The online evolution of retirement plan practices

Retirement plan advisers who resume their practice as if nothing has changed after the strict social distancing rules and travel restrictions are lifted will miss out on significant opportunities and be left behind.

The COVID-19 crisis will accelerate many trends that were percolating before the crisis, like industry consolidation and a focus on participants. This will create new opportunities and challenges.

Here’s how RPAs may want to evolve their 401(k) and 403(b) practices as the virtual world becomes a reality.

With the advent of Zoom and related technologies, more people will be working remotely. There are many downsides, as outlined in a recent Wall Street Journal article, but the trend is clear. 

Plan sponsors will be more open to virtual meetings, and they might even demand them. Likewise, plan participants who want to meet with advisers after hours, with their spouses, will be more willing to do so online. 

Advisers can adapt to remote meetings with participants by establishing a thoughtful process and protocol. They will not only make themselves more attractive to plan sponsors, but will also be in a better position to monetize the participants.

There still might be an argument for live group and one-on-one meetings as a way for RPAs to establish relationships. But routine meetings with the plan’s retirement committee will mostly be conducted virtually.

All of this creates the opportunity for RPAs with resources to develop a national ERISA practice. That can include partnering with local advisers who do not specialize but are adept and eager to work with participants on wealth management, financial planning and rollovers.

More staff members at advisory practices may also want to work from home, especially in areas where commutes are long and difficult. It opens up opportunities for older employees who don’t want to work regular hours at the office, as well as those who need to be at home. RPAs must ensure that they have the proper technology and create ways to keep their staff engaged and trained.

Just as plan sponsors will prefer virtual meetings, RPAs will want to meet remotely with wholesalers. That could in turn change the DC provider industry, which has been threatening to deploy hybrid wholesaler techniques for over a decade. 

Wholesalers are a very valuable resource, providing information about funds and record-keeping services as well as the economy, competition and resources. They will have to rely more on the value they add than the relationships they have established, which is a good lesson for advisers.

Prospecting new DC clients will be more of a challenge as plan sponsors become less likely to want strangers in their offices. Referrals will become more important, as will providing value remotely, such as through education that provides continuing education credits, as there will be fewer conferences. Larger RPA firms that can offer tangible value will be in a better position.

Advisers will have to look for opportunities to train themselves and their staffs remotely, as travel will be restricted. This will lead to a focus on smaller regional events, as the big tent conferences are all but dead. Can you imagine wearing a face mask for two or more days?

Last but not least is the importance of video conference call protocol, including: 

 •  Think about how you would dress and present yourself to a group or someone you are meeting with in person. Why should it be dramatically different on a video call? 

 •  Focus on light and sound. Simply put, face the source light, whether it’s a window or lamp. If there's a bright window behind you, viewers see shadows, not your face. 

 •  Background is important. It shouldn't be too cluttered but also not a blank wall. What image are you trying to project? 

 •  Use headphones, not speaker microphones, as the latter more easily pick up ambient sound. 

 •  Though there’s a lot of forgiveness for interruptions from pets and kids, try to work virtually from a secure room, especially if you are conducting a webinar.

Welcome to the new normal. It’s very exciting, but definitely different.

[More: 401(k) data-sharing one step closer, thanks to Spark and DCIIA]

Fred Barstein is founder and CEO of The Retirement Advisor University and The Plan Sponsor University. He is also a contributing editor for InvestmentNews’​ Retirement Plan Adviser newsletter.