According to numerous surveys, people say nothing makes them more confident in life than having their financial house in order. And, to accomplish that, many say it pays to hire help. After all, a financial advisor can play a pivotal role in helping individuals establish and prioritize financial goals, develop an effective asset allocation strategy, implement a savings and investing strategy, and much more. Sounds like the kind of advice everyone needs. So how do we get good, fiduciary planning to the masses?
On this Elementality, Reese interviews Rob Rickey of StraightLine, a firm specializing in collaborating with employers to provide independent financial advisors for financial education and counseling to employees participating in their employee-sponsored 401(k), 403(b), or 457 retirement plans.
Podcast Transcript
Rob Rickey:
So when I think about an employer sponsored plan, I think about people who are on their own financial journey, and there are different points in their financial journey. And they also like to get things different ways, right? They want to get advice, different ways, they consume things differently. So you really have to have multiple advice offerings within a plan to try to maximize the number of individuals in the plan that get the advice they need for where they’re at, right? Which is really kind of goes back to your point, advice is great, but if it’s not for where somebody is at in their financial journey and it’s not the way they want it, it’s probably not gonna add the value.
Jordan Haines:
Welcome to Elementality. Each episode we will explore the challenges and the opportunities faced by financial advisors and how advisors can use elements to grow their business and serve their clients better. We hope you enjoy this episode.
Reese Harper:
Welcome to another episode of Elementality everybody. I’m your host, Reese Harper here. Super excited to talk to a new friend who is in Long Island today living the dream. Looks like beautiful weather there. Rob Rickey. Rob, how you doing?
Rob Rickey:
I’m doing great, Reese. Thank you very much.
Reese Harper:
I’m excited to hear a little bit more about your story. I’ve just stalked you on your website a little bit and looked at some of your background. You’ve got a really interesting story and I think a fun perspective to share to our advisor audience. So how about we start with a little bit of background on how you got into the business and a little bit about where you have been in your journey.
Rob Rickey:
Yeah. And I appreciate the opportunity to talk to you and to make acquaintances with you. So 30 years in financial services, I started like many of us do in the service side of the business working for Dreyfus. So I’m kind of dating myself with that one.
Reese Harper:
Oh. Nice, nice. That’s cool. That’s actually a great company, man, for many, many years.
Rob Rickey:
It was, and it was in the early ’90s, just prior to Mellon purchasing them, I spent about five to seven years with them. Went from the servicing to the sales side, became a financial advisor and a walk-in financial center. Started down the path to getting my CFP at the same time doing my MBA in banking and finance. And around ’97, I kind of saw the writing on the wall with the financial centers at Dreyfus and the Mellon kind of transition and wound up shifting over to TIAA where I went there as a consultant to support their institutional business and participant base. And I guess around ’99 I had an opportunity to take on a new business for the company as a business lead on a project on how to work with independent advisors, right. All the trends in the industry were around the move to independence. Really a lot of the same trends we still see today, right? So for TIAA at the time, they really had no way to work with independent advisors, and I was a real big believer in the independent fiduciary model. And I saw an opportunity to really help TIA engage that community by building out the platform to allow those advisors to work with participants in TIAA retirement plans, right?
Rob Rickey:
And that meant having to build everything that a custodian like a Schwab does, right? Giving advisors access, building an advisor website, trading, bulk trading, billing, data aggregation, all of the things that would allow that advisor to say, “Hey, look, there’s value at TIAA and we can manage those assets there.” So kind of a little bit build it, maybe they’ll stay and or come. And that really grew into a tremendous business. I spent 23 years working that channel for the company, and I left there last year, last summer, and have since joined a firm and joined Straight Line as their Chief Growth Officer. And quite honestly, really a continuation of what I did at TIAA, just from the other side, because when I look back at that history, it was really a lot about bringing access to independent advisors to participants and employee sponsored retirement plans. And quite honestly, way ahead of the time, right?
Rob Rickey:
If you’re going back 20 plus years, and ironically that’s a lot of what Straight Lines history is about, they came into existence on the premise about serving those clients, those participants and employee sponsored retirement plans on those held away accounts. And we actually wound up partnering in around ’08. So my history with Straight Line goes back around 15 years where I helped them, when they learned about our capability at TIAA to support independent advisors. They started to work in the higher education space, had some opportunities, and because of the platform I had built, it really helped them support and build that niche and working with higher education employees.
Reese Harper:
That’s interesting. Was TIAA, I became familiar with TIAA-CREF when I was running my, well, when I was running my RIA really early on, we weren’t working with dentists, but I found that they were doing partnerships with like DFA on like fee only life insurance. They were doing fee only annuities. They had a really interesting billing platform. I was charging fees on their platform to one client who was a psychologist that worked at a university, but they had a way for me to actually bill against IRAs. And I was like, “Dude, I don’t even have to move the assets.” I’m like, this is a pretty progressive framework and philosophy, sort of a pretty progressive, I mean, this is 2007, 8, maybe 7, 8 or nine. For me to, TD Ameritrade was barely like really getting their stride with independent RIAs and TIAA-CREF had a billing system already in place on plan. I was like, wow. Anyway, tell me like, what am I noticing? Is this all… I just I’ve never talked to anyone who was part of the early stages of that business.
