A Shift in the Tech Landscape

Early last year, Ron Lehmann, vice president of retirement plan services at Johnson Financial Group in Madison, Wisconsin, says, his firm’s business model was very hands-on. Frequent in-person fiduciary administration meetings with plan sponsors and one-on-one financial sessions with plan participants were the norm.

When the coronavirus hit, and operations went fully remote, the 18-person retirement plan services unit had to overhaul nearly all of its procedures to continue meeting the needs of its clients. Nearly two years later, employees have settled into a hybrid work schedule, each week dividing the days between the office and home.

That transition required a relatively quick adoption of tech tools to facilitate remote collaboration, a shift that Lehmann says has made the firm more flexible and efficient.

As plan advisers across the country adapted their practices to meet the challenges wrought by the pandemic, they leaned heavily on technology to smooth the transition. Technology has infiltrated nearly every aspect of advisers’ business, and many say the way they do business will never be the same.

A Vestwell survey in October found that a whopping 85% of plan advisers say that, because of the past year, they place a greater emphasis on the technology they use to run their business.

Flexible Technology

Having access to flexible technology solutions became a competitive advantage during the past year and a half, amid the uncertainty of lockdowns and social distancing rules. Nearly nine in 10 advisers surveyed by Broadridge said technology tools became more critical while working from home.

“The COVID situation really forced the hand of so many advisers who might have otherwise been a little behind on adopting electronic trends,” says Adam Moseley, director, business consulting and education, at Schwab Advisor Services in Chicago. “They were left with no choice, as they were no longer in a position to have clients in their conference room.”

Advisers surveyed for Charles Schwab’s “2021 RIA [Registered Investment Adviser] Benchmarking Study” cited the following technology tools as having the greatest impact in 2020: portfolio management systems, client relationship management (CRM) systems and financial planning systems.

Virtual meetings—whether on Zoom, Webex or some other platform—boomed during the pandemic, and advisers relied on them to facilitate collaboration while working remotely. Chat tools, such as Slack and Microsoft Teams, that allow for instant messaging between colleagues also became vital to keeping operations running.

“The Monday morning meeting that used to be in person is now on a digital channel,” says Kevin Murphy, senior vice president and head of workplace retirement distribution for Franklin Templeton in New York City.

Of course, remote work can also lead to burnout and “Zoom fatigue.”

Still, “When you’re not traveling, you’re actually more available for meetings and more accessible to clients,” says Brian Parker, vice president and national benefits technology and services leader with Alera Group in Philadelphia. “But it’s a balancing act to make sure people also have enough time in their day to get their work done.”

Solution-in-Waiting

Just as advisers already had tools such as Zoom and Webex but only leaned into them when the pandemic hit, they have also upped their usage of other digital tools, such as report automation—especially from providers—which they have had access to but not fully capitalized on in the past.

“We’ve spent a lot of time over the past 18 months or so working with consultants and advisers to build automated data feeds that they get in a file format that can easily load into their reporting system with shared client data,” says David Swallow, managing director of consulting relations and retention at TIAA in Tampa. “In the past, that might have been done via manual entry, pulling things from spreadsheet to spreadsheet.”

Advisers on the Schwab platform also quickly began taking advantage of digital tools to which they previously had access but did not use, Moseley says. “Adoption skyrocketed across the board, whether it was [for] moving money, opening accounts or [employing] maintenance items,” he says. “There were things we had electronic solutions to for years, and adoption had been OK. Now it’s fantastic. Advisers just flipped the switch and began using them.”

Moseley says a surprise benefit has a been a reduced need to redo work, as these electronic systems have safety mechanisms in place to catch some of the common mistakes that previously required corrections, such as a mis-keyed order or a blank field.

“We try to make sure employees are engaged together and present,” he says. “We try to always have the cameras on and make sure no one is being left behind. Zoom can become impersonal, so we’re also trying to do some social activities. It was awkward at first, but people have gotten involved.”

Connecting With Clients

Besides using virtual meeting technology to connect with their internal team, advisers began using it to meet with clients, who also quickly adopted the tools.

