RPA aggregators focused on convergence, consolidation and cooperation

At the fourth annual RPA Aggregator Roundtable and Think Tank last Wednesday and Thursday in New York City and virtually, the focus was on the convergence of wealth and benefits at the workplace and in the industry, and the need for retirement plan advisers and providers to cooperate — not compete — to achieve optimal results.

Unlike any other industry event, there was no agenda. All participants were focused on the defined-contribution industry’s biggest opportunities and challenges. The group included record keepers, defined-contribution investment-only asset managers, insurance companies and enabling providers like Morningstar and Wilmington Trust.

When asked about opportunities, challenges, what keeps them up at night and their focus for 2022 and beyond, comments included:

• The importance of speed to the market and financial wellness as a stand-alone business — Michael Barry, managing director at UBS.
• How technology can help reach new markets — Ben Thomason, executive vice president at Vestwell.
• The growing influence and expectations of private equity firms on the DC market — Joel Schiffman, head of U.S. defined contribution and insurance sales at Schroders.
• Serving the 99% of participants who are ignored and the increasing demand for emergency savings — Brad Arends, CEO of Intellicents.
• Whether public policy is aligned with the growing convergence of wealth, retirement and benefits at work — Michael Doshier, senior retirement strategist at T. Rowe Price.
• How record keepers can be better partners to RPAs — Allison Dirksen, head of wealth strategic intermediary relations at Voya.
• How record keepers can enable, rather than compete with, RPAs — Gary Tankersley, head of sales and distribution at John Hancock.
• Driving margins, seeking new revenue opportunities like retirement income, and focusing on operation and compliance efficiencies — Scott Colangelo, chairman and managing partner at Prime Capital.
• Income as the outcome — Marko Ungashick, CEO of Two West Advisors.
• Leveraging scale and execution; organic growth enabled by making cross-selling a culture — Joe DeNoyior, national president of HUB retirement and private wealth.
• Having choice of whom the firms can work with at record keepers — Jeff Cullen, managing partner at Strategic Retirement Partners.
• Determining who does best to serve the participant as the roles of intermediaries change — Randy Long, founder, CEO and managing principal of SageView Advisory Group.
• How to recruit younger RPAs — Matt Kory, managing director, partner and wealth adviser at Carson Group.
• What happens and how to differentiate when there are just a few record keepers — Sam Henson, chief client officer at Lockton Retirement Services.

There was a lot of discussion about the integration of talent at acquired RPA firms and creating an environment in which new associates can thrive. Beyond the tech stack and operational efficiencies, what is hard to do with remote workers is creating culture. For example, Captrust focuses on “assimilation” rather than integration and on “culture carriers” at acquired firms, said David Wahlen, senior associate in recruiting and acquisitions at the firm.

“We only want firms where principals are concerned about their teams [post-acquisition],” DeNoyior said.

Randy Long emphasized the need to be client-focused, both during and after acquisitions.

Cross-selling within the firm can be a challenge, said Jim Waggoner, partner at VisionPoint Advisory Group. “We couldn’t get our RPAs to make wealth management referrals until they felt comfortable with [the quality] of those services.”

“We have wealth management under control — we need to focus on retirement services as workers, especially millennials, expect financial planning from their employer,” said Mike Griffin, head of sales and relationship management at UBS.

Arends boldly said that his firm wants to create a financial plan for everyone. But many, including Rob Barnett, head of collective investment trusts at Wilmington Trust, questioned whether that was economically feasible.

Though servicing small plans can be financially challenging, DeNoyior noted that it is easier to cross-sell to those firms. Hightower’s Smith agreed — which is notable, as principals at those small businesses can be attractive wealth management clients.

The three most important areas for the DC industry to collaborate that the group identified:

CONVERGENCE

This includes serving the 99% of ignored, financially challenged participants through technology, data and new processes, like an app that gives people exactly what they want. A central repository of financial data is needed, and the workplace is a good place for that.

DATA

The DC machine can't operate without the data to enable convergence, retirement income and finding lost participant accounts while managing risk and cybersecurity issues.

RETIREMENT INCOME

Rather than a single product or service, there should be an orchestration of products. There should be proper advice rather than just guidance. There is a need to engage record keepers to enable transferability and make sure that everyone is fairly compensated.

Through convergence and consolidation, enabled by technology and data, the DC industry has amassed great power. But with great power comes great responsibility. Hopefully we will not squander the opportunities.

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