Retirement plan advisers who strive to develop proprietary tools may very well be overlooking a wealth of resources available from their many providers. Wells Fargo National Sales Manager for Defined Contribution Ron Cohen, based in Boston, has an important warning for advisers seeking to do just that.

“When I’m in conversation with advisers, I often tell them to stop trying to create tools on their own,” Cohen recently observed. “It’s not that advisers couldn’t build some strong tools or technologies going solo, but I can tell you that any idea they’re going to come up with—chances are it’s already built out there and ready to go, better than they could do it on their own.”

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That seems to be the consensus of a number of industry providers, including recordkeepers, third-party administrators (TPAs) and investment managers. Leading firms across all three service provider segments have poured tremendous resources in recent years into the value-add tools they deliver to advisers, to help them better run their practices, supply to sponsor clients and participants—and, in some cases, white label or rebrand, so the tools appear proprietary. Availing themselves of such tools allows advisers to advance their deliverables while freeing up time to sell and service clients, instead of creating the tools themselves.

Traditionally, such tools have helped advisers gain new business or boost reporting efficiency while improving client service and responsiveness, but a whole host of next-generation support services has recently come online. And it is not just “robo-advice” platforms delivering more portfolio automation: Everything from student loan calculators and Social-Security-claiming data to mortgage debt analysis is being offered—making 2017 a great time to reassess your provider tool kit.

The advantages of leveraging externally developed tools over internally developed ones are obvious, whatever their purpose will be, experts suggest. Very rarely will an adviser have the technical competency in-house to compete over the long term with the large national providers, which, given their tremendous scale, can afford to hire and retain the top technical minds in the field. In fact, this is one of the driving forces behind the industry provider consolidations seen in the last several years—small, independent firms finding it difficult to match the rapid technological developments of larger peers, making it harder to compete as a standalone entity.

Perhaps the most important perk of leveraging outside providers’ tools is that there is much less risk of getting stuck with resources soon to become stale—all the top providers have clearly signaled their intent to keep investing in new and developing capacities, such as digital and automated advice, as well as offering services and products including plan benchmarking support, client management tools and the like to deliver to advisers and their clients.

According to Kathleen Roche, vice president for retirement consulting services with Commonwealth Financial Network in Boston, service providers in today’s marketplace will often let the adviser present planning tools and other client-facing deliverables with his own practice’s unique brand and “feel.” Roche highlights how important this practice of “white labeling” is for many advisory practices—which are generally very keen on maintaining tight control of the client experience.

“There is so much choice and opportunity out there that it can, frankly, be overwhelming when thinking about getting the most from service provider partners and deciding which to work with,” Roche says. “The first step is to set very clear goals, and once you [do that], it’s about finding the provider that can be the most consultative.”

Tim Seifert, vice president and national sales manager with Lincoln Financial Group in Philadelphia, agrees that many powerful tools are available. Many can be accessed as a paid or complementary add-on to existing partnerships. Therefore, advisers looking for new support solutions may want to start their search with providers they already work with. Often advisers find that their current providers have added new tools and services, or improved existing ones, since the adviser last inquired. “The large asset management providers and recordkeepers are pouring millions upon millions of dollars into developing their tools and services [to] back up advisers on the ground,” Seifert says.

In terms of specific tools and solutions sought by advisers, “staffing and compensation” has become a hot topic of development lately, Roche observes. “We have seen a lot of inquiries about tools that help advisers track their practice growth and determine the equation of plans to manage vs. staff—and how to reward employees along the line.”

But far and away the most demand is centered around fiduciary compliance support and investment fee management solutions—spurred, of course, by the forthcoming Department of Labor (DOL) fiduciary rule reforms slated to take effect in April. As this article is being written, the future of the rulemaking is shrouded in uncertainty under a Republican-led federal government, but many firms have pledged to move ahead with fiduciary reforms regardless of how the rule changes pan out—in the interest of improving their competitive profile in a more fee-conscious environment (see “Compliance News”).

Providers of all stripes are clearly keyed into this ongoing evolution, and PLANADVISER has gotten word of many dozens of new fiduciary compliance support solutions hitting the defined contribution (DC) advisory market, including tool kits from firms such as the SEI Advisor Network and Redtail Technology, which partnered to create the Workflow Your Way to the DOL Deadline tool kit. This tool will provide financial advisers with “systematized workflows that help assess business readiness and demonstrate compliance with the DOL rule through a variety of processes such as moving from commission- to fee-based investments,” the firms say.

“Everyone is talking about the DOL rule in our industry—what they should be doing and how they can get help,” says John Anderson, managing director and head of practice management services for the SEI Advisor Network, in Philadelphia. “It’s vital for advisers to have the workflows set in place to execute a plan for their clients and demonstrate compliance with the rule.”

