A Digital Divide
Strategic Retirement Partners’ new WELLth branding and website for its individual-level work on financial planning and investment management debuted at a moment when many Americans had some serious questions about their financial life. “WELLth was born right during the pandemic, as luck would have it,” says Sarah Krapec, SRP’s Chicago-based director of participant education and national practice leader for WELLth. “We recognized the need that people have for it and decided to go all-in on building the site. By the fourth quarter of 2020, we were up and running.”
Prior to that, SRP offered some financial planning and wealth management services, but not as a cohesive solution across the advisory firm, and it had no website devoted to that area. SRP sees a natural bridge from retirement plan work to advising individuals outside their retirement plan. “Now participants are saying to us, ‘I’ve worked so hard in my accumulation phase, what’s going to happen when I retire? Can you come with me to the other areas of my financial life and offer me guidance?’” Krapec says. “For many years, we’ve built a relationship and trust with people on the retirement plan side. So when other financial areas come to mind, they think of us.”
The site is not meant to be a full do-it-yourself experience, and every page has a place to click to schedule an appointment with a staff member from the participant advice team.
Krapec and other advisers at SRP write the WELLth site’s content and update it monthly, based on the type of issues coming out of their conversations with plan participants and wealth management clients. “We want to eliminate the industry jargon as much as possible, to write about the things that people actually care about, and write as simply as possible, so that people can be informed, but not intimidated,” she says. “My whole lens that I view things through is education: I feel that’s the olive branch we can offer people, whether they want to buy [wealth management services] or not. If that education leads to an ongoing business relationship, great. If it doesn’t and it helps that person on his or her financial journey, that’s fine, too.”
SRP is among a growing number of firms that do extensive plan-level retirement work and also now have a website and/or app for individuals’ use, for financial wellness in some cases and private wealth in others. But the firms interviewed for this story have a very different service model than the technology-focused one utilized by some industry providers for individual-level work. “It is absolutely necessary that we have an online wealth presence, and this is a way to introduce ourselves to people,” Krapec says. “However, the goal of the site is that we want to be able to move you into conversation with us as soon as possible. Does technology play a role for us? Yes. But that’s just the tip of the iceberg.”
Strategic Motivations
The industry’s increasing focus on working with individuals comes at a time of changing dynamics for retirement plan advisory work. “When you think about the core disciplines for plan advisers of creating the investment lineup and monitoring the investments, as an industry we now have so much technology and we’ve built so much infrastructure around this, there’s only so much we can do differently from our competitors. There’s not much differentiation we can create there,” says Troy Hammond, founder and CEO of Pensionmark Financial Group in Santa Barbara, California. “So we said, ‘Where’s our weak point? Our weak point is that participants don’t have the education and information they need.’”
The Morgan Stanley financial wellness program’s digital education portal for participants grew out of the company’s 2019 acquisition of Solium Capital Inc. and its digital tools. But working with individual participants is familiar territory for many Morgan Stanley advisers. “When I think about how Morgan Stanley operates as a retirement plan adviser, and talking to our advisers, some say they’ve also been operating in a financial wellness capacity for decades,” says Anthony Bunnell, head of retirement for Morgan Stanley at Work in New York City.
“The focus on working with individual participants has grown recently, because there is so much demand coming from plan sponsors to increase interactions between participants and their plan’s adviser,” Bunnell adds. “I think the demand is coming from plan sponsors because participants specifically are asking for it. More and more are asking for additional digital tools, and more and more employers also want their plan adviser to interact with participants individually.”
To engage participants, Bunnell says, it is crucial to have multiple communication channels. Some people like to do their own research online and then interact directly with digital tools to make changes, he says. Others want to learn some basics online, then talk to someone about their issues. “Understanding the preference of users is important to engage them successfully,” he says. “You need to have all the channels: group education, one-on-one meetings, a digital destination and proactive outbound communication” such as targeted emails.
Pensionmark introduced its mobile app called SMARTMap this year, after launching its Personal Financial Portal site in 2013, but the firm’s advisers have been doing participant-level work since Pensionmark’s founding three decades ago. “Back then, we said, ‘ERISA [Employee Retirement Income Security Act] says we should be doing this in the best interests of participants, so we should be talking to them directly,’” Hammond recalls. “This concept of connecting directly with participants and giving them support has been in our DNA for 30 years.”
“We don’t see our site and app as competing with recordkeepers. We see ourselves as integrating with the recordkeepers and going beyond the basics of what they do.”
