401(k) Specialist Issue 2 - 2016 - 42

THE 401(K) PRACTICE
ing the number of employees that convert
under this type of system, versus using a
traditional questionnaire.
Sandy, Utah-based Foresight Wealth
Management took an even bolder step. The
firm hired a software architect to create a
proprietary system to manage the accounts
of the more than 100 retirement plans they
represent, from small startups to those with
thousands of employees. The software allows
them to be completely paperless.
" No booklets, no statements, no printed
forms and employees can even enroll on
their cell phone, " says Wells, who acted
as the primary liaison with the software
developers. " Our platform allows employees
to plug in their income and other pertinent
details to help make a retirement savings
projection. From there, our advisors can
interact much better and determine where
the employee is today, where he wants to
be and how to get there. If the software says
you need to contribute more, advisors can
connect to the profile, make the changes
and then the employee just needs to select 'I
agree'. It's incredibly fluid. "
One common theme comes through
from both technology companies and advisors:
data is king.
" The thirst for data is insatiable, which is
a good thing, " says Riskalyze CEO Aaron
Klein. " There needs to be technology that
allows the advisor to definitively make decisions
based on data, not gut instinct. "
His Sacramento, California-based company
created a system which allows advisors
to capture participant data to better estimate
risk tolerance. Call it the risk version of a
" sleep number; " comprehensive information
is collected to help determine a " risk number, "
which can range from 1 to 99. Once a
number is assigned, advisors can better understand
how much risk a client can absorb.
They can then use it to determine if the level
is compatible with portfolio goals and choose
an investment option that fits.
Klein feels that Riskalyze help risk tolerance
hold steady no-matter how markets are
performing.
" In the past, advisors had to assess whether
a client was optimistic or pessimistic, traits
that can fluctuate wildly depending on how
42 ISSUE 2 2015 | 401kSpecialistmag.com
the markets perform. This type of guesswork
does not help an advisor do his job. "
Advisors can ensure they are properly
investing in ways that are definitively tied to
the actual client, not the basic demographic
profile of the client.
" Studies show that about half of investors
do not fit their aged-base risk stereotype, "
Klein notes. " If you are young, you aren't
always aggressive and if you're older, you
aren't necessarily conservative. "
Klein feels that it is imperative that advisors
get the risk tolerance correct for their
''There needs
to be technology
that allows
the advisor to
definitively make
decisions based
on data, not gut
instinct.
''
clients, otherwise " they will be inaccurately
served by their stereotype. "
Riskalyze implements a customized portal
that works in conjunction with planning software
a particular firm may already be using.
" We are solution agnostic. We can develop
a secure ecosystem that brings the
software platforms together. "
While technology offerings are centered
on accomplishing certain data-driven goals,
all agree that the human element must be
maintained. The simplification of the enrollment
process has actually improved the oneon-one
interaction, advisors say.
" We still hold root meetings with employees.
But we use this time for education,
not how to fill out the enrollment form, "
remarks Wells.
He also estimates that he addresses his client
groups between 50 and 60 times a year
because " employees are more active and
concerned post-2008. They don't want to
invest and not look at it again for 30 years. "
Brown agrees, and feels his clients have a
better baseline when they're an active part
of the process. This progression has resulted
in more educated inquiries from participants
around implementation, allocation and
contributions, he says.
Retiremap's Iverson clearly champions the
use of technology, but says it is most effective
when married with advisor involvement.
" There needs to be accountability and
interaction to have a measureable impact on
the sponsor, and of course, the employee.
The two are critical to accomplish an individual's
financial goals. "
As for the near-future, opinions vary
on the next major growth area for 401(k)
planning technology.
" Integration is in demand, " says Wells.
" It's cumbersome to have multiple logins
for your 401(k), payroll, health benefits, etc.
The pieces need to come together and have
a one point login. "
For his part, Iverson optimistically feels
data opportunities are large and growing.
" Data allows advisors to easily understand
employees. This information can be
leveraged for providers and advisors which,
in turn, can help them drive next steps and
predictions. Outside data can take a black
and white financial snapshot and turn it into
a full-color portrait. "
Klein argues that the door will soon open
for more open-architecture technology solutions.
The approach is not reliant on a vendor
or particular system to run.
Mobility is of course increasingly high
on some lists, and technology developers
like Iverson think that participants will want
personalized information pushed to them
via their mobile device. However, other
advisors aren't completely convinced.
" There's nothing sexy about checking
your 401(k) status on your cell phone, "
Brown concludes with a laugh.
Lynn Brackpool Giles is former Managing Director
of Communications and Consumer Services for the
Financial Planning Association (FPA). In this senior
management role, she oversaw all corporate and
strategic communications, media relations, legislative
communications and consumer affairs for the
national association.
http://www.401kSpecialistmag.com
401(k) Specialist Issue 2 - 2016

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