As the world reopens, it will take a bit of readjustment. That’s not just getting out and meeting with people and going to conferences again, but also because the world has changed. Assuming that the world will be the same is wishful thinking.
As I described my upcoming schedule to a friend, which includes at least one event or trip almost every week starting Labor Day, she asked if I was concerned.
After nearly 30 years of constant travel, there were parts of the sheltering in place with my wife and two dogs that I enjoyed. I’m not fearful or concerned about the hectic upcoming schedule. When the ocean is calm, you float. When there are waves, you surf. Making waves when there are none is futile. Complaining about waves when there is calm is just ignorant.
Author Daniel Pink recently noted that the pandemic showed that people could be productive while working from home and that they can trusted. Meanwhile, Morgan Stanley CEO James Gorman said that if people can go to restaurants, then they can come to work.
Pink said that many workers, especially skilled ones, are in high demand and will easily find a new job, leaving that CEO to dine alone.
So how will the pandemic change the workplace savings industry?
There will be vast differences, but the fundamentals of the business will be the same, as will the importance of strong relationships and brands.
The convergence of wealth, retirement and benefits will finally happen. It makes sense for people who want to get all their financial planning at work, which is the source of much of their wealth. Plan sponsors also want to bundle health, voluntary and retirement benefits. Providers and distributors realize the enormous opportunities. Many, like Fidelity, already have started to realize some of those opportunities.
There will be heightened awareness and focus by plan sponsors on providing not just retirement planning but other financial planning options to retain and attract talent. Doing so could make the workforce more productive, as most will work at home at least a few days each week.
With less emphasis on physical assets and offices, the importance of skilled workers who can leave anytime with the organization’s most important assets — their knowledge, relationships and experience — might be the greatest in our lifetime. It’s stunning how the U.S. economy went from losing tens of millions of jobs to almost overnight having organizations unable to fill positions.
Retirement plan advisers and record keepers will be better able to help the ignored employees, those who can’t afford traditional advice. This can be done through virtual meetings, at times that are best suited for workers and their families, with access to data to provide cost-effective mass customized financial planning.
There should be a thoughtful outreach program that includes news, information and education that’s suited for workers’ needs, along with actionable steps like requesting more information or speaking live to a professional. Based on what workers access, providers and RPAs can follow up with apt solutions. Occasionally meeting with employees in person at work will continue to be important, but more as a way to build trust.
Group meetings will be hybrid, or a combination of virtual and in-person. Most plan-level services like committee meetings and investment reviews will be virtual, all of which will allow RPAs that have the resources and technology to create a national practice. RPAs can specialize in certain industries because the pool of prospects will be much larger.
Prospecting through professional referrals like benefit brokers, CPAs, lawyers and wealth advisers will become even more prevalent. Cold calling will become colder. Building relationships through quality education and training will be even more important as the need among plan sponsors grows. Larger RPA firms will acquire RIAs to cross-sell the high-net-worth participants. Others will form partnerships with RIAs, especially those with a few DC plans.
Relationships with providers will change dramatically as the hybrid wholesaler model will finally take off and continue to grow — the pandemic showed it can work. There will be less focus on entertaining clients, forcing wholesalers to deliver real value through competitive intelligence, marketing support, technology, tools and practice management. Older wholesalers with established relationships will be more important, and with less rigorous travel schedules, they may work longer. Younger tech-savvy wholesalers will resonate with up-and-coming RPAs.
The government and teachers’ market will open to RPAs, propelled by the same dynamics that pushed the corporate and nonprofit markets from defined-benefit to defined-contribution plans. It’s all about accessing people at work. New solutions will be developed for gig workers, who represent a growing percentage of the workforce.
More older workers will continue their careers, enabled by telecommuting and flexible work schedules. Providing retirement income and other options for older employees at work will be critical.
Who wins? Aggregators that have the benefit of capital and integrated technology. They can also cross-sell benefits to plan sponsors, and provide wealth management to the high-net-worth employees and mass-customized financial planning to the rest. So too will savvy, nimble, regional RPA firms that are in a better position than ever to assemble the needed resources, technology and relationship. But that will only happen if they transition from a practice to a business, which is a subtle yet monumental shift.
The world has changed. Ride the waves or paddle to the shore because the “calm” is over.