Supporting the Advisor Playbook


  • How three leading organizations are expanding their practice management programs to support advisors' businesses and help them fulfill their roles.

Today's most successful DC advisors know that it's no longer enough to build investment menus by picking a collection of funds. They need to do more, including offering expertise on evaluating QDIAs and consulting on plan design.

It's no surprise that many of today's top sales executives are focused on helping advisors meet these responsibilities by expanding their value-added tools and services. Here's a look at how three leading organizations are expanding their practice management programs to support advisors' businesses and help them fulfill their roles.

What is the role of today's platform in supporting advisor's business?

Stig Nybo, President, Pension Sales and Distribution, Transamerica Retirement Solutions: We believe that the most important thing retirement plan providers can do is to provide an infrastructure that helps employees achieve better retirement outcomes. We know that an advisor's involvement will vary depending on their value proposition, so we have created a platform that is flexible enough to accommodate that variability. Our focus is proving state-of-the-art services that support both small and large retirement plan clients. Our services include everything from supporting fiduciary liability management to robust data analytics that allow for the management of plan goals, strategy, and execution—elements that are critically important in today's competitive market.

Many of today's top sales executives are focused on helping advisors by expanding their value-added tools and services.

Bill Elmslie, Head of National Intermediary Distribution and Service, ING U.S.: With retirement confidence levels at an all-time low, retirement plan providers and advisors are increasingly being looked to as a solution to the growing retirement challenge.

While working Americans today realize they should be doing more to take retirement into their own hands, they are feeling overwhelmed, lacking confidence and looking for help – from their employers...from financial professionals...and from self-serve tools and resources.

The mission for our business is helping working Americans on their journey to greater retirement readiness. We know advisors play a critical role in helping plan sponsor clients understand and deploy the most effective 401(k) strategies for their workforce.

Ted Haase, National Director of Retirement Plan Sales, Paychex: Platforms should act like consultants and provide expertise in plan design, pricing and compensation structures, and flexibility on investment selections. A strong platform is one that will manage the needs of the advisor, client, and participants. For the advisor, tools and updates on regulatory and industry changes; for the client, ensuring the platform is helping them achieve their goals of sponsoring a retirement plan; and for the participants, the educational tools to help them understand the value of investing in a 401(k) plan.

How are You Helping Advisors?

Bill Elmslie: ING U.S. works with over 10,000 independent advisors and third-party administrators (TPAs) working in the qualified retirement plan space. Our goal is to help make their jobs easier so they, in turn, can best serve their clients to drive positive retirement outcomes for all working Americans.

These distribution relationships are incredibly important to us. We work hard to cultivate this channel which is the lifeline to the smaller end of the 401(k) market. To that end, we're committed to providing meaningful value-added tools and services – from practice management programs that can help advisors grow their technology and engagement tools that can be leveraged with legislative updates so advisors and sponsors can understand and apply the latest regulatory guidelines.

For example, ING's GROW Program – a business-building, practice management program – is designed to help advisors find, grow and protect long-lasting relationships. The program includes a comprehensive suite of tools and resources to help advisors leverage all that ING has to offer. Actionable sales ideas tied to each tool and resource enable advisors to immediately implement new approaches and ideas into their practice to grow their business.

Included as part of the program is ING's Benchmark Wizard - a database that allows advisors to compare their clients' and prospects' plans to the plans offered by similar companies in the industry. The Wizard pulls statistics from an expansive database to generate detailed comparisons of plan provisions, types of investment options offered and retirement planning tools available to participants. This type of tool is a valuable asset for first-time advisors who are interested in discussing plan design topics with plan sponsors.

We also offer a package for advisors who want to participate in annual plan reviews with their clients. In tandem with their relationship manager, advisors are able to visit our website, retrieve data on plan demographics, investments, communications and other information and conduct a robust discussion with their clients – determining best practices to maximize all the benefits the plan can offer for both the sponsor and their employees.

ING also collaborates with our valued distribution partners on a regular basis to ensure we are supporting the way they run their business. For example, as the trend towards fee-based advisors increases, we were regularly hearing from many of our advisors that they wanted a product that included only the fees for services they deliver, in addition to ING's recordkeeping fees.

As a result of this collaboration, ING recently introduced a zero revenue menu within our MAP Select product for the RIA marketplace. This new menu removes the revenue sharing element so that advisors can eliminate commissions and fees and bill their clients directly.

Ken Burtnick, Senior Product Manager for Retirement Services, Paychex: For the last few years, we have expanded product offerings and the service model to make sure that our products and features are as flexible as they can be to meet the needs of the individual advisor, client, or participant. Through ongoing investment and a couple acquisitions, we've been able to do that. We have TPA-only solutions, bundled solutions, as well as different platforms tailored to the needs of either fee-based advisors or commission-based advisors.

