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The Convergence of Wealth Management and Retirement with Fred Barstein

Wealth management and retirement planning are two important aspects of financial planning. While they are often discussed separately, the convergence of these two industries allows people to take a holistic approach to their finances and create a comprehensive financial plan that helps them achieve their financial goals.

In today’s episode, Jack talks with Fred Barstein, Founder and CEO of The Retirement Advisor University (TRAU) and The Plan Sponsor University (TPSU). He is also the contributing editor for’s RPA Edge and Editor in Chief & Founder of 401kTV, a media channel helping mid-size and smaller companies better manage their defined contribution plans.

Fred talks with Jack about what he does to serve the DC 401k market, how wealth management and retirement can work together, and how big players in the wealth management industry are now focusing on retirement.

What Fred has to say

“The DC industry wants to get into and speak to the wealth management industry. They see a huge opportunity in the convergence of wealth, retirement, and benefits.”

– Fred Barstein, Founder & CEO, The Retirement Advisor University & The Plan Sponsor University

Read the full transcript

Jack Sharry: Hello, everyone. Thanks for joining us on this edition of well tech on deck each week I have the privilege of speaking with industry leaders around issues that inform in advance financial advice, Wealth Management, retirement and technology. I talk to those who are leading the way as we seek to help advisors, clients, participants and firms enjoy better financial outcomes all around the confluence of digital and human advice. One of the key trends I’ve observed for some time and we’ve spoken about on this podcast is the convergence of wealth management and the DC 401k retirement side of the business. Today we’ll have a conversation with someone who spends his time at the intersection of wealth management and retirement. Fred Barstein has a variety of businesses around the intersection where wealth management and retirement meet. I’ll let him fill you in on what he is doing to accelerate this momentous change. We will talk about where he sees the industry headed Fred, welcome to WealthTech on Deck,

Fred Barstein: Thank you. Thanks for having me.

Jack Sharry: So Fred, let’s start with you telling our audience what you do to advance the retirement and advice space. You have a lot of interesting projects that I know our audience would like to understand.

Fred Barstein: We focus on the advisor sole defined contribution market 40 k 403 B. So it tends to be the plans with 3 to 250 million. And our focus is to train through education online, in person and video advisors, providers of plan sponsors. And on deck we’ll be working with participants. So we have the Retirement Advisor, university, the plan sponsor, university and 401k. TV. And about five years ago, I started partnering with investment news, because I saw the convergence of wealth and retirement at work, and I wanted to get access to the wealth managers and the RIAS, you know, and so we started doing a series of roundtables, writing columns, and I do a weekly video recapping, you know, the news called 401k Real talk. And this year, I now am partnering with wealth And they’ve created an omni channel, which includes podcasts as well called RPA Edge. So all about the DC and the convergence is a big focus for us.

Jack Sharry: And there’s a very specific focus on advisors bringing these plans forward. So these aren’t the mega plans. These are really advisors working with their clients who have seeking to get 401 K plans in place and helping participants there, as well as ultimately managing their full portfolio talking about how you work with advisors. I know you have a variety of different education means and communication means talk a little bit how that comes together.