SEI and Redtail are just two of the latest firms to offer solutions designed to help advisers navigate the regulatory playing field expected to grow out of the DOL’s implementation of the rule. Others include PCS, Impact Financial Systems (IFS), Envestnet and fi360.

PCS, for example, introduced an adviser-initiated rollover system that is fully compliant with the fiduciary rule. “Come April, every retirement-plan enterprise will have to reassess its procedures,” says PCS CEO Mark Klein, also in Philadelphia. “Of the $7.3 trillion currently in IRAs [individual retirement accounts], $4 trillion is in commission-based accounts. We anticipate that most—if not all—of these accounts will transition to level fee arrangements. Whether handled by independent registered investment advisers [RIAs], advisers registered with broker/dealers [B/Ds], or hybrid advisers, every account will have to be reviewed and converted in accordance with the DOL mandates, as necessary.”

Fiduciary support may be the hottest topic for the time being, but TPAs, recordkeepers and investment managers have rolled out offerings in other areas. For advisers who want to help their clients promote retirement readiness, loan education or financial wellness to plan participants, the best approach may be: Promote the provider’s tools, while offering support to improve engagement.

MassMutual, for example, upgraded its online RetireSMART Ready tool to give savers in DC plans better guidance, and potentially improved outcomes, to help them reach their retirement goals. According to MassMutual, savers can be advised on what steps to take if their current saving strategy is falling short of their retirement goals. They can choose to implement the recommended strategies by themselves, or work with a financial adviser on instituting one. To again highlight the increased interconnectivity of value-add tools, the actual guidance and managed products are provided by Envestnet Retirement Solutions (ERS).

Morningstar announced late last year the launch of a linked student loan and retirement savings calculator. The digital tool is designed to help investors decide whether to allocate extra income to retirement savings or pay down student loans. The calculator will gather user input such as his spending and saving habits with discretionary income, his employer’s match rates for its retirement savings plan, and the status of his student loans. The output will show how much more net wealth the individual might have in retirement if he chooses the optimal savings-vs.-debt strategy proposed by the calculator.

Taking a similar approach but applying it to health insurance and care costs, BenefitGuard announced partnerships with Utah health care benefit providers Spectra Benefits and the Miller & Wade Group. The partnership will target “simplifying small-business access for the two most popular employee benefits: health insurance and retirement savings.”

“Small businesses are turning to one-stop shops, more than ever for employee benefit programs,” says Matt Bradley, CEO of BenefitGuard, in Orem, Utah. “Our solution provides a single sign-on experience and displays 401(k) balances in the HSA [health savings account] portal,” he explains. “This increases retirement-related messaging and notifications to participants, and improves 401(k) platform access and utilization.”

A similar message is being broadcast by Fidelity Investments, which notes that “employees don’t leave their financial problems at home, which leads to distractions and lower productivity at work.” That is why more advisers are seeking out and offering tools to help with budgeting, debt management, prioritizing savings goals and managing life events such as a wedding or buying a new home.

Fidelity also expects to offer more online and on-demand benefits education. Attendance at the firm’s live Web education sessions is up 52%, and use of on-demand seminars is up 62% since 2012. In addition, the “take action” rates for on-demand seminars are consistently higher than both virtual Web sessions and in-person seminars. Employees of all ages are gravitating to the sessions, which range from the basics, such as the impact of increasing savings, to the complex, such as Social Security claiming strategies, Fidelity reports.

It all comes together to form a pretty complicated picture for advisers on the ground.

Seifert, Roche and Cohen all agree that advisers need not feel daunted by the growing universe of potential value-add solutions and tools; nor do they have to rush to adopt every flashy new piece of support technology they see their competition offer. But they cannot afford to ignore the offerings or get complacent, either. Every day, top advisers are finding new ways to fold creative service expansions into their client offerings—and those who don’t strive hard to keep up will struggle to compete.

“How do you know who to partner with?” Cohen asks. “You can find out a whole lot about how these tools perform through wholesalers and other advisers who you trust. Ask your peers about what works and what doesn’t. If you’ve been a little reluctant to take on a meeting with a wholesaler just because you haven’t used their products in the past, ask them to talk about forthcoming value-add tools. It may serve you well hearing them out.”

But be mindful of the solutions you select, notes Seifert. “Make sure you find tools that are actionable … make sure [the tool] is something that in real, measurable terms will get you an advisory client or help you keep a client. That’s what matters most to business success and client outcomes.” 

  • Recordkeepers, third-party administrators and investment management firms are expanding their investments in tools for advisers, to cover such topics as financial wellness and retirement income projections. Automated advice solutions are also in high demand.
  • The race to offer the most technologically advanced tools is one of the main drivers of the consolidation among providers.
  • In response to the Department of Labor’s pending new fiduciary rule, some of the latest tools cover ­fiduciary compliance and fees.