The Successful Retirement Plan Advisor: Separating Fear From Risk

Lately in my blog posts, I’ve been writing about the qualities of successful advisors who’ve led their firms to become nationally recognized industry leaders. A common theme sounds through all of their stories: each possesses a willingness to act on early gut-feelings—they are less fearful of failure and more driven by opportunity to create viable businesses that bring their visions full circle.

Barbara Delaney of StoneStreet Equities.I was recently connected to Barbara Delaney (left), principal of StoneStreet Equity LLC, one of these risk takers who has been in the financial services industry for more than 30 years. While she’s seen a lot of transformation over the years, she has also successfully identified several opportunities along the way to develop new businesses from early insights.

She’s launched two firms whose core services were to provide plan sponsors with 401(k) plan consultative services—a need she first identified in the late 1980s as DB plans began to disappear while 401(k) plans were being developed. What started as presentations to plan committees around plan design and fiduciary liability became one of the largest and most respected independent retirement advisory firms in the nation. Today, her firm is advising on over $3 billion in assets from 95 total clients. She was named by Plan Sponsor Magazine as Advisor Team of the year for 2008 and in 2011 was inducted into Plan Sponsor Hall of Fame. She’s also been named one of the most influential advisors from 2007 to 2009, and is currently a member of the NAPA Government Affairs Committee.  

What separates Barbara and others like her? It’s a fearless “can do” attitude. The majority of us foster some of these qualities, but aren’t willing to take on quite as much risk. According to countless psychological studies, human nature makes us highly risk-averse. Psychologist and Nobel Prize winner Daniel Kanheman finds that we are twice as sensitive to potential losses as we are to potential successes, and a 2012 Babson study found that only 12.3% of the American population is considered “entrepreneurial”—those willing to take on significant risks for the chance of better return.s How do we do this? For one, we find opportunity in change.

When Barbara was told she’d need to uproot her family and move to Albany, N.Y. in order to keep her position with E. F. Hutton Group in 1987, she quit without hesitation. She wasn’t afraid about not having a job lined up (despite the fact that she had a newborn at home) because she knew she had enough experience and knowledge to do something on her own. Where she took her talents, however, was not anticipated by many of her peers.

She partnered with Don Tribus who ran a health and welfare benefits consulting company called The Tribus Companies in the mid 1980s. The company owned an actuarial firm at the time, but Barbara took a leap of faith and knew she could help him make it profitable by adding money management to the practice. She brought a new approach to the company and with their combined experience, they developed a way to help plan sponsors who were unfamiliar with 401(k) plans--which had just started growing in popularity—better understand how to design and manage their plans. Those firms were desperate for that help since most other firms were still focusing on DB plans rather than 401(k) plan consulting.

In 1999, the health and welfare practice of The Tribus Companies was sold. Barbara wanted to continue to run her business independently and launched FFOA, which merged and acquired other firms, and then in 2008, became StoneStreet Equity.  As a result of her early insights and the courage to go out on a limb before others did, she built a highly successful business and brand for herself, crediting her success to visionaries like LPL Financial and Bill Chetney who believed in developing best practices in the plan industry. More important, she believed in her own vision.

We’ve all heard stories like Barbara’s where a combination of passion, commitment and will turned into major business wins, usually of celebrities or genius businessmen and women who took risks from job losses that catapulted them into successes beyond measure. Take the current mayor of New York, Michael Bloomberg. Bloomberg was a partner at Salomon Brothers, an investment bank that was bought out by a company which is now part of Citigroup, in 1998. When he was let go he took his hefty severance check and used it to start his own financial services company. Today, he's the 18th richest person in the U.S.

What we can learn from their moves is to take chances in change. When negative changes arise, identify where there is opportunity to make a vertical move at first. You’ve got to know the market extremely well in order to spot these opportunities—always be listening to clients, partners and other professionals so that you can identify where to seek them out. If you’re doing this well, you will find you’re seeing things in entirely different niches or even industries than the one you’ve been in.

Next, tie the services you offer to larger trends in your clients’ concerns.

Barbara has told me that “sometimes you’ve got to just do what’s right and figure out how to get paid later.” She lives by a virtue to never hold back when she sees a need for something that she can help people with, or can partner with others to offer so that she’s ahead of the curve in providing a wider array of services that differentiate her firm.  

This kind of approach to growing our businesses is critical to success. It is both highly reactive, and highly proactive. It’s reactive in the sense that we’re taking what we hear from our existing clients and working toward a solution for their needs. It’s proactive because we’re identifying trends in what those clients are telling us and developing new strategic partnerships, products and services that separate our businesses from others in the market.

For example, if a client company of yours is going through retirement plan changes and is concerned that participation may suffer, think about how you can educate participants about how to manage the change and make the best decisions for their individual circumstances. This is a better approach than hosting ‘one size fits all’ workshops, because these simply don’t resonate with employees who are in their early 30s and employees nearing retirement in the same way. Then, once you’ve had a success with one client, you can proactively scale your services across all of your clients and continue to innovate =on existing products and develop new products based on their feedback and market demand.

When you’re able to identify your clients’ needs both proactively and reactively, you’re able to see things from a wider scope than just in how you work with them. If you tie your work with them to bigger issues that they are concerned with, you can establish yourself as the whole package solution to their needs—something growing increasingly important among plan sponsors as they continue to face a host of concerns around ERISA requirements and plan changes.

It’s true we may not all be built for the level of risk taking required to do what Barbara has done, but we all can revolutionize our businesses if we’re able to understand how to overcome unnecessary risk aversion that holds us back from success. 

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Read more profiles of Successful Retirement Plan Advisors by Liz Davidson of Financial Finesse.

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