Fred Barstein: Yeah, so we started in 2010, in collaboration with UCLA Anderson School of Management, their executive Ed group, to do a week long training certification program. It also includes 30 hours of online there because we saw that there were a lot of designations and it seems like there’s a lot popping up, but the credibility of them if you can just do it online and take a task doesn’t make you an expert. So we wanted to have a designation and training that plan sponsors could be sure that we’re confident that this advisor is actually well trained and has the experience we require experience. So that’s part of it. But we also in 2019 partnered with Spark, which is the major record keepers association took over their training program. And that was on one hand the training of the internal staff at record keepers, they develop the program amongst themselves but also more for the entry level visors like wealth managers that want to understand the DC market and just get their feet wet. So big, big focus on training is how we interact. But then in 2013, we started the plan sponsor University. So we saw a great need and desire for plan sponsors to get really high level good training. So we started half day five hour training programs about rather than us conducted, we decided to partner so we partner with local high level elite retirement plan advisors RPAS. And we put on the program we do the recruiting and it’s our brand but the advisor is the one training because we want to you know have it’s a local program. We want to have the plan sponsor the opportunity to work with an advisor if they’re comfortable with them. It’s obviously a very effective prospecting tool if the advisor is in front of 25 to 30, plan sponsors for five hours at a college university where we usually hold these things. So we’ve done about 500 of those half day programs and have trained over 10,000 plan sponsors. So those are the big ways. And then we have our own media side called 401K TV. And there we have articles, but it’s videos from plan sponsors that have completed one of our T PSU programs. So you’re getting insight, actually, from plan sponsors and a three to five minute video on what’s their biggest issues? What are they concerned about? What are their challenges? Where do they see and want from their advisor and their providers. So those are the ways that we interact with the community. And because our community is so collaborative, they have to work together and advisor needs a record keeper, we need investments. So obviously, we need the plant sponsor, payroll companies, so we feel like it’s our obligation or interests to work with and train all the different parts of this community.

Jack Sharry: Actually, the thing I found fascinating, but I’ve been following you for some time on investment news, and now on wealth They’ve created a real community around this, maybe if you describe, what does that community look like? Who are the advisors? Who are the plan sponsors that maybe by name, but certainly but describe? What did the type of advisor the type of plan sponsor give a little more detail around this community that we’ve pulled together?

Fred Barstein: Well, there are 25,000, RPA specialists that have more than 50% of their revenue coming from defined contribution plans, that is the primary market for us.

Jack Sharry: For those advisors, or the independent broker dealers, warehouses, or is where do they reside?

Fred Barstein: All of the above, they’re from everywhere, probably the largest is independent than wire house. And the independent includes RAs, but also insurance as well. Mass mutual, for example, is very robust 7500 advisors, and we work with a lot of their advisors there, but we’re not exclusively in that. So if a wealth manager, you know, has four or five plans, 10 plans and says, Listen, either I want to become a specialist, I want to get more into it, or I don’t necessarily want to be a specialist, but I need to know and I want to help we work with them, too. But our clear focus is on the 25,000. We’ve also in terms of the community, through investment news, and now wealth management, we created these high-level roundtable. So we invite the heads of the RPA aggregators, the record keepers, the broker dealers, and this year will be focused on retirement income. And it’s a small, you know, 4050 person five hour over two day and plus dinner. And what we wanted to do was get the heads of these groups that normally don’t come to the conferences, you don’t see them out in the regular events, and talk to them and let them talk about on the record, what are their biggest opportunities, challenges? And how do these days see the best way to collaborate because they all got to work together. So, you know, part of the reason that I work with wealth management is they want a platform, the DC industry wants to get into and speak to the wealth management industry, they see a huge opportunity on the convergence of wealth, retirement and benefits, we don’t see that same urgency or interest from wealth managers being interested in the defined contribution. So we tend to focus on that. In terms of the plan sponsors, as I said, we’ve trained 10,000, we have another 10,000 that have registered for a program but weren’t able to attend, we have 35,000 plan sponsors that are subscribing to 401k TV. And you know, that’s a harder community to get your arms around because they have 10 jobs that are not specialists and they’re not focused, but we’re trying to stay engaged. And we’re one of the few if only companies that are really reaching out to that three to $250 million market. You know, you have pensions and investments and plan sponsors, but those are generally read with by the very larger plans on that. And then, you know, the community absolutely includes the providers, they are just so critical and key to all of this. And what I try to bring to them, on the one hand is understanding of what their clients want. What do the advisors want? What do the plan sponsors want? What are their biggest problems? Not check the box or what happened but what’s the future look like? And on the other hand, For the advisors and also the plan sponsors, giving them an understanding of what’s going on with their provider partners. For example, consolidation. You know, record keeper consolidation is just massive, you know. And recently we saw a census by Newport group and empower gobbled up Prudential and MassMutual. And, you know, it’s a dizzying world for an advisor, but even more for a plan sponsor, and we try to give them candid open and honest discussions about what’s going on. Sometimes, the providers don’t want me to be as candid and open and honest. But I feel like my obligation is to the adviser and to the plan sponsor. But in the end, the good providers are going to prevail and are going to be, you know, the question is, do you want to hear what your business plan set? Or do you want to hear reality? You know, and I try to bring reality. That’s why I have my video, my weekly video is called 401k, real talk on that. So it’s a big community. And I try to, you know, I’m one of the only independent not affiliated with any provider or advisory firm or plan sponsor, voices out there who’s been in the market for 25 years. So Jake’s, as you know, you do learn a little bit along the way?

