Your customers and prospective clients need help—to offer a retirement plan to their employees, manage their finances from cradle to grave, and anticipate their future needs in a rapidly evolving world. If you focus on what you can control instead of macro trends—fee compression—there’s an opening to get a leg up on your competition.
Adapt to changing retirement participant needs
Stay in touch with what your customers—plan sponsors and individuals—need. Think about how you can redirect your business strategy based on the changing desires of your consumers.
- People live longer—What are you doing to help people plan for longer lives and higher health costs in retirement?
- Generational differences—How are you adapting your business to aging baby boomers, who own 70% of the country's wealth?1 What about the younger generations who are struggling to move out of their parents’ houses, pay down student loan debt, and start saving for retirement?
- Partial retirement is growing—How can you best support plan sponsors to manage a workforce that’s moving from full- to part-time work before fully retiring?
- Engaging the unengaged—How are you driving participation from the 49% of private industry workers not participating in an employer-sponsored retirement plan?2
Your customers are your business, so you need to make sure you’re helping solve their needs. Offer products and services that are customizable at scale. Provide solutions for the more immediate needs that your clients focus on and strategies to help them achieve long-term goals, too.
Attract clients by diversifying your revenue streams
Being a specialist can be a profitable business model—less competition, expertise in your practice, and more control over your pricing. But if your revenue is getting squeezed, you may be forced to find more ways to create cash inflow.
Plan sponsors want broader offerings for their employees to cover all life events—and so do their employees—so, if you’re an expert in retirement planning, consider which other value-add products and services you can layer into your business model. Some ideas are:
- Debt management
- Emergency savings
- Insurance strategies
- Tax guidance and mitigation
- Estate planning
- Drawdown strategies in retirement
- Healthcare—health savings accounts, Medicare, and long-term disability
- Cryptocurrencies—like it or not, these financial assets continue to gain attention, so understand them enough to answer questions from your clients and keep up with regulatory changes
Think of ways to sell these services independently to tap into niche markets, monetize them, and cross-sell clients into other products. Ensure your clients know all your offerings, so they don’t feel compelled to look elsewhere for different services—clients are more likely to be stickier with good customer service and broad offerings at the right price. Consider varying service levels—for those who want, and are willing to pay for, white glove service, give it to them. Others will want basic services, so charge a bit less and free up your capacity for clients who drive your top line.
Create a scalable business
As a financial professional, you know the value of diversification. Closing a large deal is exciting and satisfying, but at what cost—financial, resources, and stress? Consider creating less reliance on large client retention by balancing your client size and complexity. But to make that shift, you need to reevaluate the type of business you pursue, your expense structure, and operational efficiencies that will allow you to succeed.
Your target market
Many of those not participating in a retirement plan work at small businesses that don’t offer one primarily for cost reasons. How can you help the business owner start a plan at a reasonable cost, drive participation from the workforce, and grow your business all at the same time?
Thanks to the Setting Every Community Up for Retirement Enhancement (SECURE) Act, employers have more tax credit incentives now than before to make plans affordable to offer. Expanding the use of multiple-employer plans (MEPs) helps small businesses team up to offer potentially cheaper retirement benefits to employees. MEPs and pooled-employer plans (PEPs) may be a lot of work up front but can be scalable to manage and easy to onboard new clients.
Which of your repetitive processes can be automated or eliminated? Is there software that can create sustainable efficiencies at a modest cost? Which collateral, tools, and resources can be self-serviceable, removing yourself entirely from an unnecessary interaction?
Perform a deep dive on your financials—where can you cut costs? Reducing expenses can be a more sustainable strategy to improve profitability than increasing revenue.
Modernize and digitize your business
Ensure your business is adaptable. Don’t resist the growing preference for remote, digital interactions—go with it. Take advantage of social media platforms to broaden your network, create new leads, and showcase your value proposition to prospective clients. In the United States, people spend about two hours on social media every day—that’s a lot of eyeballs that could be viewing your material.
Embracing a digital footprint for your business isn’t only a way to attract a new audience, but it can be critical for sustainability. A massive wealth transfer will transpire in the coming decades as baby boomers age and much of that money flows to more digitally inclined generations who need your help.1 You’ll benefit by connecting and building relationships with this demographic now.
Receiving a user-friendly, customer-centric experience is a priority for financial professionals—why wouldn’t it be for your clients as well? Offer this same high-quality experience online to help you thrive.
Grow your financial advisory practice in all market conditions
Fee compression has become the norm in the retirement industry, so it’s best to adapt to it. Look inward at how you’re running your business and identify areas to improve and adjust. Have an online presence to broaden your outreach, create room for automation and self-service features, and build a strong footing for your long-term business model. Identify high-value, scalable opportunities, even if they’re outside your current area of focus or expertise—expanding your business horizontally may help your prospects.
Remember—nearly 58 million people need help with starting to save for retirement.2,3 The opportunity is significant if you want it.
1 “Distribution of Household Wealth in the U.S. since 1989,” Board of Governors of the U.S. Federal Reserve System, 10/1/21. 2 “Table 1. Retirement benefits: Access, participation, and take-up rates, March 2021,” U.S. Bureau of Labor Statistics, 9/23/21. 3 “Table A-8. Employed persons by class of worker and part-time status,” U.S. Bureau of Labor Statistics, March 2021.
The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made herein.
INTENDED FOR INSTITUTIONAL/BROKER-DEALER USE.
MGTS-P 46158-GE 1/22-46158 MGR0113221962392