Retirement plans, like everything else in financial services, are becoming less of a pre-packaged, paint-by-numbers sales process and evolving into a more bespoke and consultative experience thanks to a growing fiduciary mindset and empowering FinTech tools and solutions.
To better explore how advisors are evolving their approach and engagement with business clients, we decided to talk to Gary LoDuca, founder and owner of Thoughtful Advisors—an independent Tampa-based advisory firm that differentiates by offering clients a “fiduciary-focused ethical alternative to corporate financial service providers.” He shares with us his thinking about his business model that focuses on fiduciary mindset and FinTech partners to provide a competitive value proposition of successfully rehabilitating 401(k) plans for small-to-midsize business owners.
Bill Hortz: Why do you claim that most business owners are not getting specific and strategic retirement plan advice that can improve their bottom-line results for themselves and their business?
Gary LoDuca: Most businesses are sold solutions that are basically cookie cutter prototypes from the usual Wall Street, insurance company or payroll provider suspects. The growing number of lawsuits against plan sponsors and the personal feedback I get from business owners I talk to, make it clear that they are not happy with the results and advice they have been receiving.
Hortz: You mention numerous times that thinking differently is where value is created. Can you give us an example of thinking differently and how that benefits your clients?
LoDuca: Being a fiduciary advisor forces you to think differently and work strictly from client needs and goals. Being focused on what the business needs and expects to accomplish, helps us explore what options are available, which ones provide the best benefits, and shop for the lowest costs with the highest probable measurable outcomes.
That ongoing search for the right solutions brought us to FinTech companies where we have found superior retirement plan services and tools with lower costs for our clients. We are constantly looking for, and finding, financial innovation that benefits our business owners. Once we identify an innovative solution that provides higher quality, lower cost and hassle-free outcome, we introduce the innovation and quantify the benefit to the business.
Hortz: What is your recommended 4 steps to developing the best possible retirement plan?
LoDuca: The first step is Understanding. Whether it’s a start up plan or current plan, as fiduciaries, we need to understand all there is to know about what and why a company wants to add or redesign a retirement plan. With a current plan we review the most recent annual disclosure [Form 408(b)2] and prepare a benchmark report from AdvisorLab™ called a Retirement Plan Diagnostic [RPD]. The RPD report creates an objective 3rd party baseline for the most valuable measurables of the plan like participation rates, plan admin fees, investment cost etc, and sets the starting point for plan redesign improvements. We quantify all the subjective reasons for the plan as well to identify business and retirement plan goals and past experience with retirement plans?
The second step is Opportunities. This is where our fiduciary mindset and FinTech experience pays off. Through our research, analysis and collaboration partners, we identify the best combinations of technology and services available for our business clients. We compare the new opportunities to the current plan in an analysis called a Retirement Plan Efficiency [RPE] report. This side-by-side analysis quantifies the benefits and metrics of the proposed opportunities.