Jack Sharry: Sure, sure. So our audience is largely from the wealth management side. And although I think we’re picking up people on the DC 401k side, as well parse something for me to help our audience who you mentioned that there’s, there’s certainly a lot of activity on retirement side, not as much on wealth management. But I look at a place like Morgan Stanley, which bought Salem Plan administrator, they have deals with Vestwell, and with Empower, they already have a robust, obviously wealth management platform. And so they’re building out their retirement plan side. And you’ve mentioned a couple of these names anyway, that explain to our wealth management folks that are listening, how does that all come together with describe Morgan Stanley’s strategy? And then how do you fit into it as you work with an empower invest? Well, some of those players, because all this is getting sorted out. And one last comment before you address this, and that is that the first place most participants, most people consumers have touch with a financial services offering is through their 401k plan. So it seems like that’s where the money starts. And clearly, you’ve caught on to that. And you’ve built out a robust capability to serve that marketplace, that community, describe how it all comes together for our audience that may not be as familiar with how, where the 401k world has gone.

Fred Barstein: So traditionally, the broker dealers saw the retirement defined contribution, as you know, lots of assets, not much revenue and lots of liability. 97% of the 90 million participants on defined contribution plans are not really candidates for traditional Wealth Management, or even financial planning, which is customized, right? If you don’t have enough assets, you can’t really afford to do that. So you know, they looked at it, like, you know, why are we in this business, where the margins the profitability on the wealth management side is much, much greater for every dollar and wealth management, you need $10 and defined contribution to have the same revenue. And you have to have infrastructure around it. I think what people are waking up and firms like, well, Morgan Stanley have woken up to it Merrill has as well, UBS is starting to wake up as well is there’s a lot of high net worth individuals inside of these lands. And you have an incredible amount of access and trust and oversight, because now it’s not just the SEC, it’s the Department of Labor and the plan sponsor as a fiduciary is endorsing that advisor. So you have access to the wealth, the high net worth, you also have access to a term I just recently became acquainted with called Henry’s. So Henry’s are high earners, not rich yet, you know, and so if you can get a relationship with a 25 or 30 year old who’s making 100 150 $200,000 And you know, is on their way to be a high net worth, and you’ve been working with them for 10 years in the plan, you’re gonna have a huge advantage and I would say that RPAs have a huge advantage over traditional wealth management when it comes to getting access and the credibility there. So I think that the third thing that these broker dealers and wealth managers are sometimes there are transactions companies are sold. So now Are you have I remember, Cap trust telling me they were representing a 5000 employer, they were the plan advisor for a 5000 employee company, it was an ESOP the company was sold, they were paid almost a million dollars just to help and advise these participants, which also gave them access to be able to manage the money individually of them. So sometimes there are those kinds of events, liquidity events, and if you’re the retirement plan, advisor, wow, you have a huge advantage on that. So I think that those firms are realizing, and then sort of the challenge is for traditional wealth managers, and RAs that are focused or get a lot of their revenue from IRAs. And, you know, IRAs are now upwards of $13 trillion. Right? They’re going to be at a disadvantage for a couple of reasons. Number one, the Department of Labor at the end of June of 2022, the enforcement is going to start on their prohibited transaction exemption 2020 – 02, which says that if you recommend an IRA, even if it’s the first time that you’re working with this client, it’s a fiduciary Act, which means it has to be in the best interest of the client, which means you have to analyze what are the investments and the costs in the plan, is it in the best interest for them to move that to an IRA. So that’s going to greatly inhibit the ability of traditional IRAs, to do rollovers. In addition, firms like Empower but already Fidelity Vanguard, Charles Schwab have been built Ira machines to capture those rollovers and now some of the larger firms like Morgan Stanley, but I would also say some of the aggregators like cap trust and sage view and hub, and FP in particular, they are building machines to capture those Ira rollovers. And then also a lot of advisors deal with RAas deal with and help their clients with retirement income, it really makes a lot of sense for them to start planning and investing in retirement income and annuity products inside the plan. That’s going to hurt the wealth managers who are just trying to form that relationship when people retire.

