Workplace Retirement Voice: Why Wealth Advisors Should Embrace Workplace Retirement Plans
Membership required
Membership is now required to use this feature. To learn more:
View Membership BenefitsFor many wealth advisors, workplace retirement plans are either a burden or an afterthought, according to John Kutz, National Retirement Plan Strategist at Franklin Templeton. He and his team explore why embracing these plans can benefit their practice and their clients.
Wealth advisors haven’t historically embraced workplace retirement plans as part of their practice. We think they should. There is a pressing need to address the coverage gap in retirement plans. And, the landscape of wealth management is changing, along with changing perspectives on retirement.
State-mandated plans open the door to promote savings, enhance benefits for employees, and even prompt business owners to seek more tailored solutions, compared to what the state offers. The role of financial professionals has evolved in recent years, and clients today are looking for a more holistic approach, which incorporates all aspects of financial well-being.
Retirement plans for small to mid-size business can now offer:
- Outsourced fiduciary responsibility and administrative burdens can be minimized.
- A way to avoid introducing another advisor into a relationship with a client.
- A potentially more attractive privatized option to state-run retirement options.
- The workplace is a very efficient gateway to engage and interact with the next generation of savers and investors.
Our Voice of the American Worker Survey revealed that personalization and customization go a long way when it comes to American workers’ retirement savings behaviors—three-quarters (77%) of respondents stated they’d be more likely to participate or contribute more to their retirement savings if there were more personalized 401(k) investment options.1 This is where we think wealth advisors can play a key role.
It’s a win-win for wealth advisors—and their clients.
Following are highlights of a discussion our retirement specialists had on this topic, which included Kevin Murphy, Head of Workplace Retirement Distribution, John Kelley, National Retirement Plan Consultant, and Matthew Beaulieu, Senior Retirement Plan Strategist.
Kevin Murphy: Roughly half of all US workers do not have access to a workplace retirement plan.2 So there is a coverage gap. This is both a problem and an opportunity for advisors.
John Kutz: We are seeing state and federal legislators pushing hard to address the coverage gap, and we are finally witnessing new regulations that encourage interest in more turnkey workplace retirement solutions to aid business owners—particularly small businesses that don’t offer a plan.
John Kelley: I think a lot of generalists get into the retirement plan space to utilize it as a prospecting source for individual wealth clients. First and foremost, it’s the business owner, protecting them as a client but then along the way they become the financial expert to all these participants.
Matt Beaulieu: Exactly, and the new regulations are a catalyst. They are going to force wealth advisors to start coming to the table, to ask what they can do from a benefits perspective. Maybe they can provide another product that’s better for a particular client than a state-mandated plan.
Kevin Murphy: We know wealth advisors want to build a wall around their existing wealth business. The non-retirement specialist advisors have very strong relationships with influential business owners and executives. The last thing they want is to let another financial advisor into that relationship. If there’s a business owner who has a mandate to implement a retirement plan, there’s this sort of thinking that “I don’t want anyone else getting to know my wealthy business owner.”
John Kutz: Right. Recordkeepers are entering the realm of the wealth management business, and wealth advisors feel the need to protect their turf a little bit. As a result, these advisors have to be more engaged to at least some degree on the retirement plan side and with the participants in the plan to prevent losing these clients to recordkeepers or other entities.
Kevin Murphy: I have one word for you—technology. It’s now much easier to implement and service retirement plans than it was five or 10 years ago, so now I think wealth advisors are looking at it as a growth opportunity, an opportunity to develop and nurture relationships with the mass affluent and the sub-mass affluent. This is where I think the provider landscape has excelled in crafting best-in-class solutions, state-of-the art technology, and effectively outsourcing nearly all fiduciary responsibility while minimizing administrative burdens.
John Kutz: Absolutely, technology now is allowing advisors to get that lower-balance account, too, right? Historically, advisors have focused on the “c-suite,” maybe the top 10% to 20% of the workforce, and they ignored the rest of the workforce. But wealth advisors want to keep and grow their assets, and if we can help them through more personalized solutions in the workplace, they get pretty excited about an effective way to streamline their business.
Kevin Murphy: Exactly. I strongly believe most retirement advisors started doing this business for the genuine good of helping more people. Wealth managers are seeing now that they have generational wealth transfer issues to think about and they need to figure out ways to really engage and interact with the next generation of savers and investors, and dealing in the workplace is a very efficient gateway to do so.
Matt Beaulieu: All these things that historically were solely on the plan sponsor, with the advisor quarterbacking, all that can be packaged together in a way that creates economies of scale and brings down the overall cost. That’s very attractive for all parties involved.
John Kutz: The enhancements of pooled plan solutions have done a fantastic job of helping financial professionals streamline their business. Ideally, we’ve helped them strengthen their relationships with business owner clients, while also freeing up time for them to prospect new business and/or use that new additional time to support existing clients. It’s about scaling the business in a more efficient way.
WHAT ARE THE RISKS?
Franklin Templeton (FT) does not provide legal or tax advice. The information provided in this document is general in nature, is provided for informational and educational purposes only, and should not be construed as investment, tax or legal advice, or as an investment recommendation within the meaning of federal, state, or local law. Laws and regulations are complex and subject to change. Statements of fact come from sources considered reliable, but no representation or warranty is made as to their accuracy, completeness or timeliness. FT makes no warranties with regard to information in this document or results obtained by its use, and disclaims any liability arising out of the use of, or any tax position taken in reliance on, such information.
IMPORTANT LEGAL INFORMATION
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.
The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.
Any research and analysis contained in this material has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase, hold or sell any securities, and the information provided regarding such individual securities (if any) is not a sufficient basis upon which to make an investment decision. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.
Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.
Issued in the U.S. by Franklin Distributors, LLC, One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com – Franklin Distributors, LLC, member FINRA/SIPC, is the principal distributor of Franklin Templeton U.S. registered products, which are not FDIC insured; may lose value; and are not bank guaranteed and are available only in jurisdictions where an offer or solicitation of such products is permitted under applicable laws and regulation.
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
1. The Voice of the American Worker survey was conducted by The Harris Poll on behalf of Franklin Templeton from October 28 to November 15, 2021, among 1,005 employed US adults. All respondents had some form of retirement savings. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. Findings from 2020 reference a study of a similar nature that was conducted by The Harris Poll on behalf of Franklin Templeton from October 16 to 28, 2020, among 1,007 employed US adults. Franklin Templeton is not affiliated with The Harris Poll, Harris Insights & Analytics, a Stagwell LLC Company.
2. Source: Bureau of Labor Statistics, as of 2022.
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out our full schedule of upcoming CE-approved virtual events.
Membership required
Membership is now required to use this feature. To learn more:
View Membership Benefits