2023 RPAY – Daniel Carlson, Farther Finance

Business at a Glance as of 12/31/22

• Plan assets under advisement: $25 million
• Median plan size (in assets): $12.5 million
• Plans under administration: 2 (1 401(k) plan and 1 Simple IRA)
• Total participants served: 530 participants

PLANADVISER: Tell us about your practice and how you got into advising retirement plans.

Carlson: In 2011, my financial adviser encouraged me to get into the industry, as he saw my passion for personal investing and knew I would be a successful adviser. The small office he ran was looking to explore the 401(k) side of the business, and as the rules and regulations surrounding retirement plans were changing, they needed someone to focus solely on plans. I received the necessary licenses and joined the office as a 1099 independent contractor in 2012. While at that office, I served as the adviser for 401(k) and Simple IRA plans working with plan sponsors, as well as meeting individuals for enrollments and reviews. After 10 years with that office, I joined an RIA, Farther, to capitalize on growth opportunities for myself, as well as my clients. My first and largest 401(k) plan transitioned with me, along with the Simple IRA, which was originally a referral from the 401(k) plan. My passion lies in working with plan participants and partnering with them on their retirement planning. Company retirement accounts are typically an individual’s largest retirement asset, and I do not take that responsibility lightly.

PLANADVISER: How is your team/process/structure unique? How has it evolved? Where will you be in 5 years?

Carlson: Currently I work for Farther, an RIA firm. Farther provides me operational support, as well as technology, which I leverage to allow me more time and energy to focus on and meet with clients for reviews and enrollment meetings. While I am the lead professional/adviser and the one who meets face-to-face with clients, knowing I have a support team behind me is crucial. Farther has truly allowed me to put all of my time and efforts into helping my plan participants be financially successful both today, and in the future. I’m unique in that I am not a part of a “traditional” office. I work remotely and travel quarterly to nine different locations to meet with my 401(k) plan participants in person, and annually for the Simple IRA. On occasion, it can be a 3 hour roundtrip to meet with one individual. However, knowing I made a difference in the financial life of that person, makes every mile and every minute worth it!

My process is unique in that I handle all of my own enrollment meetings (quarterly for the 401(k) and annually for the Simple IRA) as well as review meetings for both plans. The truly unique part of my business is that both companies are located throughout the state of WI so there is a lot of traveling involved. Sometimes it’s three hours round trip to meet with one individual. I take pride in providing that level of service for the clients and that’s a big reason why I have been partnering with them for so many years. I also handle all of the committee/sponsor meetings and plan reviews – I utilize the reports generated from the providers, but I prefer to run the committee meetings on my own without the help of the record keeper. The participants know me and can put a name to a face. This level of service not only provides value but continues to build relationships and trust.

From day one, I have always done my own enrollment meetings and reviews with participants. If I do not meet with those individuals, they’re on their own, and that’s not how I want to run my business. Their retirement account and financial planning will likely be their largest investment and can be complicated to someone who isn’t “in tune” to all the aspects that are required for a true financial plan. I prioritize their needs and become their trusted advisor. This personal one on one experience has created a platform of learning for both me and my participants to evolve. I’ve learned what questions to ask and how to ask them in a way that allows me to dig deep into both the participants personal and financial lives. So much of financial planning is the “why”, and getting to know participants on a deeper levels helps me as an adviser understand what’s “behind the curtain”. It can be tough for participants to open up about their finances as it can be an extremely personal conversation. By getting to know each of them as a person, not just a 401(k) participant, I’m able to create a long lasting partnership, and not just simply be their “401(k) advisor”.

My five-year plan includes continuing to enhance my current plans as well as acquiring additional plans under advisement. The one-on-one participant service I provide, is unique in this industry and will be the backbone of growth to my book of business. In order to grow my business, I will remain focused on referrals and networking to continue to grow both personal and business relationships.

Additionally, I will prioritize prospecting, by utilizing the tools my new partner companies offer. In leveraging those tools and my years of experience, I plan to double my business in that timeframe. Finally, Farther hopes to grow the team locally so that I/we can help serve more plans, and in turn, change the financial lives of many more plan participants and their families!

PLANADVISER: As a retirement plan adviser, what do you take the most pride in?

Carlson: I take pride in knowing I’m making a difference in the financial lives of the participants. Without a “hands on” advisor, many participants would not have the knowledge to enroll in the plan, know which fund(s) to pick from, and put together a financial plan for their future. Additionally, I take pride that when I walk into one of the locations, people know who I am – I’m not a stranger, I’m a name and a face. It’s a “Hey Dan!” rather than a “Hi, how can we help you”? A 401(k) plan is truly for the participants, so the fact that I’m making a difference in the lives of individuals is what drives me to continue to evolve and build long-term, lasting relationships.

With my recent transition to Farther, I take tremendous pride in knowing the strong relationships I’ve built with those companies made the decision easier for them to transition with me. Had the relationships not been as strong as they are, it may have made the outcome completely different as there are many advisers in the industry, but very few like myself who are so inherently client and relationship- focused.