Jack Sharry: It’s interesting how quickly this seems to be changing. And a lot of it has to do with technology. We’ve had Murphy on the show here and had Aaron Schumm from Vestwell, Ed from Empower. And they’re building out tools and making it much more seamless process, talking about how you consider as part of you in your community, how you address issues around technology, how you do training, how you keep people up to date on all that’s going on, on the technological front.

Fred Barstein: The DC market is way behind on technology, from the wealth management industry, I would say it’s another 10x. And the problem with technology in the DC is number one access to the data, the data is not clean, it’s record keepers are reluctant to give it partly because they want it for themselves and do the rollover partly because of privacy concerns, releasing that data. So the first issue is data. The second issue is that most of the major record keepers, they’re built on 1990 technology record keeping, and it’s like they’re trying to keep up and change. But they’re it’s like trying to put a Tesla engine into a Pinto without pulling over. They can’t stop. Right. So they’re building on top of archaic very, very difficult technology and putting things in is a challenge, which is why you know, firms like best well who are starting from scratch have an advantage on that. And then the other issue, Jack is that there are three people that have to say yes, which means there are three people who can say no, before any of these tools and apps are in there. It’s the plan sponsor, the advisor and the record keeper. And I don’t know about you, but I can’t get three people to agree on anything. So it’s very, very difficult. The challenge is also for advisors is the capital investment, not just you know, in the technology, but the people that they need to be able to build a wealth stack. So that’s why we’re seeing a lot of consolidation in the retirement plan advisor market with the aggregate enters. The DC aggregators are now upwards of 2.3 trillion of the 10 trillion in DC. And cap trust is expected to be more or to reach $1 trillion by June of this year. So that group of aggregators are buying up and attracting partly because of the technology, a lot of other reasons as well.

Jack Sharry: So talk a little bit about that this trend that you just described, and I’ll throw in just to keep it interesting. I’d look at a place like Morgan Stanley, which built a wealth management platform, arguably the best in the industry. And now they’re applying that to the other retirement side. Solium was a purchase they’ve done deals with Empower partnerships, empower, invest well, and they’re pulling it together, which basically what I can see the retirement plan businesses, they’re finding ways to serve that marketplace at a low cost, very technology driven basis, and then ultimately manage the assets managed on the wealth management platform, and they understand it to have the higher net worth the corporate execs, what have you matriculate into wealth management customers. So that’s their, their strategy and plan cap Trust has a different approach where there they’ve been buying up firms to get it from the DC side, kind of coming in from that angle, then marrying up with a wealth management but I’m fascinated by this whole trend, maybe your rear front and center on the what’s going on. You’re at the Coliseum watching the gladiators duking it out. Where is it today? Where do you see it going? What’s your prognostication on how this all plays out? Because when the big boys get in the game, I think, I guess we’re called serious now.

