What are the biggest hurdles advisors face when it comes to growing their retirement practice? What do advisors look for when helping clients select a retirement plan?
A new study aims to answer both questions. The digital retirement platform Vestwell launched its first 2018 Retirement Trends Report, which surveyed both advisors and plan sponsors from around the country.
For this report, Vestwell conducted a survey of financial advisors across the industry to gauge their perception of market trends and personal interests in the retirement planning industry. All advisors who do not sell retirement plans were disqualified, leaving Vestwell with 352 responses.
Advisors responded that they were most focused on identifying new opportunities, with nearly 30% saying so. The big hurdles advisors face include displacing incumbents, with nearly 25% saying this, and managing scale, with just over 23% saying this.
The survey then asked what advisors’ biggest priorities were for 2018.
“It is no surprise that despite the challenges advisors face, growing, servicing and retaining their client base remain the most important,” the report states.
According to the survey, nearly 57% of advisors see growing their client base as their biggest priority for the remainder of 2018 and 22% see servicing and retaining clients as their biggest priority.
The survey also finds that the more tactical initiatives of driving efficiencies and leveraging technology pale in comparison. According to the survey, 7% said better leveraging technology platforms was their biggest priority for 2018 and 13% said driving operational efficiencies, whereas only 1% said navigating regulatory changes.
The study also examines how advisors who offer retirement plans select a platform.
“One may think that when it comes to offering a retirement plan, saving sponsors money and maximizing tax benefits would be an advisors’ top selling points,” the report states.
These factors were important, with nearly 60% and more than 50% of advisors saying saving money and tax benefits respectively were “very important.” However, the survey found that more advisors viewed other factors as “very important.”
“Likely stemming from the traditionally cumbersome and confusing aspects of 401(k)s, advisors view minimizing fiduciary risk and administrative burden as even more important factors in helping clients select a retirement plan,” the report states.
Nearly 70% of advisors said that both minimizing fiduciary risk and minimizing administrative burdens were “very important.”
Interestingly, the survey also found that plan sponsors also consider these factors to be the most important — supporting the demand for more services catered to these needs.
“I think advisors will be surprised to see that increasing employee engagement doesn’t rank nearly as high on a plan sponsor’s list of priorities as advisors believe it should,” Ben Thomason, executive vice president of sales & relationship management at Vestwell, said in a statement. “Advisors should engage their clients in conversations around their needs rather than selling plans based off perception.”
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