PLANADVISER: How do you grow your business? What changes to your practice or service model are you planning for 2023 or 2024?

Carlson: My business grows mostly by referrals and creating networking opportunities. I am an active member of a Business Networking Group (BNI) which allows me to get involved in the community and receive referrals for other retirement plans. I systematically believe the best way to generate new business is by building relationships with everyone you meet as you never know where that relationship may lead, whether that’s on a personal or business level.

This year I am implementing two impactful changes. The first is to prospect new plans by utilizing the tools our partners provide that find areas a plan can be improved, particularly on the participant level, as those are the people that truly benefit from a “hands on” advisor. The second is to create a quarterly self-review strategy and evaluation to critique myself on what is going well and identify areas of opportunity. Much like a financial plan without any goals, the lack of accountability creates an environment where opportunities are left on the table. Humility to self-reflect will aid in my personal growth which ultimately benefits all of my clients.

PLANADVISER: What challenges do you think the retirement plan industry faces and what role do you have in addressing and confronting those challenges?

Carlson: There are many challenges affecting the retirement plan industry. Particularly market volatility, financial literacy, rising costs and hidden fees. Having one-on- one meetings with plan participants allows me to get a greater sense of long-term goals and risk tolerance. This allows me to recommend a diversified portfolio which can help smooth out some of the turbulence experienced with market volatility.

Financial literacy is another important issue affecting millions of Americans. It is not taught in most schools, so unless someone had a family member or friend well-versed in these areas, it may be like a foreign language to a plan participant, especially a younger person just getting into the workforce. Education, both on an individual and plan level can play a crucial role in helping participants better understand the financial planning world.

Rising costs and inflation are having a major impact on budgets and spending for most people. Helping participants with a budget as well as spending strategies can make a huge difference in whether they are able to make a plan contribution or not, which in turn, will affect their long-term financial goals. Many financial tools are available and meeting one-on-one with participants allows me to partner with them to take advantage of those.

Fees associated with 401(k) plans have been an issue for years. Many participants don’t even know there are fees associated with the plan because they don’t see them. Whether it’s a plan level fee or investment fee, participants need to know they are there and how those can affect long-term investing. By meeting with participants one-on-one, I’m able to explain those fees, how they are being charged to the participant, and partner with them on putting a portfolio together using funds and share classes that best fit their goals.

PLANADVISER: Why do you feel it is important to work individually with plan participants?

Carlson: It’s important to work individually with plan participants because they may not have anyone in their life to share their financial story and build a plan. An individual without an active adviser can get left behind and not understand what questions they need to ask. Being hands on, I understand the details of their plan, and can help participants take advantage of everything the plan has to offer (Roth contributions, in-plan Roth conversions, etc). As noted, for most participants, their company’s retirement plan is, and will always be, their largest asset for retirement. It is extremely important they fully encompass an understanding of the plan in order to make changes as necessary and be able to formulate a plan for their future financial life. These are the reasons why I know it’s not only important, but imperative for me to continue to provide one-one-one participant service that they have come to value and expect from me. I will always continue to provide this service, even if it means a three hour round trip to meet with one person. If I can impact that participants future in a positive way regardless of the time it took, it makes every mile and minute worth it.

PLANADVISER: What are the biggest challenges that plan participants face today and how are you helping to address them?

Carlson: There are many complexities within 401(k) plans and the financial services industry. Without the help of an active advisor, a participant could easily get confused, throw their hands up and say “forget it”. Our current society is all about instant gratification and saving for retirement does not accomplish that. It’s much easier to just not start contributing and continue to live your life and not “have” to worry about your future today. As costs of goods and services continue to rise, paychecks aren’t stretching like they once did. Having a plan in place, including a budget, is crucial in the financial lives of participants. Again, meeting participants in a one-on-one setting, I am able to dig deeper and help those individuals build a plan that works for them today, as well as in the future.

Additional challenges participants face today includes insufficient savings, investment selection, market volatility and a lack of transparency around fees; Encouraging participants to contribute an additional 1% to their retirement account can have a significant impact on their savings long-term. This can also be done with an auto-escalation feature many plans offer, and regularly discussing these options with participants and showing how these changes can positively affect their long-term goals. Often, participants have no idea what investments to select within their plan and ultimately default to the aged based/target date fund. While target date funds offer diversification and can be quality funds, often times many, if not all of the underlying holdings are that of the fund company itself. Meeting with participants one-on-one I am able to individualize their situation and assist them in putting together a portfolio of investments that truly align with their goals. Fluctuations in the market, especially large ones, can be unsettling for participants especially those nearing retirement. Having a well diversified portfolio, that changes over time based on their goals, can help alleviate some of the stresses that come with the volatility. Having an adviser like myself, who meets with participants regularly, adjustments can be made as their situation changes. Many participants in 401(k) plans are unaware there are fees associated at a plan and investment level. Over time, a plan with high fees can eat away at their savings. Exploring the fees with participants upon enrollment, reviewing them regularly, and selecting good quality funds with lower expense ratios can be beneficial to plan participants. This is where an annual review at a plan level plays a critical role.