Rob Rickey:
Still I’m the guy that built that.
Reese Harper:
Yeah. That’s Cool.
Rob Rickey:
Yeah. It was early 2000s and a lot of it was driven again, by the trends that we were mentioning that again, they’re trends that continue, right? It’s amazing how strong that trend towards independent advice and fiduciary advice. And one of the things I talk about a lot when we talk about what we did at TIAA is that everybody thinks about the 403b market as being kind of behind the 401k space. But the reality is when you think about how advisors did business in the 401k business for so long, it was really on the registered rep side, right? Basically, you did a plan, you got a trail, and you basically didn’t do a lot much more work to earn that trail. And some people, maybe that’s not always true, but reality is that’s what was happening. In our side, we went directly to the fiduciary model. And around 2000, 2001, we built that capability you are referring to, to allow an independent advisor to actually, if the plan allowed it, right? So in the IRA, we controlled that, so obviously we could allow it, but the plan sponsor in the retirement plan had to allow for the payment of the advisory fees in order to turn that function on and allow that participant to hire their independent advisor and allow them to manage the assets on the platform and then deduct their fee. So yeah, it was very progressive.
Reese Harper:
That’s super progressive, man. I don’t know, that’s a very unusual for… But was TIAA-CREF or I would imagine their origin was an insurance company though, not an asset manager, right?
Rob Rickey:
Yeah, I mean, the TIAA company itself started with their, the TIAA general account, which basically was designed to provide pensions for professors in the higher education market.
Reese Harper:
Oh, so it wasn’t life insurance, it was pension.
Rob Rickey:
It was pension, it was 403b, right? It was providing that pension or that guaranteed lifetime income, which again, is so progressive now. If you think about where the world is today TIAA started that back in 1918, right. With some funding from Andrew Carnegie.
Reese Harper:
It’s interesting ’cause I got introduced to them through like, my first three of three years in my career, I was at Northwestern Mutual, and I was wrestling with the conflicts that I felt around accumulating inside of life insurance. If I’m gonna charge an AUM fee, how do I discount that? If I get a commission, this is like early 2000s and I just remember stumbling across TIAA-CREF’s life insurance product line too. And it was quite progressive as well. I mean, it was like no commission, fee-based, the surrender values were like 100% or more, right? In year one, you could pick underlying term insurance contracts as the, I was like, “Man, it’s amazing what affiliating closely to a university culture must have done to their product department.” That’s the story I told myself. Was they, because they’re close to university, maybe they just got a really tight feedback loop from a really smart group of progressive people. Tell me a little bit more about what you see for the future for your current organization and what you’re excited about right now.
Rob Rickey:
Well, boy, I tell you first of all, when you brought… I didn’t know that you had a history with TIAA and using the platform I’ve built. So that brought a smile to me inside as well.
Reese Harper:
Cool. Nice. Man. Well, congratulations, dude. It clearly had an impression on… I would say my gifts are more in the invention and sort of maybe wonder and dreaming. I’m pretty early and when I meet someone like you who has a strong discernment ability that helps me know that I’m done. I don’t try to fine tune or to put the finishing touches on anything because that’s not my gift. And I kind of have to let go at a point where I can see someone who is more operationally minded, and strategically minded, and has seen more at batts than I have in a particular motion. ‘Cause I don’t trust myself to take the idea too far. [laughter] And I would rather go back and just do another idea. I’d rather just go spend more time one more idea. Like I’d rather do back.
Rob Rickey:
Well, we need idea people too, man. We need idea people.
Reese Harper:
I mean, if I could have eight conversations a day like this man, and come up with new ideas, that’s all I’d love to do.
Rob Rickey:
Going back to your question, I’d say it’s back to the future, right? It’s really great that we talked about that beginning and how unique it was because one of the things that really excited me about coming to Straight Line, not only because I knew the people and they were great people, and I had a history with them of helping them build a business in the higher education space and work with those participants the same way you did with the one they were doing it with hundreds, right? And now I have the opportunity to do it from that side of the table on the RIA side. And I think when I look at the market today, and I look at just talking about employee sponsored plans in general, I see a very significant opportunity around providing general education, communication and advice services to employees in those employee sponsored retirement plans.
Rob Rickey:
And as I come into Straight Line, we’re making some changes to kind of standardize enhance our services, standardize our fee structures, to put us in a position to actually really grow that niche again for the firm. And I’m really excited about that because it’s about bringing that independent, right? When I was at TIAA, I could say to you, “Hey, my role is to open up plans to bring access to independent advice for employees in that plan.” So now I’m on the other side sitting at the table saying the same thing. I want to work with employer sponsored plans to give them access to independent advisors and get fiduciary advice down to that partition, holistic fiduciary advice, which is different than some of the advice services being provided today in plans.
