[The Institute for Innovation Development interview series invites innovation experts, innovative business leaders and emerging FinTech companies to talk to our readers about their latest innovation activities. The series seeks to learn from innovative business creators, uncover innovation best practices, and apply these insights into a financial services business model.
We recently sat down with Michael Roth, Chief Strategy Officer of FinTech company RetireUp – a retirement income planning software-as-a-service (SaaS) provider – to discuss innovative new tools and strategies they have developed which address the DOL-inspired changes needed in the retirement income field for financial advisors.]
Hortz: Do you see the recent DOL ruling driving a change in the way advisors will have to interact with their clients?
Roth: Yes I do. The interaction between the advisor and the client is destined to become increasingly client-centric. Instead of a cookie cutter approach, the advisor will have to dedicate more time, energy and resources on each client to provide a thorough retirement planning process and an efficacious retirement plan. The immediate consequences and practical responses to the DOL rule, we feel, will be driving advisors to implementing thorough and repeatable processes within the framework of prospecting, advising and operating a fiduciary grounded financial planning practice. This heightened level of process demands technology tools that are robust enough to provide structured support yet do not add complexity to the advisor’s day-to-day practice.
Hortz: Based on that, can advisors also use your retirement income planning software and service as a fiduciary compliance tool as well?
Roth: Yes. RetireUp provides the ability for the advisor and the client to interact around different retirement risks and assists in demonstrating how to fill any gaps as a result of those risks. RetireUp also allows the advisor to easily document any key points of conversation or specific rationale for why the advisor and client chose a specific course of action.
Hortz: You have expressed concerns about the industry’s reliance on financial planning and risk tolerance questionnaires and advocate replacing or complementing them with a collaborative planning process like the one you have developed with RetireUp. Can you explain that process and how that addresses the DOL ruling?
Roth: Financial planning or risk tolerance questionnaires do add a level of value. However, the issue with these questionnaires is that they are static where a collaborative planning process is dynamic. RetireUp is a deeper version of the financial questionnaire. We address the needs analysis and risk questions needed in a way that provides a fuller financial picture of the client, as well as, allows for ad hoc changes within the client’s retirement plan. We are concerned that the client’s stand alone answers to standard questionnaires may vary based on market conditions, current client mood, changing goals, recent popular press articles, etc. An advisor using our narrative and visual process actively works with a client to communicate their current financial plan, demonstrate what their plan may look like in different scenarios, and then the advisor involves the client in determining what course of action they should take with the retirement plan. In regards to the DOL, RetireUp acts a bridge between the advisor and client so they take the best possible course of action for the retirement plan not only in regards to monetary goals but also customized to the intrinsic goals of the client (I.e. increased income stability at retirement may be of greater value than a higher ending asset value).
RetireUp is a dynamic needs analysis tool gathering financial planning and risk parameters of a client, but you also have the psychology of the client in real time while you are doing it. That higher level of engagement and understanding of the client’s needs should provide more support in addressing the DOL ruling and concerns.
Hortz: How does your visually designed narrative process add to the financial planning experience with clients? How does it help create - as you have described - “light bulb” moments?