Client Service September 26, 2019

AI Being Used in the Retirement Planning Industry

Chatbots, automated voice services, smart CRM systems and data mining are the main ways that retirement plan advisers today are using artificial intelligence.

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A survey that Nationwide Advisory Solutions conducted last year found that 33% of registered investment advisers (RIAs) and fee-based advisers are currently using Artificial Intelligence (AI) in some capacity. Among this group, 37% said they expect their profitability would expand substantially over the next year, whereas only 22% of advisers not using AI said the same.

So, how are advisers, specifically retirement plan advisers, using AI? They are using chatbot or voice services like Alexa that can answer typical client questions, says Mark Rieder, head of innovation of NFP in Austin, Texas.

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Indeed, Dream Forward, a provider of turnkey 401(k) and 403(b) services for small and medium-sized businesses and nonprofits, recently rolled out a conversational AI chatbot to address plan participant questions. To the plan participant, the chatbot looks like an online chat with customer service.

“Artificial intelligence is still in its nascent stage within the wealth management industry, but it has some exciting applications, especially when applied to client servicing,” says Ken Thompson, CEO and president at TD Private Client Wealth in New York. “The most active players continue to explore opportunities to enhance, rather than replace, the person-to-person interaction. This includes investment in robotic process automation (RPA), where repeatable, non-judgmental tasks like client meeting preparation can be augmented by a machine. What could take an hour or more to put together in preparation for the meeting can now be delivered in minutes through RPA.”

AI can also be used to provide automated education for retirement plan participants, says Tyler Fondrk, a consultant with the wealth practice at Buck in Pittsburgh. For example, AI could “automatically notify participants who are not contributing enough to get the full company match and provide them with a quick and easy method of increasing their deferral,” Fondrk says. “It could also analyze data [on the participant] to determine a financial wellness score that is compared to the scores of others in the company and/or the industry.”

Retirement plan advisers are also using customer relationship management (CRM) systems that have integrated AI, says Craig Hawley, head of Nationwide Advisory Solutions in Louisville, Kentucky. “With the right CRM and a strategy to capture more high-quality data, advisers can develop predictive profiles using AI tools that are widely available, such as Saleforce’s Einstein and EIM’s Watson.”

As an example of this, Redtail Technology recently added AI to its CRM system, which can now analyze emails, notes and text messages to predict client needs. Specifically, the CRM system looks for client sentiment by identifying and categorizing their opinions, so that advisers can then mitigate any issues that arise.

“Advisers can also use machine learning, prescriptive analysis, meta-language processing, natural language processing and robotic process automation to streamline mundane back-room and repetitive activities so that they can focus more on strategic initiatives,” Rieder says. “In light of the fee pressure retirement plan advisers are facing while at the same time being asked to deliver more for their clients, the only way to meet these needs is by embracing technology.”

Recordkeepers, as well, have embraced data analytics, AI and machine learning to provide a more customized experience for each retirement plan participant and to help them make better decisions to improve their retirement readiness.

“The use of AI and machine learning is becoming increasingly important among recordkeepers, to find insights into participants,” says Jason Grantz, director of institutional retirement consulting at Unified Trust Co., N.A., in Highland Park, New Jersey. “They’re sitting on a treasure trove of data. As AI becomes more sophisticated, you’ll see them improve their understanding of participants and offer better suites of services.”

Deals & People September 25, 2019

Creative Planning Buys ‘Disruptor’ America’s Best 401k

The deal announced by Creative Planning and America’s Best 401k shows recordkeeper consolidation is not just occurring at the top end of the market.

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Creative Planning has announced the acquisition of America’s Best 401k, a technology driven retirement plan provider focusing on a high-transparency, low-fee model.

America’s Best 401k Founder and President Tom Zgainer will remain in his current role. The financial terms of the deal are not being disclosed.

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In a number of conversations with PLANADVISER held over the last few years, the leadership at America’s Best 401k have emphasized their intention to “disrupt” the traditional retirement plan recordkeeping model. Now, speaking about his firm’s goals in acquiring America’s Best 401k, Peter Mallouk, CEO of Creative Planning, says the “disruptor” mindset will continue. He says Creative Planning has long embraced the same principles driving America’s Best 401k, and in fact the firms already work together extensively behind the scenes.

“As the current 3(38) investment fiduciary and registered investment adviser for America’s Best 401k, Creative Planning has in-depth knowledge of the firm’s clients,” Mallouk says. “We became the fiduciary for all of their plans a few years ago, and we have taken on the role of picking their investments and handling the fiduciary services for their clients. So in that respect, this deal has been some time coming.”

Mallouk notes that Creative Planning already has a well-established 401(k) offering, but it tends to be best for large, established plans that have millions of dollars and lots of participants, and which are seeking in-person education services. America’s Best 401k, on the other hand, has specialized in efficiently serving start-up plans and smaller entities with a digital-first footprint.

“They have built an incredibly efficient and technology driven platform,” Mallouk says. “We expect to be able to leverage their digital onboarding and client service model, which makes high quality plans accessible even for startups and smaller employers. Their capabilities will round out our recordkeeping offering completely, and of course there is a good cultural fit. They have focused on the same things we have from the start—full fiduciary services and highly transparent, indexed-based fund lineups.”

Echoing the leadership’s language at America’s Best 401k, Mallouk says the retirement plan industry is “laden with conflicts of interest and very high fees relative to service levels.” Investment lineups continue to exist for the wrong reasons, he suggests, but increasingly plan sponsor clients are pushing back.

“What’s happening broadly is that providers have to do more for the same fee,” Mallouk says. “From that perspective, it is very helpful to be a fiduciary these days, and to have a low-cost fund lineup. On top of this, things continue to get even move competitive from a value-for-fee perspective. You really have to have strong technology and established economies of scale to be able to be competitive in this type of recordkeeping marketplace. That’s why you will see more and more consolidation.”

Mallouk expects the integration of America’s Best 401k to be fairly rapid, given the extent of the existing collaboration.

“Part of the excitement for us is that we have already been fulfilling a big part of their offering for years now,” he adds. “For us, this deal is ultimately about being able to say ‘Yes’ to more Creative Planning clients, and to do so in a seamless way, rather than maintaining and explaining two separate brands. The other component is being able to integrate their powerful technology within our current platform. That’s the integration we are working on now.”

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