The Pensionmark offering for individuals breaks down into three levels of service, depending on how in-depth someone wants to go. At the first level is the SMARTMap app, which helps people get started with basics such as setting up a budget and establishing their goals for the financial wellness program. “Eventually, we want them to outgrow that. We want them to come to us and say, [for instance,] ‘Your app is great. I have two kids who’ll be going to college in six or seven years, and now I realize I need to plan for that financially,’” Hammond says. “Then we can start doing custom planning and setting goals with people.”
That leads to the second service level, which Pensionmark calls Foundational Planning. It incorporates a more enhanced technology platform, which Hammond likens to the type of financial planning resources offered by wealth managers, to create an individualized, in-depth financial plan. The third level, Portfolio Advisory Services, is an ongoing advice offering that includes fiduciary counsel and services such as managing a custom portfolio.
CAPTRUST started its CAPTRUST Advice website for its retirement plan clients’ participants in 2016 and revamped it in 2020. “We’ve offered a participant [fiduciary] advice program for many years, and, as we grew, we wanted to help participants engage more with what CAPTRUST can offer them,” says Greg Delage, the firm’s director of advice and wellness, in Raleigh, North Carolina.
“The website is mostly just to get folks engaged, and to help them understand the importance of the financial matters they don’t understand now,” Delage explains. The website offers education, while CAPTRUST’s advisers help participants with individualized plans and give fiduciary advice, he says. “We want them to use the information on the site, but the No. 1 call to action is that we really want to talk to them.”
The site is not meant to be a full do-it-yourself experience, and every page has a place to click to schedule an appointment with a staff member from the participant advice team. “Our main tool for our financial wellness program we let participants use only with a financial adviser,” Delage adds. That tool helps them put together a customized financial plan.
Currently, Intellicents Inc., in Albert Lea, Minnesota, is rolling out to clients its new financial wellness app for individuals, Lifesteps, as part of its continued expansion into financial planning and wealth management. Asked why Intellicents focuses so much on individual-level services, co-founder and CEO Brad Arends says, “The American worker just plain needs the help and needs it badly, and it needs to go further than just retirement.”
Technology plays a key role initially in Intellicents’ work with participants. “We use our app’s technology to deliver a foundational financial plan to every employee at our plan clients,” Arends says. The goal is for people to be interested enough in that foundational plan to start engaging with the financial planning program. From that point, a client’s employee would work with an Intellicents Certified Financial Planner to develop a personalized financial plan. The new app has tools for help with first steps, on topics such as budgeting, debt control, emergency savings and retirement readiness calculations.
Arends hopes the financial wellness program will lead to improved retirement readiness, and to some participants becoming wealth management clients. “The average plan advisory firm has got to get into private wealth,” he says. “If you’re still just focusing on ‘funds, fees and fiduciary,’ you’re going to be at a huge competitive disadvantage, because you’ll be competing against national firms that can do both retirement plan work and wealth management work.”
SageView Advisory Group, headquartered in Newport Beach, California, now has a website for its wealth management business, and founder and Managing Principal Randall Long sees a clear synergy between serving retirement plans and wealth management clients. “Working with so many participants has led us down the road to expand our services into the wealth space in the past several years,” he says. “It’s a natural evolution for us to expand in this area, because people need help with comprehensive wealth management.”
The wealth management side of SageView now has clients with approximately $4 billion in assets, compared with $175 billion in assets in the retirement plans that SageView has as clients. Asked if he could ever see the wealth management and retirement sides becoming an equal percentage of SageView’s business, Long says, “In terms of assets, clearly the institutional retirement side will always be larger than the wealth management side. But in terms of revenues, I can see them becoming equal.” A wider breadth of services can be offered on the wealth management side, he adds: For example, an executive participating in a retirement plan and also utilizing SageView’s wealth management services could get wealth management advice on how to execute her stock options and how to best utilize nonqualified plan benefits.
SageView intends for the digital resources to be paired with the services of a SageView adviser. “We’ll definitely continue to use technology, and increase our investment in technology, because it helps us connect with people,” Long says. “But once we connect with people, then our advisers will work with them to develop a personalized strategy. I think you need both: You need a high-touch interface, and you need technology. So much of this advisory business is about building trust and confidence with people. A computer can’t do that: You still need that personalized touch.”
Art by Julien Posture
Growing Your Practice | A Digital Divide