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Creating Specialized Retirement Plan Practices in the Virtual World

Industry expertise is now more important than location.

The pandemic has created myriad opportunities and challenges for retirement plan advisors. It always made sense for RPAs to specialize on one or related industries like professional services or construction companies, but the pool of plan sponsors is limited within a geographic area.

As remote service models become more acceptable and even attractive to plan sponsors and participants, RPAs now have a much greater pool of prospects beyond their local region even if travel is required periodically.

Focusing on one or related verticals has many benefits for the RPA, including sourcing new clients either through direct referrals or a reference-able client list. Plans want to know what benefits their rivals are offering so they can stay competitive in the war for talent.

Each vertical may have specific nuances and requirements—specialized RPAs are more knowledgeable and in tune with the needs of the plan sponsor and their employers. Plan and participant service models should be more efficient and less costly as clients have similar needs making the RPA’s practice more profitable and competitive.

An RPA can determine which verticals to focus on by categorizing their clients list by industry and determine which plans are most profitable and appealing. Attending and speaking at targeted industry conferences while connecting with publications and writers in that vertical as well as focusing their websites and social media posts will make the RPA a recognized industry expert outside the DC industry to an audience that really counts—plan sponsors.

Connecting with centers of influences like benefits brokers, CPAs, attorneys and bankers that focus on the preferred verticals can also drive more opportunities.

In the past, plans may have been reluctant to work with RPAs outside of their area, but the pandemic has alleviated many of these objections. Quarterly in-person committee meetings are not required and no longer expected with most plan sponsors preferring virtual meetings to include more members. Virtual meetings with employees are also much more efficient and allow spouses and family members to attend.

There still may be reasons to meet in person periodically, just much less frequently than what was expected in the past.

Specialist RPAs should consider hiring service and sales professionals from the targeted industry to better serve clients while leveraging their network and reputation. It’s easier and faster to train a person from the hospitality industry, for example, to learn the 401(k) and 403(b) plans, a world that an RPA and staff know well with many third-party resources available than to train a DC professional in the nuances of an industry.

RPAs may be reluctant to jettison clients not in the preferred industries even if these outliers are likely less profitable and will only become more difficult and costly to serve over time. Why not partner with RPAs that focused on other verticals who might be able to refer clients outside their targeted industry? Partnerships with other advisors can be challenging, but those that can successfully execute will have a huge advantage.

What about RPAs that are part of benefit-owned aggregators that may not be able to refuse a referral? These firms should consider pairing specialist RPAs with benefit and P&C brokers that also focus on their vertical or funnel referrals based on industry expertise—not location.

We live in a virtual world enabled by technology that is changing rapidly. Becoming a specialist RPA might have been hard to imagine just five years ago, but the brave and innovative RPAs that take the lead will become the go-to advisors in their specialty not just locally but also nationally.

Fred Barstein is founder and CEO of TRAU, TPSU and 401kTV.

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