In the cover story from the latest issue of NAPA Net the Magazine, nine of NAPA’s Top Women Advisors discuss the ways the industry will evolve over the next 10 years.
“Years ago, we were seen as just an investment expert, and our role as advisors has only increased over time,” says Renee Scherzer, a principal of 401K Resources in Scottsdale, Arizona. “As we move forward, I think we will be reinventing what a plan advisor is, and what services we provide.”
Nine of this year’s Top Women Advisors shared how they see the retirement business, and the role of plan advisors, evolving in the next 10 years. “I think there is the potential for us to see the most seismic shift that we’ve ever had,” says Jeanne Fisher, managing director, Nashville at Strategic Retirement Partners. Only the transition from pension plans to defined contribution plans in the 1980s and 1990s compares, she thinks. “So many things are going to change in the next decade,” she adds.
Changing Dynamics
Sponsors, advisors, and participants face changing dynamics these days. Plan sponsors increasingly want their advisor to play a key role in both directly and indirectly helping participants to retire on time, with enough savings. “Imagine a pyramid of services,” says Jean Duffy, senior vice president at CAPTRUST in West Des Moines, Iowa. “At the base level are the basics, such as having all the plan documents and keeping up with compliance requirements. The second level is procedural prudence, things like monitoring vendors and funds, and benchmarking them. Now, we are really at the top level of the pyramid, and it is about participant success and outcomes.”
“At the top of the pyramid, the real value-add is, what are you doing to move every individual employee closer to having a successful and rewarding retirement?” Duffy continues. She mentions five main areas of work that advisors do: plan design, participant education, fiduciary processes, vendor management, and investment management. “I think we have to look at each of those five areas and say, ‘What can I do in that area to help get participants closer to the end goal?’” she says.
At the same time sponsors’ demand for services from their advisor has increased, fee compression set in, and will keep having a big impact on advisors in the years ahead, believes Julie Braun, corporate retirement director at The Dubie Group at Morgan Stanley in Colchester, Vermont. “As advisors, we’re all trying to do more with less,” she says. “Plan advisors are going to need a well-thought-out, efficient process, to do more with less. And they’ll need to really think about the clients they are bringing on, and whether they make sense for their practice.”
The services that made up a plan advisor’s core value-adds in the past won’t be enough in the future, predicts Erin Hall, managing director, Los Angeles at Strategic Retirement Partners. “We’ve seen it before: The advisors who held their services out as ‘My funds are better than your funds’ have seen their services become commoditized,” she says. “Now we are seeing some next-step services be commoditized, like fee benchmarking. I think that the ‘funds, fees, and fiduciaries’ type of services will become more commoditized in the future. The thing that clients value more now is, what resources do we have for participants?”
Meanwhile, the pandemic has led to shifts in how some participants in the pre-retiree age range think about their future. “The pandemic has changed the landscape of the retirement horizon, as employees are being asked to return to their offices here in New York,” says Eva Kalivas, senior vice president, retirement & wealth management at EPIC Retirement Services Consulting, LLC, a division of HUB International. “Employees within 10 years of retirement may be more inclined to consider the option of early or partial retirement, as they reevaluate their work/life balance. I think we’re going to see a lot of people retire sooner than anticipated.”
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