Common Mistakes Advisers Make That Should be Avoided

Experts outline several ways advisers can ensure they keep the loyalty of their clients.

Advisers can sometimes slip up on delivering the service they provide to plan sponsors and participants, which could lead to the loss of a client. Here, industry experts outline common mistakes advisers can avoid to remain in their clients’ good graces.

The first thing a retirement plan adviser that charges a sponsor more than $1,000 a year needs to do is disclose their fee, as mandated by the Department of Labor (DOL), says Ary Rosenbaum, managing partner at The Rosenbaum Law Firm P.C. If the adviser fails to do so, Rosenbaum says, the DOL could consider any transaction with the adviser to be a prohibited transaction and could charge the plan sponsor financial penalties.

Jay Jumper, chief executive officer of ProNvest, agrees, saying, “One of your best options to inspire confidence in the plan sponsor is to be upfront about your fees, making them easy to understand and competitive with the market.”

Sponsors also need to ensure that the fees their adviser is charging them are reasonable, Rosenbaum says. If, through requests for proposals (RFPs) or requests for information (RFIs), the sponsor discovers the fee is unreasonable, they might grow dissatisfied with their adviser, he says.

Rosenbaum goes on to say that there are many advisers who fail to meet with their sponsor clients on a regular basis, which, he maintains, should be twice a year at a minimum, in order to “review the plan, go over the investment lineup and conduct participant enrollment/education meetings.”

Ann-Marie Gorczyca, senior vice president, client services and operations at Vestwell, concurs that this is a common mistake advisers make. “Advisers should be continually engaging with both the plan and participants to increase participation and results,” Gorczyca says. “Where we see unhappy clients is when advisers are less present—or, perhaps, not present at all. Sponsors want regular feedback on employee engagement, fund lineups, plan design, costs and more. If sponsors feel like the plan and its participants are operating on an island, it’s very likely they’ll devalue the need for having an adviser at all.”

Vestwell files as PEPs provider

Fintech and digital record keeper Vestwell is among about three dozen firms that have registered as pooled plan providers with the DOL, but the firm does not yet have information on pricing and plan design for a potential PEP product.

Vestwell is considering its options in the pooled employer plan market, filing last Thursday with the Department of Labor to become a registered provider.

But the New York-based fintech, which has about 5,000 retirement plans and 150,000 participants on its digital record-keeping system, isn’t totally sold on the idea of PEPs, said the firm’s general counsel and chief privacy officer, Allison Brecher.

That’s partially because the DOL has yet to weigh in on potential conflicts of interest in such plans — including whether a single company can provide plan administration and fiduciary services.

“We’re waiting to see how the market unfolds,” Brecher said. How the DOL could address potential conflicts will help determine whether Vestwell launches a PEP and if so, what that plan looks like, she said.

Because the company hasn’t drawn a firm line on how it will participate in the marketplace, it does not have information on pricing and plan design for a potential Vestwell PEP. The qualified default investment options used in PEPs also present a question of whether many disparate types of businesses in the same plan are best served with a target-date fund or a more personalized managed-account option, she said.

COVID-19 has more employees paying attention to their 401(k)s

Despite some good signs over the last year, experts warn the pandemic still could have negative repercussions on workers’ retirement savings.

Although COVID-19 has dealt a blow to many employees’ retirement behavior and optimism, there’s at least one bright spot: The pandemic has caused some participants to pay more attention to their retirement accounts and savings progress.

Although 60% of respondents in a new survey from provider Vestwell said their behavior regarding their 401(k) stayed the same over the last year, about one-quarter said they checked their account more often, 10% increased their contributions and 6% made investment changes. The provider surveyed more than 1,000 participants.

“Employees showed a heightened awareness around their retirement plan balances in 2020,” says Ben Thomason, Vestwell’s executive vice president. “Fortunately, not many acted on their instincts to withdraw funds or implement near-term changes.”

Retirement has become a sensitive topic in the midst of COVID-19. Not only did some 401(k) balances drop significantly due to market volatility, but a handful of employers have halted or reduced retirement matches or are considering doing so. But Vestwell’s report is the latest indicator that employee interactions with their retirement plans have remained relatively stable despite financial hardships.

#ItzOnWealthTech Ep. 79: The Ultimate Tech Stack for Retirement Plans with Aaron Schumm, Vestwell

After Aaron Schumm graduated with a degree in finance, from the University of Illinois, his very first job was as a portfolio analyst, reviewing the investments held by corporate pension plans. Now, 20 years later, it seems as though he’s come full circle with his latest startup Vestwell that wants to automate all the underlying tasks of companies that are launching retirement plans, as well as helping the advisors that work with them.

I spoke to Aaron about the trade-offs that firms have to make between user experience and cost, some of the impacts he’s seeing from the massive industry consolidation, and how he wants Vestwell to be the underlying tech stack in just everything that happens in the workplace, and a whole lot more on this episode of the Wealth Management Today podcast.

Nineteen Predictions for Wealth Management in 2021

Leaders across the wealth management space with quick takes on what they expect is coming for the industry, your business and your clients in 2021.

If the past—particularly the recent past—teaches us anything, it’s that the future can’t be predicted. But to rehash a widely shared sentiment attributed to everyone from Abraham Lincoln to Peter Drucker to Howard Marks, you can prepare for it.

With that in mind, we asked a handful of forward-thinking wealth management industry luminaries and leaders what they think the coming year will hold for financial advisors, their businesses and clients.

A slow emergence from a once-in-a-lifetime global health emergency takes center stage; but behind the headline, these quick takes are worth perusing as you map out your own journey, and the journey for your clients, in 2021.

