it is fee compression: With fees getting tighter, advisors are saying, ‘What additional services can we provide, to keep the fee level?’ And from a recordkeeping platform perspective, for them it’s ‘innovate or die,’ right? They want to be the one-stop shop for a participant’s financial life. They want to own the participant experience.”
How Two Advisory Firms Approach It
During the pandemic, employers have become a lot more aware of the financial stressors their employees face, says Brad Arends, co-founder and CEO of Albert Lea, Minnesota-based intellicents inc. “Employers are now enamored with financial planning as an employee benefit, and I’m telling you, it’s not hard to get appointments with employers to talk about this,” he says. “They know that they need it to offer to their employees, but they don’t know how to get it. It’s a door-opener for an advisor—but you have to then be able to actually deliver on the service.”
The worksite financial wellness service at intellicents has expanded over time, Arends says. “It really started out as a value-add to our retirement advisory practice for our 401(k) clients,” he says. “Today, it has evolved into a stand-alone product.”
Focusing their services only on the “3 Fs” (funds, fees, and fiduciary) did not do enough to impact participant outcomes, the intellicents team realized. “We were able to move the dial, but there was a limit on how far we could go,” Arends recalls. “We saw that there were still a lot of participants who, from a financial wellness standpoint, were a mess. We sat back and said, ‘If we want to get retirement readiness up to 75% to 80% of plan participants, we need to start teaching them how to be more financially fit overall.’”
Intellicents developed the methodology to do a “foundational” financial plan for a participant without his or her input, based on basic data such as someone’s age, income, and 401(k) balance. It also began hiring CFPs (Certified Financial Planners), who focus on working one-on-one with participants who want to go further after receiving their foundational plan, and do a comprehensive, individualized financial plan.
The intellicents approach relies initially on technology, but mostly on boots on the ground. “What we’ve found engages participants is to provide them with a foundational financial plan, and give them the opportunity to work with a financial planner to do a comprehensive financial plan,” Arends says. “Our model at intellicents is to put financial planners in an area where we have a high population of 401(k) client participants. We’ve found a way to service these participants, do it at scale, and make money.”
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