Reese Harper:
That’s pretty compelling, man. Sounds like you and I are dreaming about the same future that might be out there. I’m saying that, ’cause we haven’t actually talked, and I’m sure the reason we’re connected is, we know of each other, but we haven’t ever had a conversation live. And I know that there’s lots of people that helped me [laughter] meet with the right people and interview the right people. And when I saw the list, I check of this interview. I went on the site and kind of started looking around. I was like, “Man, this person’s thinking something in the general direction that I’m thinking.” And the thing that I’m most concerned about is that the average person in America doesn’t even get a decent answer to a financial question. And they don’t have enough money to ever even qualify to ever get a good answer. And good answers aren’t a number, man. Good answers are like a conversation. That’s what good answers are. There’s not a good answer that’s a number. It’s like, we just need a way to drive down the cost of conversations that are effective, curated, targeted, they don’t cover everything. They cover the thing instead of, because we can’t afford to cover everything. I mean, these people got 15 minutes.
Rob Rickey:
Well the other thing about that is the concept of a financial plan is just not what it was 20 years ago. Right. To me, now it’s a living collaborative ongoing work of art. Right?
Reese Harper:
Totally, man. Yeah. Yeah, that’s why I said financial advisors to me, the day that you said you do financial plans was the day that you cheapened what you do so much. [chuckle] People don’t want a plan, and they don’t know what it is though. Well, they do want a plan. They do want a plan because that’s what we told them they’re supposed to have. And they feel like that’s the answer. But what they really wanted was to know something, to get an answer, to ask a financial question, to have a conversation, to feel better about their money. And that requires an ongoing conversation. And if we say it’s a plan, then it obfuscates this truth because people are like, “Well, I already did a plan, I did it, so I did the plan. And my life’s still not better. I still don’t have my answers, but I don’t…
Rob Rickey:
By the way, it’s already old and things have changed. So look, here’s another problem with that, which I haven’t really heard a lot of people talk about this, but I’m agreeing with you. I mean, clients really need targeted stuff. They focus on particular topics and they need to have a sense of how they’re progressing towards their goals. That’s why I’m a bigger fan of I goal-based financial planning.
Reese Harper:
Well, talk to me about that. This is something that you clearly feel good about the goal-based. What does goal-based mean to you, and what is drawing you into emphasizing that right now?
Rob Rickey:
Yeah. Well, I think for me, I think at the end of the day when you think about, I use my own personal life experience. So I found myself a year ago, right? Suddenly jettisoned from a 25 year career at a company, right? And the reality was I was doing that job for so long and look, you get comfortable with the benefits and the compensation, and you’re thinking towards a goal, right? I gotta achieve a number, I gotta achieve a, whatever that number is, right? And the reality is, when I left TIAA and I really sat back and did some soul searching, I realized that I could do anything I wanted to do, and I didn’t need to stay in corporate America. Why? Because I was in a position where that, it’s not just about the end game, it’s about the whole game. And we’re planning so much towards this end game of this one goal that people are losing sight of the fact that there are things they could be doing today. Like you have people who are over saving for retirement, who actually, are saying, I want to spend 20 grand when I’m 65 traveling the world.
Rob Rickey:
And the reality is they’re 55, and they probably could do that, some of that traveling now. So I think if you start to base your planning around goals and really identify your goals and can really get a sense of people’s progress to their goals, it’s not only helping them achieve those goals, but helping them realize that maybe they can do things differently today that they didn’t think they could do. And that’s really what changed my thinking when I started to think about doing things a little bit more entrepreneurial and coming to a smaller firm and really doing what I love because I felt like I was in the position to do that now.
Reese Harper:
That’s cool. That’s way cool. So what I’m hearing is when people can clarify their… Well, what I’m hearing is there’s a lot of people that actually don’t have very clear understanding of what they want. That’s what I’m hearing. They don’t know…
Rob Rickey:
Well, listen, I’m 54 and I’m in the business and I still don’t know what I want when I retire.
Reese Harper:
That’s the thing, right? It’s hard, right? It’s hard to answer that question.
Rob Rickey:
It’s really hard. It’s really hard.
Reese Harper:
And I was talking to this the other day with my… Well, yesterday I was doing a podcast and we were talking about values and how values drive a lot of our choices. And like I was saying earlier I was referencing earlier, for those of you who may be interested, there’s a new book that Patrick Lencioni came out with. It’s called like six G Areas of Genius or something. And I was quickly patterning Rob’s areas of genius with this book I had just read and kind of seeing where he was at. If you wanna check it out, it’s pretty cool. And I don’t get paid to refer it, but I’m on a part of the spectrum that’s closer to the ideation stage where Rob, his background has been more in a larger organization, like shaping a new strategic direction, kind of moving it towards a different direction. And we’re, right now, the issue that I’m seeing though, and why our two personalities are having a good conversation today is I think that in the middle between what we want as an industry, what we want to happen, what we’re seeing, and then what has worked.
Reese Harper:
I’m learning a lot right now about what has worked and when I talk to people like you Rob, around goals and why this is still important, ’cause I kind of came from another angle, which is like, I want to get as far away from what people think financial planning is as possible. I kind of wanted to create a creative thing that made people just go like, “I don’t know what this is.” And then I’m like, “Finally, we can start from scratch.” Because they’re not bringing all of this baggage to the table of like, well, I already did this and that plan, and I did this plan. And what I wanted was just to spur more conversations with professionals. That’s all I wanted to do. I just wanted to spur more conversations.