“It was a little rough early on, as we worked through how to identify what’s working and how to be able to do everything, from advising participants to enrollment meetings and sales presentations,” Lehmann says. “But as we began utilizing these meetings more effectively, it created a huge opportunity for us. Now, as we come out of this, I’m challenging my team not to revert to the way we always did things.”

As recently as the first quarter of this year, 90% of clients were engaging with their adviser firm’s staff completely virtually, said adviser respondents to the Schwab study, and they expected half of clients to continue with that virtual engagement even when COVID-19-related restrictions lifted. A separate study from Nationwide found that employing remote service options was the No. 1 way that successful advisers planned to better support their clients over the next year.

The ease of online meetings has changed the nature of in-person meetings, for those advisers who have resumed them. For Parker, the goal now for in-person meetings is to make them “purposeful.”

“Part of it is being social, but it also might be an opportunity to whiteboard or spend a few hours going through something,” he says. “We have the clients prescribe to us whether they want to meet in person or online. Flexibility will be key for meetings through 2022.”

Lehmann says his firm is going forward with a hybrid model for doing business with clients—working with them in the way that works best for everyone. “For some, that might be going back to in person,” he says. “For others, it might be continuing on with electronic meetings, which we’ve become pretty darned good with, over time.”

Sources say many advisers have found that digital meetings make it much easier to coordinate the schedules of a quorum for a quarterly committee meeting than it would be to get them all physically into the same room.

New Opportunities

“The good part of this new technology is that it really opens up the business model for many advisers,” says Mike Shamburger, head of core markets at T. Rowe Price in Baltimore. “They’re not limited to a specific region. If they get a referral across the country and build a relationship over Zoom, we have seen that can be as effective as going across the country to meet in person.”

The increased efficiency of firms that have completed a digital transformation has also positioned them for better scalability and growth in the future.

“These virtual meetings and electronic tools that advisers have absolutely perfected now set them up to do much more with the staff they already have in place,” Moseley says. “I am expecting adviser businesses to grow, and for them not to feel the same growing pains they might have if they weren’t using these tools. There’s simply more time on the calendar.”

Increased understanding and adoption of technology also present opportunities for advisers to help their clients upgrade their tools. Reliance on old tech could result in higher costs or make it more difficult to implement flexible plan design features that will best serve participants.

In today’s tight labor market, plan sponsors without up-to-date technology face another potential cost: lost talent.

“If you don’t have decision-support tools to help plan participants in their benefit selections, they might not understand and not appreciate the benefits they have,” Parker says. “They may leave and go somewhere else that can explain it better.”

A recent study by LIMRA and Ernst & Young found that plan sponsors would choose benefits providers with systems that work with their benefit technology platform, even if it costs more. Plan sponsors increasingly want advisers who can help them deliver tech-forward solutions to participants, such as on-demand, personalized advice or a gamified experience. An array of new fintech providers are able to offer such services, so today’s advisers need to know what is available and how it might fit into a plan sponsor’s benefits.

Multiple Solutions

Advisers have vastly expanded their arsenal of digital tools to better connect plan sponsors with their participants. The Broadridge study found that advisers are investing in search-engine marketing, webinars, and audio and video content for social media.

At Argi in Louisville, Kentucky, plan adviser Jim Trujillo says the firm has relied on different communication tools to make the connection at different companies. “We always started by asking how our clients were communicating with their people in the pandemic world we were living in, and then we created a customized virtual solution for each client,” he says.

For many, the answer was short-form videos. “So then we really started to get creative about short videos and creating group education in a way that was scalable for our clients,” Trujillo says. “We got updated cameras and sound equipment and learned how to edit videos.”

For other clients, Argi instead focused on webinars or email newsletters. In each case, the firm collected data on participant engagement. “Then we can go back to our clients and say, ‘Here’s the data—this is the right way to communicate for your company,’” Trujillo says.

Johnson Financial Group has also introduced new tech tools to better communicate with participants across multiple platforms. “We did things we never would have thought about in the past, such as on-demand videos and podcasts,” Lehmann says. “They’re all prerecorded, so we’re able to reach participants at a time that’s convenient for them.”