Fred Barstein: Yeah, I think the traditional broker dealers that Morgan Stanley’s the UBS says even the LPL is, to a certain extent, they have a much greater wealth management capability than the RPA firms, even the RPA aggregator, so in some ways, they’re starting with a great advantage, Jack, I’m just starting to see them wake up. And I’ll tell you that creative planning acquisition of locked in is $110 billion retirement division is a seminal moment for the raa wealth management industry. Because before that, and even now, the RA aggregators are just buying wealth managers. This really shook up the world. And because if creative planning can leverage the million participants, the 100 and 10 billion and locked ins, you know, PNC and benefits clients, they’re going to leap ahead of all of their RA aggregator, so we’re seeing the others like high tower and Mercer are trying to catch up on the other side of it is cap trust, five years ago, figured out it’s all about wealth management. And so they focus probably 70% of their acquisitions were with wealth managers, and they’re buying those firms in geographic areas where they already have the RPA firms. And so now more than half of their revenue is coming from wealth management and more than half of their profit. And all the other aggregators are really just playing catch up, you know, to cabin trust on that and cap trust is leading the way to a point aren’t retirement plan, advisors will charge nothing to manage the plan. And then all of their revenue will come from participants. Right now, all we’ve been able to figure out is how to deal and monetize the wealthy, no one has figured out how to engage the 97% of the ignored participants. And no one has figured out how to monetize that. We will through technology, through data through a new type of financial advisor that will be emerging the virtual financial coach, that does not really exist now. But that has to because you can’t do the traditional one on one meetings for these less fluid people. And by the way, the millenniums they don’t want to meet with you in person anyway. So you know, there’s you know, you see, I was fascinated by UBS acquisition of Wealthfront.

Jack Sharry: Right, tell me what’s your take on that? I have some thoughts but look to yours.

Fred Barstein: I think that UBS similar to Morgan Stanley seize the opportunity, you know, they have a couple million participants that they’re UBS advisors are managing how do we apply Wealth Management find those wealthy or in relationship with the Henry’s but then use the technology? and the infrastructure that Wealthfront has to serve the 97%. Interesting that both Morgan Stanley through the E trade acquisition, but also UBS have very robust stock option employee stock option. And that’s in some ways a very similar business where you have to work with individuals and participants and those stock option, the same technology, the same kind of phone, people that deal with those can also deal with DC participants. And, you know, let’s not forget, you know, the big elephant in the room is 90 million people in defined contribution plans $10 trillion, and DC assets growing, and 13 trillion in Ira rollovers of which 90% comes from defined contribution. So this is really the game and I think that wealth managers are sort of outside the tent and doing very well and picking up people. But the real show is happening inside the workplace. Because plan sponsors have changed plan sponsors did not care about their retirement plan, it was a tactical, it was like health care, right? Give me the lowest costs, what I need to have. And then every year, they would just negotiate fees, because they were writing a check, they weren’t doing that with their plan, DC plan, because the participants pay for the vast majority. It’s totally shifted since the pandemic, because the war for talent now makes benefits, and particularly financial benefits, and specifically 401k, as a way to recruit and retain employees. And that war for talent is changing everything. And DC plans have now become a strategic benefit rather than tactical. And retirement plan, advisors have moved from the waiting room with the rest of the salespeople to the boardroom talking strategy. And if you can be in that boardroom and the RPA is have that think about all the senior executives that you have, and the access that that advisor has to that entire employee community who wants that advisor to help their people. I mean, it’s a huge opportunity.

Jack Sharry: I can’t recall the Wealthfront’s CEOs name, but I saw him speak at a conference. He was basically there’s a few years ago, talking about making Wealthfront into a virtual bank. So that was one of the things that struck me with the PaineWebber acquisition, a lot of wealth managers moving into the banking realm.

Fred Barstein: He also made one of the stupidest comments that I’ve heard in a while, which is our acquisition proves that the pure technology model is the most successful, and that could be anything further from the truth. It’s the combination of data, AI, technology, and then people because the largest and most successful robo advisors are Schwab and Vanguard, and that’s a hybrid model. Yeah.

