In my previous column, “Innovate, or Evaporate,” I outlined all the things NAPA has done and must continue to do to stay relevant as an organization in the retirement security discourse taking place at many levels today. This dialogue is being assessed from a plethora of different and at times conflicting perspectives, so there is much work to do in sorting it out all out in a favorable fashion for our membership. In assessing where we are now and what is at hand, I was struck by how far we have come — but even more so by how much farther we must go.
Applying a bit of wordsmithing to the title of a book in my library by Marshall Goldsmith, let me suggest that “What got us here, won’t get us there.” So, where did we come from? For some of us, it was the Stone Age. I remember installing my first 401(k) plan in 1982 using individual fixed annuity contracts sold one at a time.
Where are we now? As an industry and as individual advisors, we have helped working Americans accumulate within their 401(k) plans more than $5 trillion since the early ’80s, and that doesn’t even count balances already rolled out to IRAs by terminated or retiring participants. Yet some would still claim that our efforts were a “failed experiment” even after considering the success metrics of other methods of saving also available over the same timeframe. In fact, when you factor in a comparative of the current industry environment to the complexity, cost, technology and lack of transparency of the early 80’s, today’s retirement plan and planning landscape is a far cry from that not-too-distant past. We have much to be proud of!
But much work remains to be done in ensuring a dignified and comfortable retirement for all Americans. So, where do we go from here? Will today’s industry service providers and advisors be deemed relevant in the future due to their value propositions built around vendor packaging and selection, cutting edge platforms and mobile technologies, offering even deeper pricing discounts, delivering superior investment vehicle performance or being recognized for unique fiduciary guidance services? While these are all important attributes that we must continue to improve upon, will they be the differentiators deemed most critical in the selection process? Could commoditization and fee compression favor the deep-pocketed giants in the industry and drive further consolidation? And where would that leave retirement plan advisors?
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From an advisor’s perspective, I believe the future will shift and belong to those who can prove they can move the needle in the coverage dilemma and at the same time drive improved participant outcomes, not just at retirement but through retirement. To do that we will need to develop a methodology and technology that can measure and communicate our ability to not only have an impact on projected and realized outcomes but also coverage statistics that haven’t changed in more than 40 years. Why? In the big picture, if we as an industry and as advisors can’t document and communicate our ability to positively impact the social concerns inherent within the nation’s retirement picture, we will be viewed as just another self-serving special interest group, part of the problem rather than part of the solution. Historically, that conclusion never bodes well for those being assessed.
So, what to do? First, we must all support NAPA as well as our sister organizations and parent, the American Retirement Association. We must support them with our confidence in their advocacy on our behalf, our time in volunteering and providing both conceptual and antidotal thought leadership, our money funding the PAC to enhance access to legislative and regulatory bodies, and finally, by communicating our pride of association with NAPA. It is critically important that we let our plan sponsors and participants know of our collective efforts as an organization and as individual members on behalf of all Americans to secure retirement dignity and independence. That’s how we get from here to there!
Jeffery Acheson, CPFA, is the founder of Advanced Strategies Group, LLC. He serves as NAPA’s 2018-2019 President.