Mike Henkel, former president of Ibbotson Associates, was recently tapped to be the managing director of Envestnet Asset Management’s newly established Retirement Services Group. A pioneer in the 401(k) business, Henkel helped to spearhead Ibbotson’s 401(k) advice offering, growing revenue from $3.6 million in 1993 to $40 million in 2006. Envestnet Asset Management, which electronically provides a range of wealth management services to more than 20,000 advisors, currently has $45 billion under management. Henkel is charged with the task of completing Envestnet’s 401(k) advice platform–which will include a number of helpful tools for advisors–and hopes to have it up and running by summer. We spoke with with Henkel in late April about how he plans to pull the platform together and the challenges he sees for advisors working in the retirement space.
How do you plan on building out the Retirement Services Group?
I’ve got a couple of mandates. The first is to get the last pieces [of the platform] built and in the market for a 401(k) advice service Envestnet announced last summer. That is a discretionary advice model in the 401(k) space designed to work with big plan administrators. So it’s similar to some of the things that we pioneered at Ibbotson, and I was one of the key reasons that we pioneered that at Ibbotson. So you go to a big plan sponsor and help them build advice that doesn’t get entangled with ERISA regulations; today, that’s still mostly accumulation oriented–how do you help an investor in a 401(k) plan that may have only $50,000 or $100,000 saved make sure they have the right savings and right investments and that they understand what they need to do to get to retirement with enough money put away?
The second step has broader ramifications. Everybody in the industry talks about the coming wave of baby boomers retiring, and most of us are not going to have pensions. I know I probably won’t. So you’ve got the money you’ve put away and you say, “I don’t know how long I’m going to live. I don’t know how much I can spend. Where should I put it and how should I manage it?” There’s a whole set of tools, advice, guidance, and models that need to be built around how to help people do that. Some of that [process] will go into the 401(k) market; there’s a base level set of tools that’s going to work across all of this, but a lot of it will also extend into the traditional Envestnet business lines of separately managed account platforms, etc. So the things that we build in my group will get pushed out across the Envestnet platform.
What types of services will be on the platform to help advisors?
Advisors will have access to more tools, and we’ll be looking at various annuity products and how they work and include those in an advice or illustration model. The idea is to help any advisor help any investor look at their situation and assess the risks–”What am I facing? If I invest this way, how often would I run out of money? What are my options? Help me understand it in a more holistic sense.” So it’s not about selling a product, it’s about selling a process.