Rob Rickey:
I don’t think what you are saying is far off from me because if you do goal-based financial planning and you just stay focused just on those goals, and don’t realize that it’s not just about the end game, it’s about the whole game and kind of what’s happening in that person’s life today and the decisions they need to make. I think it’s very similar to what you’re saying. You can get stuck in any plan that is just based upon a goal and I mean, there’s no doubt about that. But I think if you’re allowing it to be a living…
Reese Harper:
Okay. Yeah, yeah, yeah. I want to just add to what you just said and see if we’re saying the same thing now. What I heard you say differently, I’ve been studying spec like human communication for a little bit now, and every therapist I ever talk to says that humans don’t know how to ask for what they want. That’s like the most common way they close, like therapy sessions. Like, what do you want? What do you want? What do you really want? And like no one knows. In my relationship, me and my wife go and chat with people all the time and we’re both like, I think I know, but I don’t really know what I want. I just like to complain. And so [chuckle] some days Rob, it’s just, I just wanted to complain. I don’t know what I want, but I just like complaining. And I don’t think it’s that different with money. I think people just like to complain about money, but they don’t really know what they want.
Rob Rickey:
I’m like, “Do you wanna make more? Do you wanna change jobs? Do you wanna travel more? Do you wanna have a better house?” It is fascinating, the word goals, that’s what was triggering for me. ‘Cause when I think of a goal, you put 500 grand in, you got to save 1,000 and nobody has enough. No one has enough money, so they’re all depressed, especially if they’re in this rank and file we’re talking about kind of that middle tier of income. There’s never gonna be enough money for the goal that you want in a monetary way. But if you can just describe what you want. Like, I want a little more, I want a little less intense work schedule. Like that would be nice.
Reese Harper:
Or I want a little more job satisfaction. I don’t love my job, or I’d like to vacation at this cadence. Anything like that, anything they want, that feels like what you were saying, a goal whole game.
Rob Rickey:
You are describing the whole game, not the end game.
Reese Harper:
Okay. Okay. What’s that? Yeah, talk about that. I like that.
Rob Rickey:
Well, I just think it’s, again, it goes back to the point, you can have goal and have it, some people have very clear understanding of what they want to do. And God bless them for that.
Reese Harper:
And they’ve quantified it and they have more than they need and they still don’t think they got enough.
Rob Rickey:
Well, and that’s my point. Helping, by the way, helping those people live today. To do that 10 or 12 years or whatever years earlier, I think is one of the things we often miss in the planning. I do think a lot of advisors do that where they help their clients get comfortable with the realization that they do have enough and getting them to learn how to spend is almost as important as teaching them how to save to achieve a goal. That’s my point. And I think if you can use the structure of goals to help people understand both the today game and the future game and how they’re living and because here’s the thing…
Reese Harper:
Are you using the word goals the same I was saying ask for what you want? Is that the same as a goal to you?
Rob Rickey:
Yeah. I think so.
Reese Harper:
Or do you like think of a goal as quantify? You got to quantify it or it’s not a goal?
Rob Rickey:
No. I don’t think the goal necessarily has to be quantifiable but…
Reese Harper:
People like that though. It’d be nice.
Rob Rickey:
But no, that’s very, yeah, it’s an interesting thought.
Reese Harper:
I think that’s what’s tough about goals. If you say the word goals, someone, I think most of us think dollars.
Rob Rickey:
Money.
Reese Harper:
I think most of us think dollars and those are hard. I don’t know if that’s… That’s probably not, I think that’s the advisors who have done goal-based planning and MoneyGuidePro for like 20 years when they think goal, they think dollars. And I think that conversation then ends up being kind of not as effective with the client as one you would be like you were like…
Rob Rickey:
That’s a great point.
Reese Harper:
“Hey, what do you want?” And as soon as you say like a goal, that’s why I’ve avoided talking about it because I’m…
Rob Rickey:
It’s a great point.
Reese Harper:
And the advisor starts to, like, the goal needs to be quantified. The client is like, wow.
Rob Rickey:
Look, let me look at the, I love that and I agree with it.
Reese Harper:
You’re not disagreeing with it as the…
Rob Rickey:
No. I’m not disagreeing with you.
Reese Harper:
I’m just complaining today, Rob, I’m not adding any…
Rob Rickey:
But listen, let’s talk about the CFP Board then. Right? If you’re giving investment advisory services, you have to be offering financial planning.
[laughter]
Reese Harper:
I know. Yeah. This bothers me.
Rob Rickey:
Right? Now, the great thing about that, to be fair to the board, they don’t define what needs to be in that plan for you specifically, but…
Reese Harper:
Very helpful. Thank you.
[laughter]
Rob Rickey:
But I do think it sets the tone for why advisors feel the need to kind of really set more quantitative goals. Right? But look, good advisors are on the emotional side with their clients. And I think they’re doing what you’re saying. I think that’s…
Reese Harper:
Yeah, it’s tricky, right? I just like spurring this conversation. ’cause I know I’m like, there’s about a third of our audience just kind of a little frustrated with my pejoratives around goals now. But I think that we need to be serious about the types of conversations that are helpful for the plan participant in 15 minutes and 20 minutes man.
