For plan advisors looking to take their business to the next level, the power of technology aggregation can have tremendous benefits, advised panelists featured in an April 7 workshop session at the 2019 NAPA 401(k) Summit in Las Vegas.
Lisa Buffington of Marsh & McLennan moderated a discussion featuring Petros Koumantaros, Financial Consultant with intellicents; Washington Financial Group’s CEO Joe DeNoyior; and Jamie Worrell, a Managing Director with Strategic Retirement Partners, each of whom explained how their ability to leverage technology, resources and human capital management through aggregation has led to diversified revenue streams and better client service.
Against the backdrop of technological advances changing the way Americans communicate, combined with various disruptive forces in the marketplace, such as an increasing focus on governance issues by consumers to the rise of Millennials, the plan advisor industry is undergoing a paradigm shift and may “miss the boat” if it doesn’t change the way it communicates, according to the panelists.
When asked about his reasons for considering aggregation models, DeNoyior explained that his firm started with a desire to make a larger impact on the employees they serve, and to do that, they had to leverage the power of technology for its efficiency and scaling, concluding that it’s important for deliverables.
“If we focus on what business we’re actually in, we’re trying to drive results for employees and get them to where they need to be to retire. It’s beyond education – it’s an experience,” DeNoyier said. But to do that, he noted, it’s critical to have scale. For example, you can’t have one-on-one meetings with all the participants in a plan if you only have three people in your office.
In considering the employer as the consumer, Koumantaros explained that as purchasers, employers have become much more sophisticated over the past 20 years. They now demand more, know more and ask more thought-provoking questions. “As an advisor, this creates some challenges in terms of our business models, because ultimately we have to address a much more sophisticated economic buyer,” he noted.
“This is where technology as a tool can certainly aid in providing some kind of unique personalized experience demonstrating those capabilities at the point of sale that show what uniquely makes your model as an advisor different from another advisor’s model,” Koumantaros emphasized.
As for the benefits that come out of aggregation partnership models, at the end of the day it comes down to advisors wanting to get back to the business of advising clients and building their book of business. To that end, Worrell explained that scaling allows advisors to deliver on a broader level via aggregation, allowing them to keep doing what they’re best at. “The idea of scaling through an aggregator is that you get a team of people who can do different things really well that allow you to act on your unique ability for the most amount of time,” he explained.
What will be the big technology solutions over the next three to five years? Koumantaros pointed to financial wellness offered not only as employee benefit, but as custom personal financial planning services. With employees getting most of their financial services in workplace, why should plan advisors leave that conversation untapped, he asked, focusing just on their 401(k) instead of having a broader discussion? “Why not expand the conversation to look for opportunities around a more holistic planning approach? We think this is a tremendous opportunity in the future,” he observed.
DeNoyior pointed to providing firms with much better data analytics as an emerging trend. He explained that you always hear firms talk about data, but they don’t know what they are going to do with it. As such, DeNoyior believes there will be a movement over the next couple of years to provide better business analytics to advisory firms to help them make better decisions. “From an aggregator level, this will help you make decisions nationally on what’s going to help the most number of firms, but also locally on how it’s going to help you grow your business,” he said.
As key takeaways, the panelists offered the following suggestions:
- Leveraging data and technology should be part of every business decision, from running your business to serving your clients and how you develop your business model.
- Determine the value you want to provide your clients and confirm you have the technology to deliver that value.
- Outline a business plan with a 3- to 5-year outlook and determine the technology and resources needed.
- Consider if aggregation or partnership affiliation is required to support your 3- to 5-year business plan.