Creating specific retirement planning practices in the virtual world
The pandemic has created myriad opportunities and challenges for retirement planning consultants. It always makes sense for RPAs to specialize in one or related industries such as professional services or construction companies but the pool of planning sponsors is limited within a geographic area.
As remote service models become more acceptable and attractive to planning sponsors and participants, RPAs now have a larger pool of possibilities beyond their local area, even if periodic travel is required.
Focusing on one or related verticals has several benefits for RPA including sourcing new clients through direct referrals or a reference-enabled client list. Planes want to know what benefits their rivals are offering so that they can stay competitive in the war for talent.
Each vertical may have specific specifics and requirements—specific RPAs are more knowledgeable and tailored to the needs of the plan sponsor and their employers. Planning and participatory service models should be more efficient and less expensive as customers have similar needs to make the practice of RPA more profitable and competitive.
An RPA can determine which areas to focus on by classifying its client list by industry and determining which plans are most profitable and lucrative. Attending and speaking at targeted industry conferences, engaging with publications and authors in that area of work, as well as focusing on their websites and social media posts, will make RPA a recognized industry expert outside of the DC industry that really matters. Keeps- Plan Sponsor.
Connecting with centers of influence such as for-profit brokers, CPAs, lawyers and bankers who focus on preferred verticals can also provide greater opportunities.
In the past, planners may have been reluctant to work with RPAs outside their area, but the pandemic has dispelled many of these objections. Quarterly individual committee meetings are no longer required and virtual meetings are no longer expected to be preferred to involve more members with most plan sponsors. Virtual meetings with employees are also more efficient and allow spouses and family members to participate.
There may still be reasons to need to meet in person from time to time, much less than what was expected in the past.
Specialist RPAs should consider hiring service and sales professionals from the target industry to better serve customers while leveraging their network and reputation. It’s easier and quicker to train someone from the hospitality industry than, for example, to learn 401(k) and 403(b) plans, a world that has been thwarted with RPA and many third-party resources available to train employees. DC Professionals in the nuances of an industry well versed.
RPAs may be reluctant to drop customers into preferred industries, even though these outliers are less profitable and will only become more difficult and costly to service over time. Why not partner with RPAs that focus on other verticals that may be able to refer clients outside of their target industry? Partnering with other advisors can be challenging but those who can execute successfully will have a huge advantage.
What about RPAs that are part of for-profit aggregators who may not be able to decline referrals? These firms should consider specialist RPA and P&C brokers with leverage who focus their vertical or funnel referrals based on industry expertise—not location.
We live in a virtual work enabled by technology that is rapidly changing. It might have been hard to imagine becoming a specialist RPA just five years ago, but the brave and innovative RPAs who lead will become consultants in their specialty, not only at the local level but also at the national level.
Fred Barstein is the founder and CEO of TRAU, TPSU and 401kTV.