Rob Rickey:
And let’s talk about that a little bit ’cause again, I think there’s probably, the truth probably lies somewhere in the middle, right? You need to be somewhat quantifying those goals, but also.
Reese Harper:
This is the root but behind elements, this is kind of the level of precision that I was hoping my academic mind would inspire, but I’m a slow, people don’t catch onto my taste very quickly, Rob. It takes a while. [chuckle] So like, when I look at the element scores, I’m like, “Okay, I can just like look at these and because the math is reasonably trustworthy and simple, then I’m able to say, “Let’s talk about what we want now within reason because I can.” ‘Cause that’s the issue, right? Is what do you want? Well, within a realm of like remote possibility. You can’t be like, what do you want? And financial planning marries your dream with where you’re at. It’s kind of more like financial planning helps you get about 25% better than you could have been on your own. [chuckle] And I think coaching and consulting and emotional jobs, like a special piece of advice could change someone’s life and create exponential change in terms of the joy, happiness they feel. But the standard rank and file kind of functional financial planning tasks of tax management, better investments, all the stuff that we know is it’s gonna augment a trajectory, but it’s not gonna like invent a new starting point. Right?
Rob Rickey:
No, but there are decisions that people make that can have significant impact.
Reese Harper:
Let’s talk about it. Yeah. I wanna hear. Yeah, they’re big. Like savings rate increasing.
Rob Rickey:
Well, yeah, or even just let’s talk about the choosing between priorities, which my generation and generation Xs and the sandwich generation, whatever you wanna call it, dealing with that, right? Kind of trying to pay for college for your kids. You’re thinking about retirement, right? You’re 10, 12 years out. How do you make all that happen? Like there are really very big decisions there that can change the end game in terms of achieving a goal. And I’m gonna say that because it’s important, right? And that…
Reese Harper:
And what they, yes. Or what they want is they want their kid to be able to get a good education.
Rob Rickey:
But there are decisions there that’s not just about saving $1,000 here or whatever.
Reese Harper:
Yes.
Rob Rickey:
It’s about, hey, do they need to go to that in-state school or out-of-state school? Do they start at a community college and then go to the school of choice. Right? There are ways.
Reese Harper:
There’s a lot of value there. That is a lot of value in that conversation.
Rob Rickey:
I was just talking to someone the other day about this. I have my daughter’s in her second year of college. She goes to out-of-state school. Right? If she had chosen to go to an in-state school, it probably would save me a hundred grand over four years, right?
Reese Harper:
Yeah.
Rob Rickey:
So, fortunately I was in a position where we had the savings to pay for her to do where she wanted to go. But if you’re struggling to do what you wanna do, as you would say it, there are decisions there that can have a huge impact on still achieve the child’s goal of getting them the parents’ goal and the child’s goal of getting an education. And then also helping you achieve what you wanna do in your life.
Reese Harper:
Yeah. It’s so true. That’s a great example of one of dozens of functional conversations that are very pragmatic. They save lots of, and lots of money. It’s a, sorry, those types of decisions save people lots of money, right?
Rob Rickey:
And by the way, think about that planning for 18 years in a financial plan as opposed to the functional conversation we just had about it. So it goes to your point right on those conversations and those tidbits that are so important to the individual, right? And helping them achieve…
Reese Harper:
Yeah. It’s like, I think it really is like when you’re talking about one, like a plan, I mean, for the most part, what I’m trying to do is make it to where these plan participant and smaller client interactions can be effective, very effective and follow the Hippocratic Oath. [chuckle] Which is like, first thing we do here with this client is we’re not trying to hurt them. We don’t wanna like send them down the wrong emotional angle or the wrong functional angle. So like, let’s teach them something, let’s make a decision. And I still think that’s something that I haven’t. I’m curious what’s in your mind about how you do that.
Rob Rickey:
So let me tell you, this’ll take us back. All of this will take us back to how I view our services at Straight Line and what we’re looking to do, right? And I’m gonna go to the plan sponsor and think about how advice is delivered in plans. And I always use the term called the full spectrum of advice.
Reese Harper:
Okay.
Rob Rickey:
So when I think about an employer-sponsored plan, I think about people are on their own financial journey and there are different points in their financial journey. And they also like to get things different ways, right? They want to get advice, different ways they consume things differently. So you really have to have multiple advice offerings within a plan to try to maximize the number of individuals in the plan that get the advice they need for where they’re at. Which is really kind of goes back to your point, like, advice is great, but if it’s not for where somebody is at in their financial journey and it’s not the way they want it, it’s probably not going to add the value.
Reese Harper:
There you go. I think a beautiful way of saying it. If our goal here is to add value, add the most amount of value to a person at any given time, there has to be some level of prioritization that we focus on.
Rob Rickey:
So it makes me think about Burger King, right? The way you want it. [chuckle] I’m dating myself a little bit with that one. But…
Reese Harper:
I do, I did. I drove to Burger King and I liked the chicken sandwich back in the day I did like it.
Rob Rickey:
Let me tell you something.
