PLANADVISER - May/June 2019 - 14

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HCEs Gain From Workplace Advice
Retail and retirement plan advisers each have a different expertise
NATHAN TROTMAN, an area vice president
at Arthur J. Gallagher & Co., a
retirement plan consulting firm, says
the availability of retirement advice in
the workplace makes the idea of planning
for the long-term financial future
less daunting.
According to Trotman, this is
certainly true for workers lower down
on the income scale, who are unlikely
to consult a financial adviser outside
the workplace. But it is also true for
a company's highly compensated
employees (HCEs), who often have
their own source of " retail " advice
unrelated to their job.
" Studies have shown that the more
advice people get, the more apt they are
to save and the better position they'll
be in when they retire, " Trotman says.
" As we start to move up to the higherincome
workers, they will more often
utilize the workplace advice to get a
second opinion. "
A recent Hearts & Wallets survey
found that retail advisers-more often
than workplace advisers-consider
individualized financial and wellness
goals with their clients, plus they are
more apt to have expertise on taxable
brokerage accounts, contributory individual
retirement accounts (IRAs) and
rollover IRAs. Workplace advisers, on
the other hand, will typically focus on
maximizing the use of defined contribution
(DC) plan accounts, though
some can and will give participants
broader guidance.
Laura Varas, president and CEO of
Hearts & Wallets, agrees that workplace
and
retail advice
can and
should work together. This is especially
important for Millennials, as
more in this generation are opting to
invest in taxable brokerage accounts,
she says.
" People should have a variety of
account types, " Varas says. " That's the
behavior that we see most often leads
to success. The most successful savers
direct some of their resources into
retirement accounts and save some in
their brokerage. "
Trotman suggests that plan sponsors
concerned about how their workers
use, or do not use, advice resources
could consider running some mandatory
education sessions. Even if higherincome
workers have their own primary
source of advice
and
investments,
they may access different capabilities
through the retirement plan adviser or
provider than they can get in the retail
space. Additionally, the greater buying
power of DC plans can help deliver
lower-cost products and solutions to
participants, which retail advisers or
brokers cannot always match.
" Workplace advisers must do a
better job of explaining their value, "
Varas says. A failure to clarify what
they provide may lead a participant to
prefer advice based on his own terms,
therefore electing guidance outside of
the workplace and potentially paying
excess advisory fees. Varas says a
best practice here is for the workplace
adviser to determine and communicate
when the employee should seek
retail service on his own.
-Amanda Umpierrez
14 | planadviser.com May-June 2019
Art by Haleigh Mun
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