The Next Phase of Our Development is the Expansion of Our Sales Organization.

Ted Haase: The flexibility that our platforms provide has allowed us to create a specialized sales force (which supplements our existing 300+ 401(k) reps) that partners with advisors to create incremental sales for both organizations. Our distribution channel consists of 40 licensed sales people that prospect exclusively to clients with $1M and above in assets and the 50+ employees. Layered on top of that are 10 national wholesalers and a national retirement relationship manager.

We believe that both of our payroll and plan expertise across all of our fee and commission-based platforms gives us a unique opportunity to add value, to get plans up and running, and to service them through Paychex and the advisors.

We think that the combination of our integration, the added flexibility of our platforms, and the fact that we work with many different broker dealers and have so many selling agreements, allows us to be really well positioned to offer strong support to advisors.

With our specialized sales force, we'll have the unique opportunity to help sell plans, design them, and because of our relationship with our other clients, introduce advisors to also some of our other 401(k) prospects.

Paychex platforms are very competitive when we are viewed as just a TPA or recordkeeper by the advisors. However, when you look at our connectivity with payroll and our 300+ national sales reps, we know we are a huge strategic advantage for advisors who work with our platforms and their clients, whether they have $25M in assets or are a start-up.

Stig Nybo: In a larger plan market, our services include a "business intelligence" system that is available to efficiently provide information and insight into plan performance metrics. This helps the advisor deliver a very sophisticated and high level of service to the large market client, by understanding the specific needs of the plan and building strategies to meet those needs. Our business intelligence capabilities, coupled with true service excellence, helps advisors really move the needle on important plan goals.

The smaller plan market can sometimes actually be more difficult to serve than the larger plan market. Why? Because a smaller plan has less scale and often requires an equal (and sometimes even greater) amount of support from an advisor, without commensurate resources. One of the biggest misconceptions about advisors that serve the small retirement plan market is that they do not fall into the category of specialist retirement plan advisors. We find that the new breed of retirement plan advisor – the retirement plan specialist – is present in both the small and large markets, and we have built our platform to ensure that both market segments have the tools and resources needed for a first class experience.

We also believe that TPAs are a really important piece of the puzzle. They can have a tremendous impact on savings behavior because they are very often plan design experts and plan design can drive participant behavior. We are currently focused on helping TPAs get comfortable with auto plan features, since these features are not heavily used in the smaller end of the market.

As a company, we are also very focused on changing participant behavior patterns more globally. I recently published a book on the topic, called Transform Tomorrow: Awakening the Super Saver in Pursuit of Retirement Readiness, which deals with how we, both as an industry and as a society, can materially change participants' retirement outcomes and savings behavior. The book is just one example of what can be done to help advisors have conversations with their plan sponsors about setting goals and positively changing savings behavior patterns.

There is so much discussion about driving participation rates in our industry. We all talk about deferral rates, about automatic enrollment, and the use of QDIAs, and we're making progress. But, if you look closely, we're not fully doing what we talk about as an industry. We talk about a 6% default rate as the right answer from an auto enrollment standpoint, but that's not what people are currently doing — 74% of the plans out there are auto enrolling at 3% or less. Only forty percent of those plans automatically escalate employees, but at only 1% per year. The reality is that those deferral rates aren't going to get participants where they need to be for a secure retirement.

What does the future hold?

Stig Nybo: We're working very hard to ensure that the infrastructure is in place for us to work with advisors, TPAs, and their sponsors to specifically set goals that drive better retirement outcomes for participants. In other words, we're asking what can we do differently to create a healthier plan from an activity and savings behavior standpoint.

We also have an internal focus called "Drive to 10," which is about getting our entire participant base up to a 10% deferral rate. Why 10%? Well, because we believe that getting participants to a minimum of 10% savings rate can dramatically impact retirement readiness.

We know that auto features, such as auto enrollment and auto escalation of deferrals, do drive savings behavior. I very purposefully did not say the "right" behavior because we have to change how we're using these auto features before we can say they drive the right behavior. In addition, what is "right" for one plan may not be "right" for another. If Auto Enrollment is the right answer for a particular plan, plan sponsors and their advisors should consider a 6% auto enrollment starting point, with 2% auto-escalation, up to at least 10%.

We emphatically believe that one of the key things our industry must do is to refocus our efforts. We're not saying we should completely lose sight of the progress we've made with concepts like fiduciary liability mitigation and plan operation. But we are saying that the most important thing for Americans right now is for us to focus on participant outcomes.

Clearly, the most important thing that we can do as an industry is to drive higher participation and deferral rates in retirement plans, because ultimately it is about saving, it's about getting that balance up so that participants have choices when they do retire. Employees will not have choices, if they don't start to save significantly more for retirement.

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