[overlapping conversation]
Reese Harper:
I haven’t been in like a decade, but it wasn’t…
Rob Rickey:
The best. Me neither. But the best classic chicken sandwich on the market still today, probably.
Reese Harper:
I think you’re right. If you forced me to have to go to like down the middle fast food franchise chicken classic from, it’s gotta be 20 years old. They haven’t changed a that thing. It’s not bad.
Rob Rickey:
No, it’s not. But…
Reese Harper:
I’m glad we took that diesel. This was important. Thank you.
Rob Rickey:
It was, it was. And everybody, let’s see what happens. If we can track what happens to the chicken sandwich sale.
Reese Harper:
I’m still waiting for my New York restaurant recommendations after the show. Okay.
Rob Rickey:
So, just going back to the whole concept. Think about what you see in a plan. And you see target date funds, you’ll see advice and guidance services offered by say the record keeper and maybe even full wealth management services by a record keeper. And all of that is kind of services that are at no additional cost ’cause it’s built into the plan. You may have custom portfolios or a managed account solution that’s delivered through a consultant, maybe a Morningstar or if it’s in modeling service, mostly based upon your risk and your balance and your age, to get to a balance. But what it lacks is the ability for that participant to hire an independent advisor to provide more fiduciary advice around their portfolio and the planning services to answer the questions we’re talking about for where they’re at in their financial journey.
Rob Rickey:
And I think what we’re looking to do is go to plan sponsors and say, look, we’re not a traditional planned consultant, but we believe if you marry our services with the other advice services, and by the way, let’s also include financial wellness because, ’cause financial wellness is an important part of the advice spectrum. And it’s a great example because it’s very heavily focused on those individuals like building good behavioral habits, right? How to save, how to get outta debt, right? All of those things. But really, how useful is a financial wellness program for the 54, 55 year old who’s got $750,000 and doesn’t know what they wanna do or is thinking about what they wanna do in seven or eight years. And I think if we can get plan sponsors to stop looking at those advice channels as in silos, but to figure them as a packaged offer and the value of independent advisors and the ability for a participant to work with an independent advisor more holistically, I think then you’re in a position where you have that full spectrum of advice within a plan. And no matter where somebody is in their financial journey or how they like to receive advice, they have options.
Reese Harper:
Oh, interesting. That’s great. Yeah, man, I guess what I’m hearing here, I want to like dive into on a couple of items, talk to me about what is the state of the financial wellness market as you see it right now. Are you familiar with the main competitors in that space of who is trying to provide those services? I’m familiar with like a Dave Ramsey service that there everyone’s got stuff.
Rob Rickey:
I am looking at those services I am familiar with.
Reese Harper:
You’re getting up to speed on them.
Rob Rickey:
I’m up getting up to speed on them. I have pretty good familiarity with them. What I would tell you is in general terms, when I think of financial wellness a couple things come to mind. One, I think financial wellness got derailed by COVID, right? Because there was a huge focus on mental and physical wellbeing, right?
Reese Harper:
Kind of pushed by. Yeah. It kind of, that was one of the very few times when the American Psychology Association saw money kind of go to the number two slot. Healthcare kind of was like dominant. Yeah.
Rob Rickey:
The other thing is, and that like, wellbeing was part of the traditional benefit packages. And I think financial wellness for a lot of reasons, and I think this is changing in there are some of the platforms that actually are doing this, but it was also tied to the general benefit package. Instead of it like being tied to more to the retirement plan side. Right. And I think the programs that are tying more to the retirement plan side are going to have a better opportunity of adding value. And my feeling with financial wellness attract…
Reese Harper:
Why?
Rob Rickey:
I’m sorry.
Reese Harper:
Why would the ones that tie… Why would retirement be more likely to…
Rob Rickey:
Well, because, I think when you think about financial wellness, it is a lot around how to, again, we’re gonna go back to this goal thing, but you know, just for the purposes of this is getting people on right track so that they, they have a better outcome in retirement. And I think Tony has…
Reese Harper:
You’re saying that skews younger, right? And…
Rob Rickey:
Yes.
Reese Harper:
And probably [chuckle] the people that have provided products to that part of the market have been kind of boring. I mean, I’m seeing it so like, I don’t know a young person who’s like, I’m looking for a financial wellness program at work. But they do wanna meet with the 401k guy. I feel like they always wanna meet with that 401k person. But I don’t know.
Rob Rickey:
I think if you put that in the spectrum of the advice offerings that are really geared through the financial, through the retirement plan. Right, think about it, if we weren’t talking wellness, what would be the lowest level of advice in a retirement plan? It’d probably be the target date fund. Right?
Reese Harper:
Target date fund. Yeah.
Rob Rickey:
So now you kind of have wellness, let’s say to the left of that. Right? And that really helps the younger employees come in and look, financial wellness is great because you can get great general education to the masses. And there is value for maybe a lot of people in, even in various stages of the process. But again, when people need more holistic advice, it’s not a financial wellness platform, right? It’s gonna be that managed account solution. It’s gonna be the record keeper providing advice and guidance services. Or it could be their already the independent advisor that they’re working with. But that advisor can’t manage the assets in the retirement plan. Collectively, I think these things are more complimentary than competing with each other. And I think…
Reese Harper:
They target different consumers, right?
