Not Just Retirement Services
Art by Giulio Bonasera
When Sean Patton, a partner and senior consultant at Westminster Consulting in Rochester, New York, helped found his firm, in 2003, the motivation was quite clear. “Our vision was based in the fact that too many people who handled institutional assets, and who were fiduciaries to their clients, didn’t necessarily understand what their responsibilities entailed, especially with respect to the Employee Retirement Income Security Act [ERISA],” Patton says. “We saw a big business opportunity in providing that fiduciary expertise for plan sponsors.”
Many elements of the business are the same this year as they were back then. What has changed, however, are some of the things sponsors require and expect from their consultants. As Patton and other sources see it, expertise about fees, funds and fiduciary responsibilities remain important, but several noteworthy additions appear on the list, principally an ability to address health care benefits and retirement plans in a combined, holistic way.
Clients also increasingly look for support in “financial wellness”—a massive and evolving topic covering everything from debt management and budgeting to employees’ money-related anxieties and mental health issues.
Patton says the pandemic has forced employers of all types, here in the U.S. and globally, to think about the health and immediate financial needs of their people in a new way. To be engaged and responsive service providers, advisers must make a similar pivot, he says, and this means speaking to clients and prospects about bridging the gap between health, retirement and financial wellness. It means helping employees create strategies to pay down toxic debt and embrace the importance of creating emergency savings funds outside of the retirement plan. If an adviser cannot do these things effectively, Patton and others agree, he will have a hard time keeping clients or selling to new ones.
Various Ways to Deliver the ‘Package’
Aaron Pottichen, senior vice president at Alliant Retirement Consulting in Austin, Texas, had been an independent before being acquired by Alliant in 2018. He says he gains from the broader company in that it has many corporate clients that would like to work with an adviser who has a close association with the health care benefits or insurance benefits Alliant already delivers to its employees.
“We are now an advisory shop that is closely connected to a benefits and insurance broker,” Pottichen explains. “While it is helpful, the access and scale itself goes only so far. Scale itself is not enough. What does make a big difference for us as we sell is how holistic and responsive we can be as advice providers and consultants. The primary theme that’s driving our business forward is the marriage of health and wealth. I’ve been on this train since we were first acquired by Alliant. Our vision is that health and wealth are not church and state—it’s one issue.”
Westminster Consulting does not have the same inherent incentive or ability to cross-sell health care services or insurance services to its clients. Rather, Patton says, the firm engages in discussions about the health care plan or other ancillary benefits in its direct capacity as an independent fiduciary plan consultant.
Patton says his firm must do this to remain competitive in a landscape being so fundamentally and rapidly altered by mergers and acquisitions (M&As).
Collectively, dozens of sizable acquisitions of well-established plan advisory firms have been enacted in the last several years, by the likes of OneDigital, Hub International Ltd., Marsh McLennan and others. All of these groups are already helping their new advisers deliver a holistic package of “health and wealth” services—comprising traditional retirement plans, health savings accounts (HSAs), ancillary insurance products, financial wellness solutions and more, both to existing clients and prospects.
In discussing why her firm chose to sell to Hub, Barbara Delaney, founder of StoneStreet Renaissance (SS/RBA), in Pearl River, New York, emphasizes the back-office efficiencies that let her focus much more on business development and on building increasingly holistic relationships with existing clients. In addition, she cites Hub’s broad employee benefits capabilities, especially with respect to HSAs and financial wellness tools. She says being able to efficiently deliver such services presents a clear advantage in today’s marketplace, given that financial leaders at companies want a rational benefits strategy—not a jumble of disparate products and services.
This may seem like a daunting competitive environment for an independent firm such as Westminster, Patton says, and he points to a clear need for his firm to step up to the challenge. That said, he is confident that a small advice-only shop such as his does have a role in this emerging ecosystem.
“For starters, I would point to the importance of delivering financial wellness with a model that still includes that human interaction, and we can provide that profitably, in part because of the increased acceptance of digital meetings,” Patton says.
By taking travel out of the equation and keeping people in the office, Westminster can provide financial wellness services at scale. It can also take the time to talk about the bridging of wealth to health in a way that responds nimbly to client needs. “That’s the future of how we deliver these services,” Patton says.
“It won’t always have to be in person, I believe. The new acceptance of digital meetings, largely due to COVID-19, is very significant in this discussion.” he says. “If you think about having to put two coaches on a plane, and you add the cost of a hotel for a couple of days and paying them for all that time, it doesn’t work financially. Using digital tools, that is no longer such a problem.”
Pottichen agrees that varied approaches to delivering “health/wealth services” will be possible, to suit advisory firms’ different styles, whether or not they affiliate with a bigger provider.
“I’ll say that many of the top recordkeepers are coming out with their own HSA products, and some are even doing white-label HSA products,” he says. “They’re also offering flexible spending accounts [FSAs] and group life insurance embedded into the 401(k) platform. There are new product sets and platforms for advisers and consultants to take advantage of, even if they can’t provide some of these things from under their own roof.”
The Demographics Connection
Another adviser in similar shoes to Pottichen is Daniel Bryant, who co-founded Sheridan Road Financial, in Northbrook, Illinois. He transitioned his advisory shop into Hub’s private wealth and retirement business in 2018. That experience has already made a few things clear, he says.
“To be successful, every adviser should be operating with some understanding of the interconnectivity of financial fitness, emotional well-being and health wellness,” Bryant says. “These three things are completely tied together from the perspective of the employer, and advisers have to understand and embrace that fact to keep their clients and to win new business.”
Whether an adviser affiliates with a benefits provider or not, he can make clear to employers that wellness at work is not about paternalism, Bryant says. “My view is that the adviser can always help the employer understand the demographics of its employee base, which can then help it pick the right tools and services for that demographic.”
“For example, the adviser can help determine that you probably don’t want to prioritize a retirement income planning solution at a startup tech company that has a very young employee base, and, by the same token, you don’t want to prioritize a student loan repayment option at a blue-collar employer with relatively few college grads on the payroll,” Bryant continues. “The adviser, whatever kind of firm he works at, can be the strategic voice and help employers sort through all of this.”