Stop selling them investments.
Thousands of retirement plans and it occurred to us...we are never asked to talk about retirement. PAi’s Care Center fields hundreds of thousands of contacts every year, and in order to measure our performance, we categorize those contacts. You’ll probably be as surprised as we were to discover how little we are actually asked to talk about “retirement.”
The retirement industry continues to try to perfect the concepts of Benchmarking and RFP’s to make it easier for you to choose a solution for your customers, but the trouble with many of those efforts is that they produce TONS of information with few answers. And at the end of the day, your success and the success of your customers’ plans will be judged by one question: “is each participant in every one of your plans on track for the retirement goals they set?”
The last few years have taught the retirement industry a tremendous amount. We’ve “deconstructed” our offerings twice—once for fee disclosure and once for the Fiduciary Rule. Through that process, we’ve uncovered a few simple but significant learnings. There is a big difference between a 401(k) “product” and a 401(k) “service,” and oddly enough, the industry still doesn’t speak consistently about those differences.
More than a third of Americans do not have any savings for retirement. Further, unless something changes, Social Security benefits will be reduced in a little over a decade. Something needs to be done. And kudos to the state governments for stepping up and providing solutions for their workers, but a Roth IRA isn’t going to mean that a saver is retirement ready and is certainly not going to benefit a business owner as much as a 401(k) plan.
Changes in legislation have spotlighted what it means to be a plan fiduciary. With a litany of 401(k) lawsuits in the media, plan sponsors are growing weary of taking on the fiduciary role and are turning to financial advisors to minimize their liability. Do you have the capacity to be profitable in the small market space? Many advisors are choosing to work alongside a 3(38) to provide fiduciary protection to the plan sponsor and to work more efficiently in the small plan market.
What’s not getting done matters too.
With all the discussion in recent years about the benefits and challenges resulting from the fiduciary rule, the focus seems to be more on a plan’s framework and less on participant outcomes. While the role clarity was productive and good for plans, it did little to help plan participants reach their desired outcomes. And ultimately, plan sponsors should be focused on finding where the holes are in the service model and taking the necessary steps to fill them.
A retirement service is intended to help prepare your clients and their employees for their eventual retirement. Yet, many services only provide charts and pie graphs that make it challenging for participants to actually understand if they are on track for retirement or not.
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