Rob Rickey:
Well, it’s really got two layers. It’s where are you in your financial journey and how do you consume advice solutions, right?
Reese Harper:
Oh, yeah, how do you?
Rob Rickey:
So it’s really two things, right? You could have a younger person who wants an advisor or you could have somebody who wants to do it themselves and then you could have a 52 year old that also wants an advisor.
Reese Harper:
And so what you’re pushing for, it sounds to me like is an a… If the right solution, if we could magically snap our fingers and it could just appear, the right solution is aware of preferences, like preference aware, right? And demographically responsive too. So like there’s preference, but that’s a filter on top of demographic, which is old versus young versus middle versus retiree versus not.
Rob Rickey:
Most definitely.
Reese Harper:
But you could have preference at lots of… At different life stages, there’s still preferences, like Forrester’s research around delegator to validator to self-directed to disengaged.
Rob Rickey:
You can have it at any stage, so right? So it’s multi, it’s smooth.
Reese Harper:
Isn’t more appropriate to filter by the consistent thing? For me I’m like, if I know this person’s a classic delegator, then and they don’t want to be doing any of their own research or kind of like entering in data, that’s a… Yes, now I still have choices to make in terms of what age are they, what age are they and what’s appropriate. If they’re young and they’re a delegator and they got no money, that’s where I feel like that’s a problem. [laughter] So it’s…
Rob Rickey:
But your financial wellness platform can help solve it, right?
Reese Harper:
Yes, if it’s engaging enough, but most of them are like a PDF to read, man. I mean, yeah.
Rob Rickey:
I think the newest systems out there are starting to really leverage.
Reese Harper:
Attract. Cool.
Rob Rickey:
And they’re able to really do some things that actually help to create the right behavior.
Reese Harper:
What’s your top three? Can you tell me your top three?
Rob Rickey:
I don’t wanna do that yet, Reese.
Reese Harper:
Okay, good, you’re…
Rob Rickey:
Maybe that’s a follow-up conversation, right?
Reese Harper:
Okay, alright. I like that.
Rob Rickey:
Because to be fair I’m talking to multiple of them and I don’t want to…
Reese Harper:
This is good, I appreciate that. That’s a very measured thing to say, it doesn’t surprise me from a revenue leader. I like it.
Rob Rickey:
What I will say about that though, is I’m looking… So like everything that’s challenging, I’m looking for a partner that fits well with what we wanna do, right? Because if I go to work into a plan and we want to deliver advice, really to the participant who really has the asset base and wants holistic advice and planning, right? As what they need. But we wanna also be responsible and get general education and communication to those plan participants. I’m looking for a partner in say, a wellness program that can help deliver that scale and that penetration to the masses, and also allow those people who actually feel like they need more than a wellness program gives, that they can find their way to us as the advisor to provide the actual advice. And I think that’s a win-win for everybody, by the way, it could be that it’s direct with a plan sponsor, maybe we have a consultant who’s a traditional consultant who doesn’t wanna work at the participant level. But they really need to have a solution, right? Having a financial wellness and an advisor who only wants to do advice at the participant level is a great way to anchor themselves in that plan and achieve better outcomes for everybody.
Reese Harper:
Yeah, we’ll have to wrap here in a minute because I’ve taken too much of your time today, but we… One of the things that I remember was in my third or fourth year of my career, I got in with a big, a couple of big plans, when I was really young in my career, one of them was a big restaurant franchise and another one was a large like outdoor mall retailer. And it was like, it was just magic, once you got in, man, you were in, and it was just like participant meetings and I don’t… For me, I ended up as you might expect, once I figured out how that would work, I got interested about something else, but it was a really great experience. And when I hear you say that anchor in, I’m like, man, it’s a great reminder a lot of advisors, they spend so much money and so much time actually, one at a time, bottoms up sales. And it’s like if you can get inside of one plan sponsor…
Rob Rickey:
Well, that’s the scalability of the model, right? If you can get into the plan sponsor and you can provide value in the general education and you should be in a better position to have those participants drive to you for advice, holistic.
Reese Harper:
Yeah, and a lot of these individual, a lot of these retirement plan shops, I feel like struggle to get that personal advice business up off the ground too. So there’s actually a really… That’s an interesting niche.
Rob Rickey:
Well, it’s an interesting dynamic because I think it’s been a huge focus of many shops, it’s driven a lot of the merger and acquisition activity over the last couple of years, as consulting firms try to get into the wealth management or the participant level services. And I think a lot of that is because they feel fee compression on the consulting side, so they need to add services. And they also do wanna anchor themselves in that plan, because if they don’t, someone may backdoor them on the…
Reese Harper:
Totally, man. Yeah, they totally will. It’s an interesting dynamic there, but they feel… I feel like the retirement plan business for some reason to me just like feels a tiny bit more like a B2B sale that is really strategic with like a lot of moving parts. Like it’s just… And then some people, some professionals don’t have patience for that. And so it’s at least if that’s where the private wealth management business, I feel like for most advisors, they lean more towards at least their background has been more hunt and kill one at a time and go faster. ‘Cause they gotta get their business up off the ground.
