Nicsa’s 2023 General Membership Meeting featured an insightful panel discussion focused on the evolving relationship between the wealth management and retirement industries.
Moderated by Bing Waldert, Managing Director, U.S. Research, Cerulli Associates, the panel featured Kevin Murphy, Senior Vice President, Head of Workplace Retirement Distribution, Franklin Templeton, Jania Stout, Senior Vice President, OneDigital | Retirement Services, and Nathan Voris, Head of Channel Strategy, Morningstar.
The conversation centered on the transformation of wealth management from a conventional business model to one that prioritizes financial planning. One central theme was the changing battleground in wealth management, shifting towards organic growth and acquiring new clients. The panel pondered the implications of this shift on the future of retirement savings and explored the convergence between these two domains.
“We need to retire the term “retirement.” What we’re talking about now is financial stability.“
The Wealth Management Shift:
The panel initiated the discussion by highlighting the growing commoditization of the wealth management business model in recent years. The industry is increasingly leaning towards the foundational implementation of financial planning. This evolution has prompted a reevaluation of wealth management, and the panel recognized organic growth as the new frontier. The central question became: How can the industry attract new clients and what impact will this have on retirement savings and the broader wealth management ecosystem?
Expanding Roles of Retirement Advisors:
The convergence of wealth and retirement industries is encouraging advisors and their practices to expand into wealth management. This shift is pushing the industry to enhance its offerings, from product solutions to additional resources to provide individuals with comprehensive advice and ongoing asset management. Advisors who have successfully transitioned "from the boardroom to the breakroom" as well as those that have embraced digital solutions have excelled in this changing landscape. They are now capable of serving both fiduciary needs at the plan level and delivering valuable propositions to plan participants, addressing their diverse needs.
The Holistic Approach:
A significant portion of the panel discussion was dedicated to emphasizing the evolving roles and responsibilities of advisors and plan sponsors. Their reach is being extended to become holistic human capital consultants, going beyond just retirement planning. Participants are seeking personalized advice and guidance tailored to their unique needs and preferences. The focus has shifted from the traditional notion of saving for retirement to addressing immediate concerns like renting versus buying and paying off debt. Meeting participants where they are in their life plans and personalizing solutions emerged as a crucial aspect of the discussion.
The Need for Personalization and Data Sharing:
The industry needs to adapt to the changing preferences of participants. The panel emphasized that what worked decades ago is no longer effective today. Actionable (a big theme for this panel) personalization is at the forefront, with 70% of employees seeking more holistic solutions beyond retirement. Over half of them are willing to provide additional data to their employers to receive personalized recommendations. Furthermore, the importance of financial health, often overlooked compared to physical and mental health, was discussed. Employers were urged to consider investing in financial health as part of their benefits packages.
The Future of the Financial Epicenter:
The workplace was identified as the emerging financial epicenter for most Americans. Data and personalization played a critical role in the industry's evolution. Younger generations are increasingly comfortable sharing their data, which can be harnessed to enhance the industry's solutions. An inherent level of trust between employees and their employers was noted, offering an opportunity to leverage this trust through advisors to deliver personalized and holistic financial solutions.
“The workplace will become the financial epicenter for most Americans.”
Challenges and Future Prospects:
The panel touched on the challenges of measuring engagement and the importance of retraining to meet contemporary needs. The discussion also extended to potential solutions, such as collaborating with employers and redefining success metrics. The critical role of employers in engaging employees and demonstrating the value of retirement plans to their workforce was underscored.
In conclusion, the panel emphasized the need to retire the term "retirement" in favor of "financial stability," recognizing the evolving financial landscape. The convergence of wealth and retirement industries is a reflection of changing demographics and the growing demand for personalized, holistic solutions. Employers, employees, and advisors must collaborate to address these changes and meet the diverse financial needs of today's workforce. The evolving landscape offers opportunities for the industry to adapt and thrive while ensuring financial stability for all Americans.
Personal views and observations of individuals contained herein are as of the date of the live event or written material and do not necessarily reflect the views of Nicsa or its member organizations. May contain forward-looking statements subject to various uncertainties. Nothing herein is intended to be or should be construed as legal advice. Contact your own counsel in order to obtain legal advice regarding these or any other matters. The information contained herein is for informational purposes only and does not constitute a recommendation of best practices.
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