The firm has also introduced content that participants can tap into as they reach certain milestones. “We are using an online financial planning tool that goes beyond retirement planning to help them achieve long-term financial security,” Lehmann says. “We have educational modules available for marriage and divorce, debt management, college planning, etcetera.”

Providing just-in-time education about financial stresses to employees as they are dealing with them is a benefit to the employer, Lehmann says. Doing so can improve absenteeism, productivity and even retention rates. That is especially important now, with more than 60% of the employees recently surveyed by PwC reporting that their financial stress has increased over the months of the pandemic.

Financial Wellness

“The pandemic has really accelerated an adviser movement toward [fostering] financial wellness, and they’re doing it with less reliance on the recordkeeper and in a purely digital way,” Murphy says. “They’re promoting participant education beyond the retirement plan. The conversation is no longer about stocks and bonds but ‘Do you have a budget?’”

Shamburger says T. Rowe Price has also seen increased interest in financial wellness programs from plan sponsors, which want to integrate their retirement benefits with college savings programs, health insurance offerings or an emergency savings product.

“For advisers, that’s really interesting, because it broadens the conversation they can have with plan sponsors,” he says. “Anytime you can do that, it’s an opportunity to create more value and engage the participant base.”

Participants also expect providers to offer the latest technology. In a March study by Edward Jones, 95% of investors said it is important that advisers use the latest technology and tools when providing financial help, though 83% said they would still rather work with a human than a robo adviser.

Plan advisers agree that the accelerated adoption of technology appears poised to continue. Shamburger says he expects to continue to see service providers migrating their offerings to the cloud. “It’s just so much cleaner and smoother to adapt going forward,” he says. “Looking 10 or 15 years down the road, most systems we operate will be cloud-based.”

Personalization

Industry thought leaders surveyed last year by Voya said technology would drive more personalized advice, which would lead to better outcomes for participants over the next decade. For plan advisers, that means an increased reliance on tech tools to connect with plan participants, who are now more willing than ever to engage virtually.

“When we went all virtual back in 2020, our engagement did not decrease at all,” Swallow says. “We had the same amount of engagement with participants as we did pre-COVID. That tells us that the ability to engage and meet participants where they want to be met is very powerful, and that’s something that’s going to be here to stay.”

Flexible platforms that allow plan sponsors to facilitate digital advice or offer managed accounts at scale will also likely continue to grow in importance. Providers are launching a host of new products aimed at enabling such services. In the past year alone, Morningstar and Dimensional Fund Advisors debuted a customizable, adviser-driven managed account service; Prudential Retirement unveiled Advice and Income Engines; and Ascensus introduced a product with Financial Finesse that uses artificial intelligence (AI) to service individual participants.

As the number of products and solutions in the space continues to grow, advisers can help sponsors determine which might make the most sense for their business. They might also help sponsors streamline their provider ecosystem. To do this, the adviser can create an easier-to-manage experience for participants, while minimizing the need to share data and therefore decreasing the risk of a cyber breach.

It will also be increasingly important to select technologies that work together, even if they are provided by multiple vendors, as participants demand a more user-friendly experience that, additionally, allows them to see their entire financial picture at once.

“The average U.S. worker wants personalized attention and a holistic snapshot of their financial situation,” Murphy says. “And we’re seeing advisers embrace that, and financial wellness generally, in a major way.”

That, of course, requires access to data, another major focus for tech-forward advisers. “There’s a struggle for the participant data right now, and technology is going to be critical in that battle,” Murphy says. “Technology that can help aggregate data outside of the recordkeeper is going to be extremely useful.”

To remain competitive, advisers will need to adopt new technology as it becomes available—and adapt their operations accordingly. “The question is, how to manage the firm around the technology and implement the day-to-day practices that ensure [you]’re taking advantage of the extra lift available to [you] thanks to technology,” Shamburger says. “It’s a matter of change management.”

Art by Ryan Peltier