Aaron Schumm, Founder and CEO, VESTWELL

“Between SECURE Act incentives and state mandates and an accelerated movement to lead with digital engagement in the COVID era, we are seeing a dramatic leap of new retirement plan business. I believe this trend will continue for the foreseeable future. But as advisor interests bring them closer to the participant, efficiency will become even more imperative to scale. Being able to sell, manage and invest in a fully digital capacity is now table stakes, and advisors that can leverage the right technology and tools, will have a leg up in 2021 and beyond. The good news for advisors is that plan participants are becoming more attuned to the important role they play. With an increased focus on personal finance and financial education, more employees than ever are welcoming financial advice. In fact, our 2020 Employee Retirement Trends Report uncovered that while only 41% of plan advisors reached out to participants in 2020, 70% of those participants welcomed the outreach. This highlights a tremendous opportunity for advisors who see engaging at the workplace as central to their value proposition.”

The Experts Weigh in on Trends in Digital Wealth for 2021, Part 1

We ALL love predictions, don’t we, especially when we look to what the future might hold for the coming year in our industry.

And given that 2020 has been a PRETTY “interesting” year, there’s no shortage of individuals ready to kiss this current cycle around the sun good-bye and get back to the business of “normal”, not “new normal” (a term I find highly annoying), for 2021. We’ve asked a number of our industry friends to comment on this and in prior years, it’s been like pulling teeth to get these responses back on time. Ahhh, the life of an editor! But THIS year they’ve been rolling in like never before, perhaps because we all want to be validated and heard, after the year we learned that now mainstream new phrase – “social distancing”! So much so, that we have to break this feature apart over 2-3 weeks in order to include all the quotes we received.

So – without further ado – here’s where the industry leaders see fintech and digital wealth heading for 2021 and beyond.


“I expect we’ll see an increased demand for experiences that support what users have become accustomed to in nearly every other aspect of their lives (think online banking, shopping, and even seeing a doctor via telemedicine). This includes everything from intuitive interactions and real time access to fully digital processes and on-demand education. It also means customization. Offerings like managed accounts will draw heightened attention because they appreciate the differences in investing strategies. Additionally, we anticipate ESG products will become more mainstream, not only because the incoming administration will likely make them more accessible, but because people are more actively using their wallets as a form of expression. State-mandated initiatives will also continue to grow, as the messaged importance in closing the savings gap is amplified.”

Vestwell’s 2020 Employee Retirement Trends Report in the news

In November 2020, we surveyed thousands of employees who were either using Vestwell’s platform for their retirement plan or were eligible to do so. Our 2020 Employee Retirement Trends Report explored how some of this year’s major topics, namely racial unrest, the presidential election, and the global pandemic, intersected with 401(k) plans.

Check out some of the coverage.

Retirement Industry People Moves

Vestwell has named Richard Tatum president of retirement services.

Tatum will report to the firm’s CEO, Aaron Schumm, and will be responsible for scaling platform operations, administration and client services.

Prior to joining Vestwell, Tatum was the president and CEO of Avintus, a third-party administrator (TPA) firm he joined in 1998. Under his leadership at Avintus, the TPA service division expanded its service suite to include payroll, human resource (HR) and 3(16) fiduciary outsourcing solutions. In 2018, the firm was acquired by Ascensus under its TPA Solutions division. Following the acquisition, Tatum became a divisional vice president, where he was responsible for sales in FuturePlan by Ascensus’ Southern Division.

As president of retirement services, Tatum will be involved in the firm’s ecosystem of partners, including global financial services companies across financial advisers, asset managers, and insurance providers, as well as payroll providers, company plan sponsors and participating employees.

Tatum holds a bachelor’s degree in finance and business management from Lipscomb University.

Vestwell is in and Ascensus is out in Oregon as mushrooming ‘force-function’ state retirement plans spark heated bids to recordkeep; RIAs are angling for a cut, too

When Ascensus stepped away, Vestwell jumped at the opportunity to recordkeep for a lousy $69 million of assets held by tens of thousands of investors in Oregon.

The pop echoed like a boom because of the winner-take-all nature of emerging state-sponsored retirement plans.

RIAs are also angling for a cut at these seed programs of “forced function” assets, but from a different angle–proposing alternative 401(k) plans.

One thing is clear, state-sponsored retirement plans are expected to swell unstintingly to billions, maybe trillions, of dollars over time as state governments — and possibly the Feds–begin to put the squeeze on employers to facilitate employee saving through a form of IRA.

Vestwell stepped in and grabbed the state’s $69 million IRA plan after Ascensus dropped out over cost issues.

Although the amount is minuscule by pension plan standards–about $6 trillion in U.S. 401(k) assets and $29 trillion in total retirement assets–the account is considered a key foothold in the burgeoning state-sponsored plan market.

Oregon’s plan was the first on the market three years ago; nine other states have joined including California, which launched CalSavers as a pilot program in Nov. 2018.

CalSavers took its first contributions on Jan. 3, 2019, and became available to all eligible employers in July a year ago. Illinois launched its plan in 2019 and other state plans in Maryland and Connecticut are also in the works.

In that sense, it’s apparent why Vestwell went to the trouble.

Envestnet Introduces New Retirement Plan Solutions for Advisors: Tech Roundup

Envestnet has teamed with Vestwell to offer turnkey retirement plan solutions to financial advisors.

Vestwell is a digital recordkeeping platform that specializes in 401(k) and 403(b) plans. Through the new collaboration, advisors who use Vestwell’s platform can now access Envestnet’s 3(38) investment management services through Envestnet Retirement Solutions to provide clients with a turnkey solution.