Jack Sharry: And the other comment, I was going to agree with everything you just said, although it will be that that will accelerate UBS’s ability to do what Well Frank can do. I heard a while back and you’re talking about this that you’ve Remember, a few years back wealth managers were having putting minimums get up to under 50,000, that talk to an advisor and all that sort of stuff. And Schwab didn’t went the opposite way. So they’ll take anybody what’s been proven. And I think wealth managers across the board observed this about Schwab, they’ve just got more money, they just got access earlier. And that’s how I view the retirement business is it’s all about getting access to capital earlier. So you’re seeing a lot more people, a lot of the big players moving in that direction, because they want to get there sooner. Because eventually some many of them, some of them will turn into higher net worth clients that they’re going to convert.

Fred Barstein: This if we’re wealth managers and RPAS are running 100 yard dash, and the RPAS are starting at the 20 yard line.

Jack Sharry: That’s great. There’s been a fascinating conversation. I appreciate it. As we move to close here. What are three key takeaways, you’ve covered a lot of ground in which I very much appreciate. But what are three key things you’d have our audience want to understand.

Fred Barstein: I look at the three C’s convergence of wealth, retirement and benefits at work and benefits. You would say, Well, I don’t do wealth managers don’t really, you know, deal with benefits? Well, they do because what they need to advise on their clients is which benefits that they should be using at the workplace, given their family and financial situation. And by the way, they should also be helping to manage their 401k plan, which they really it’s maybe their second largest asset, but they don’t have any insight. You know, they may look at the statements but they’re not really able to manage and so the convergence, industry consolidation you know, it’s happening everywhere the record in our market, the record keepers, the RPAS What’s happening in the IRAs with money managers, you know, traditional mutual fund companies are scrambling like, what’s our business model? It’s just can’t continue. And then you have the brokerage, as you said, you know, with fidelity and Schwab as the big ones, and how do you compete with those kinds of trillion dollar. The third thing I would say, and this is probably true, not just of our industry, but overall is COVID, change the world, we have fundamentally different ways of doing business. I’ve been on a series the last three weeks of virtual selling. And for those that don’t change the way they do business, not only managing their own staff, but dealing with clients and prospecting for new clients in this post COVID world, they’re gonna get left behind and in five or 10 years wondering what happened to them. I agree with you all the above. Appreciate that, as we do each week on our podcast, will we bring our session to a close? Can you tell us something interesting or unique you do outside of work that people may not know about you? And we find interesting? Yeah, so I started about 20 years ago, I sort of moved away from running, realizing that being a marathon runner is probably not the healthiest thing in the world, when especially when I turned 50. So I started doing yoga, hot yoga about 20 years ago. But what’s really been my focus in the last 12 years is meditation. Interesting. I meditate two hours a day, I do at least once a year, a 10-day silent retreat. It’s called Vipassana. And a lot of people, especially in western world, you know, business and meditation don’t seem to be compatible. Like, you know, we don’t do that. In the east. You know, in India, especially, you know, most business people are meditating, right? That’s a common thing. But meditation for me is has nothing to do with religion or spirituality, it’s training the mind, you know? And how do i Quiet that voice and become more focused and more peaceful and happier. And I will say that, it’s not the reason to do it. I am two to three times more productive. Because of meditation at work, I’m able to, there’s a saying, when nothing is done, nothing needs to be undone, meaning, I don’t make as many stupid mistakes as I used to. Because when you make a stupid mistake, you gotta go back and undo it. And so yeah, so meditation is probably the number one thing even beyond work in business and family, because if I can get my mind right, and trained, and quiet, it’s going to help in all aspects of my life.

Jack Sharry: But what you’ve put together is impressive. And no doubt in large measure due to your ability to take some time out to meditate. It seems to be working. So Fred, this has really been a great conversation really enjoyed it learned a ton, as I hope our audience did as well, for our audience. If you’ve enjoyed our podcast, please rate review, subscribe, or share what we’re doing here, WealthTech on Deck. We’re available wherever you get your podcasts. Thanks again, Fred. It’s been a real pleasure.

Fred Barstein: Thank you. Thanks for having me. I look forward to talking to you further.