Rob Rickey:
Yeah, I think, look, to that point, look, the world is changing rapidly around us in the advisory business, right? And I think to be competitive and to sustain yourself, I’m not sure… That’s a tough model in the future, I’m not gonna say it’s not possible, but my feeling is to be successful, you have to find your niche and you have to find a niche where you can scale. And a lot of our participant clients are onesie twosies as well, right? Where we serve them, and that’s why we’re going back to that focus of how do we convince plan sponsors that there’s value in having this full spectrum of advice and adding this kind of chassis of access to independent advisors to the platform.
Reese Harper:
And they should eat, and you guys should eat some of the cost, this is a real…
Rob Rickey:
Yeah, I think, look, the beautiful thing about it is you can deliver, like take what we did at TIAA, just to go back for a second and I know you’ve gotta go. But this is an interesting thing, people will argue, “Well, you’re gonna open up a plan to independent advice and a participant’s gonna pay a traditional investment advisory fee for that advice.” Well, I’d say, “Yeah, that’s fine.” But you’re not socializing it across the plan, you’re only those that choose to hire the advisor are paying the fee. And it’s coming out of there if the plan allows it and the record keeper can support it, it’s coming out of their retirement account, right? So the other thing about that is a lot of those participants couldn’t afford to pay for that advice if it wasn’t coming out of their retirement account.
Reese Harper:
That’s the thing, man, it’s a huge factor, it’s a huge factor.
Rob Rickey:
Yeah, so I think there’s a combination of win-wins, the key is getting plan sponsors to understand the whole idea of the spectrum of advice and understanding how it plays in terms of their fiduciary obligations and supporting what they’re trying to achieve for that plan.
Reese Harper:
Okay, man, the last question. I slacked someone and told them, buy me five more minutes ’cause I’m dying to know the answer to this question. But we’ll see, do you have a vision for how you’re going, how you would say this can actually be executed on? Because it’s like, if I have seen that model of like just build a plan assets a lot and it’s a technical challenge, it’s pretty big. And I feel like if you can control the assets and you can control the plan, then it’s one thing. But talk to me a little bit about like, what’s practical there? Like what’s gonna be practical here?
Rob Rickey:
So the answer to your question is, yes, I have a plan, look, what I did at TIAA was I opened plans to independent advice, right? Now, the fortunate thing to your earlier point, TIAA was pretty progressive in the fact that we had the ability to support that. So you need to look at record keeping…
Reese Harper:
How many people are like that? How many plan sponsors and custodians are like that?
Rob Rickey:
There are more and more capabilities on the record keeping platform for advisory fees, and quite honestly, with managed account solutions it’s becoming a pretty standard plan feature to allow for the payment of advisory fees. It’s just thinking about it differently into that, not that managed account custom solution to more of that individual relationship with an advisor of the participant’s choice, right?
Reese Harper:
Yeah, yeah.
Rob Rickey:
But there are key components to that, right? Is getting the plan sponsor to understand that and how the model works. So that takes real structure around how to communicate that, there’s the legal side of that getting them comfortable with the fiduciary responsibilities. And then there’s the real, the big challenge and you asked me this, what are some of the growth challenges? One of the challenges in this business is if you’re working with participants in employee sponsored plans and you’re working with 10, 15, 20, 50 plans, and you have say standard five portfolio allocations, those plans could all have, will all have different fund lineups. So you now have 50 plans times five portfolios, that’s 250 models in that. So how to do that to bring that value in, to get paid out of the plan and to find solutions to scale that operational side of how do you get access at the record, and you’re dealing with multiple record keepers now. So it’s not a business faint of heart for many advisors don’t wanna touch that stuff.
Reese Harper:
It’s exciting, guys, I’m excited for you and excited for what you’re building. I just think you’re gonna come out with a really interesting solution and it’s just cool to kind of be able to interview you while the work is in progress and kind of see the wheels turn in. So thanks so much, Rob, it’s been a pleasure.
Rob Rickey:
No, thank you.
Reese Harper:
Definitely look forward to another conversation and let’s keep in touch as often as we can over the next bit as we can both keep learning.
Rob Rickey:
Most definitely, and I appreciate your time. Thank you very much.
Reese Harper:
Yeah. Thanks so much.
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Abby Morton:
Next time on Elementality.
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Eric Rodriguez:
I really just ask questions and get people to open up and then they just overshare and overshare and overshare, it’s almost like therapy. It’s like financial therapy and it’s fun for me, it’s fun for me ’cause all I’m doing is just repeating what people are telling me.
Abby Morton:
Yeah, yeah. [chuckle] You’re like, “I look like the amazing person, I’m just asking the question.”
Eric Rodriguez:
So you wanna get out of debt, you want to buy the new car, you wanna go on vacation, you wanna do this, you wanna do that. Okay, well let’s do it. And they’re like, “Wait, what?” “Yeah, what a concept, right? Let’s action these things and let’s make a plan so that you can actually live your ideal life.”
[music]
Abby Morton:
To find out more about Elements, go to getelements.com/demo. Elementality’s executive producers are Reese Harper and Carl Richards. Elementality is produced by Tad Henderson and directed by Abby Morton. Have a good one.