Retirement Plan and Wealth Manager Silos Are Fading Fast: Jamie Hopkins

Petty says he spent four years on the Phoenix police force before making the decision to transition to the financial world, and his first gig was with an organization called ICMA, which creates and services retirement plans specifically for public sector workers and civil servants.

“That’s where my passion for the retirement plan topics comes from, I think,” Petty recalls.

Not an Easy Niche

According to Hopkins and Petty, a big part of the reason there has been a traditional divide between wealth managers and retirement plan advisors was the aforementioned reticence on the part of employers to encourage advisors to engage directly with their people — often out of fear of aggressive cross-selling.

Another factor, though, is the simple challenge that breaking into the retirement plan space presents for firms with primary expertise in individual and family wealth management. Not only are there strict regulatory requirements to contend with, but the sales cycles are generally really long on the retirement plan side, and it’s hard for newcomers to compete with the big established firms in the space.

“It’s just not easy to get started,” Petty warns. “Our approach has been successful because we have a clear message that we are independent fiduciaries that work with employers to develop a best-in-class retirement plan — something an organization and its leaders can be proud of offering.”

It’s a challenging space to get into, Petty says, but once a firm secures clients and serves them well, it should steadily gain credibility in the marketplace, at which point the momentum can really pick up.

“In our case, it was a painful process at first to grow the client base, no question,” Petty explains. “But now that we have a robust book of retirement plan business and it covers all different sizes and types of employers, we have a lot of success. That’s a big hurdle to get over, but it’s so important. The first thing a prospect is going to ask is, do you have clients that look and think like us?”

As Hopkins and Petty note, plan sponsors are increasingly seeking support from advisors who can speak to the needs of workers at all different phases of their careers, from the youngers to the oldest employees. Particularly important, they say, is the ability to help late-career workers capitalize on all the saving and investing they have done and make an efficient transition from accumulation to decumulation.

The Payoff for Successful Firms

In the end, Hopkins and Petty argue, working across the wealth-retirement plan divide won’t be easy, but success in the effort means a two-fold benefit for the firm.

On the one hand, assets in retirement plans tend to grow steadily over time and become some of the stickiest assets an advisory shop can serve.

On the other hand, building trust and loyalty among large groups of participants will be a natural source of new business on the wealth management front, as participants who trust their advisor in the workplace often seek additional services once their needs grow more complex and the subject of retirement ceases to be a theoretical one.

“It’s been a huge shift, and we believe there is just much opportunity there if you have the right approach,” Hopkins concludes. “So often, we see advisors who have close connections with some business owners and they might have set up and support a handful of retirement plans, but it’s not really a focus for them. These firms are really missing out.”

Photo: Jamie Hopkins