401(k) Real Chat: Vinnie Allard
Fred Barstein, contributing editor for WealthManagement.com’s RPA channel and CEO at TRAU, TPSU and 401kTV, speaks with Vinnie Allard, Betterment’s head of advisor national accounts, asking:
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We’re hearing a lot about convergence of wealth and retirement at the workplace. Let’s start with RPAs. Why and how are RPAs leveraging relationships with DC participants to offer wealth services? What are the most common products and services they are offering?
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We’re also seeing more wealth advisors interested in DC plans? Why do you think they are and do you think this trend will accelerate?
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Finally, Betterment is uniquely positioned to support the convergence as a fintech record keeper because your main business is providing a platform for advisors to offer wealth services. Are you seeing the pick up in convergence activity on your platform from RPAs and wealth advisors?
Read the full raw transcript below:
Fred Barstein: Welcome to 401(k) Real Chat. This is Fred Barstein, contributing editor at Wealth Management.com’s RPA Omnichannel and CEO at TRAU, PSU and 401k TV. I invite the most interesting, innovative, and impactful retirement wealth management professionals, asking them to provide open, honest, and candid answers to three important and difficult questions. So let’s get real. Today we have the pleasure of speaking with Vinnie Allard, head of advisor national accounts for Betterment. Welcome, Vinnie.
Vinnie Allard: Thanks, Fred. Good to be here.
Fred Barstein: Good to have you. So, Vinnie, we’re hearing a lot about the convergence of wealth and retirement at the workplace. Let’s start with RPAs, retirement plan advisors. Why and how are RPAs leveraging relationships with DC participants to offer wealth services, and what are the most common products and services that you see them offering?
Vinnie Allard: That’s a great place to start. If we look at the broader industry, we’re seeing a lot of retirement plan advisors’ fees being compressed, much like we’ve seen in other areas such as record keeping and asset management. Additionally, there are other platform providers targeting participant rollovers. Advisors view engaging with their plan participants and focusing more on the wealth side as not only a way to protect plan assets but also as a way to grow their per-client revenues, especially as they move toward more holistic planning with higher-net-worth plan participants—think executives, top-level employees, and similar individuals.
Many times, we’re seeing advisors simply wanting to offer a streamlined solution for those low-balance participants, finding ways to help drive and deliver better outcomes. As we know, these clients don’t generate much in the way of revenue, so having a platform like Betterment that can easily bring a plan participant onto the wealth platform from the 401k plan is a huge advantage for us. It allows us to address both sides of the wealth coin. The interest from advisors, we hope, will continue to expand as the portfolio marketplace and other features on the platform grow. This will enable advisors to work with their favorite asset managers or even create their own individualized models.
Fred Barstein: We’re also seeing more wealth advisors interested in DC 401k and 403B plans. Why do you think they’re more interested? And do you think this trend will accelerate?
Vinnie Allard: For some advisors, I think it’s the opportunity that’s driving the interest. We partnered on a couple of white papers last year from both retirement and wealth advisor perspectives, and I believe you cited, if I’m remembering correctly, as many as 1 million retirement plans coming to market by 2030. For some advisors, it’s that opportunity. For others, it’s really out of necessity. I see it as them digging a moat around their business with state mandates and federal legislation bringing many new, what I call, dabblers into the 401k space.
Just as we discussed retirement plan advisors expanding into the wealth services space, if advisors don’t want to manage their business owners’ retirement plans, there’s an increasing chance they’ll lose that client. More advisors want to handle the whole relationship, not just focus on the wealth side. Over time, I think more of these advisors will consistently do retirement plan business, either because of the opportunity or because their hand is being forced. Ultimately, I believe this will be better for retirement plans and their participants, as it will drive better outcomes through having more professional advisors working with these individuals.
Fred Barstein: Finally, it seems like Betterment is uniquely positioned to support the convergence as a fintech record keeper, because your main business is providing a platform for advisors to sell wealth services. Are you seeing the pickup and convergence activity on your platform from RPAs and wealth advisors?
Vinnie Allard: We’re definitely seeing it. There’s a lot more interest in Betterment from both a brand and platform perspective on both sides. But if we take a step back and look at the big picture, even though we’re seeing interest across both platforms, specifically in regards to the convergence conversation with wealth and retirement, we’re seeing that cross-platform use more with independent RIAs versus the advisors we’re working with at some of the regional and national broker-dealers.
Honestly, a lot of that has to do with the fact that the wealth platform was initially designed over 10 years ago with the needs of independent RIAs in mind. We’re still gaining traction and building required features to get the wealth platform in front of some of those larger national firms and their advisors as a custody partner. That being said, we’re seeing interest from both big national broker-dealers and RIAs already on the platform. Much of this interest is coming from plans that are already on the platform, with advisors getting broker-of-record on them and seeing how user-friendly the Betterment platform is. It streamlines administrative hurdles and provides an efficient way to manage participant accounts at scale.
Between the advisor dashboard and the client app, there are a lot of tools and insights available to help clients reach their goals without requiring a significant lift from advisors or their teams.
Fred Barstein: Great, thank you. That’s all the time we have today. I’ve been chatting with Vinnie Allard, Betterment’s head of advisor national accounts. Thanks, Vinnie, for participating today.
Vinnie Allard: Thanks, Fred.
Fred Barstein: And thank you for watching 401k Real Chat. Stay tuned.