As we exit the pandemic, and before we plan for the future, we must first acknowledge that the world has changed as a result of the pandemic. People are ready to come out and live again, even with the dangers that the coronavirus still presents. It’s time. But hoping for things to go back to the way they were will not be in vain, it will be dangerous and even sad if we don’t take advantage of all the opportunities this new world has to offer.
I’ve been working in the advisor-sold 401(k) industry since 1996, when a few brave practitioners decided to focus on workplace retirement planning as defined contribution plans began to replace defined benefit plans. These plans have one major thing in common – payroll deducted at the workplace – but one major difference – DC plans are participant directed, which is why consultants were and are necessary.
So while the retirement planning advisory DC market has been in existence for over 25 years, it seems we are in a real job of helping people, and not just employers, with the pandemic that offers extraordinary opportunities. The focus has clearly shifted from planning services, which are table stakes, and plan design, which are clear, to working with employees and helping them leverage $10 trillion dollars, which is actually $23 trillion. If we count the IRA, as well as the reach of almost 100 million participants and the protection offered by workplace savings plans.
RPA emerged from wirehouses and insurance brokerages, giving rise to RPA aggregators, who are taking the lead in showing both retail and institutional advisors what is possible. Firms like Captrust have proven that serving participants is an opportunity, even if it’s only 3% of the wealthy for now, and firms like Hub have shown employers the power of cross-selling benefits, P&Cs, and retirement plans. Traditional broker-dealers, RIA firms and institutional advisors have already taken note.
All of which begs the question: Now what? What are the new opportunities in the post-pandemic world?
Even though there have been millions of fewer jobs since the start of the pandemic in March 2020, there is a war for talent due to great resignations, more people retiring and a temporary decline in lifespan due to the opioid crisis and COVID-19. Just as the workforce is shrinking as more people enter the gig economy, jobs are being created at record levels.
As a result, benefits, especially financial benefits, and 401(k) and 403(b) plans in particular, are one of the main weapons in helping employers recruit and retain talent. This seismic shift means senior management is paying close attention to their DC plan, when they were mostly ignored two years ago.
The major issues for employers before the pandemic were intellectual: fiduciary liability, financial well-being and compliance with laws and regulations. There has been a shift in tackling the war for talent, communicating with a remote workforce, and helping employees navigate the benefits of the workplace. This is a fundamental and almost emotional shift.
When we combine the profound reform and acceptance of virtual communications with increased litigation and laws, state and potential federal mandates, as well as the convergence of money, retirement, and benefits at work, the opportunities seem endless, but especially hopeful. It can be frightening for those who do. To return to the world as it existed on March 11, 2020.
Which is why it seems to me that we are at the beginning of the development of DC plans that took real shape as a way to replace the DB system and now take advantage of the workplace to help people with financial issues beyond retirement savings have developed in. There is a need to redefine “retirement” for “financial freedom”; We need to figure out how to profitably serve the 97% of workers who do not have access to traditional, customized financial planning and wealth management, through hybrid solutions that deploy technology and virtual financial coaches. use data.
So it’s time to get out there and look at the differences in the new post-pandemic world and listen to customers about their problems and innovative peers to solve them. Because those who are not busy in being born are busy in dying. whether they know it or not.
