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Ways to Grow Your Retirement Business

Ways to Grow Your Retirement Business

Join Josh Brown, CEO of Ritholtz Wealth Management, and Aaron Schumm, CEO of Vestwell Holdings, as they discuss ways to grow your retirement business.


Josh Brown: Hi, I’m Josh Brown from Ritholtz Wealth Management.

Aaron Schumm: I’m Aaron Schumm, founder & CEO of Vestwell.

Josh: So Aaron, as you think about the opportunity for advisors to do more in the 401(k) space, where are those opportunities, what are they, what should someone in my shoes be thinking about?

Aaron: There’s no shortage of opportunity in this space, that’s for sure.

Josh: I can’t believe you would say that.

Aaron: [laughs] It’s something that we realized rather quickly. It’s interesting so if you look at the landscape, right, to date a lot of retirement specialists always chase the large pockets of money.

Josh: Of course.

Aaron: But 90% of plans are less than five million dollars. But you’re 90% of plans are less than 5 million dollars right across this space. And there’s a half million of companies in American that have nothing at any given moment right, so that green field but there’s ways to build a practice around that so-

Josh: Say that again: 500,000 companies with employees that are not offering them anything.

Aaron: That have nothing today. Zero 401(k).

Josh: What is their problem?

Aaron: Typically, to date, it hadn’t been accessible enough, or it was just too expensive for people to get into the market and do it. And a lot of the time, when you’re an early stage company, you’re going a thousand miles an hour.

Josh: It’s not even in the top 10 priorities list.

Aaron: You don’t wake up in the morning and think about it.

Josh: Because if you don’t prioritize the other things, there is no company. So of course, makes sense.

Aaron: So now if you can make it really accessible and at a price point that makes sense where someone’s like “I can do this and it’s not going to derail my entire day, awesome.”

Josh: So are you saying that advisors should be focused on companies that are starting from scratch, or not necessarily?

Aaron: Not necessarily. You can, right, but you have to be able to make money doing it because if you’re getting paid a basis point fee for that–or maybe it’s a flat fee, which is great—but if it’s just a basis point fee, then you’re getting zero on some basis point.

Josh: And with startups, you can end up setting up great plans for companies that don’t last 18 months.

Aaron: Sure.

Josh: And there’s a lot of upfront work for not a lot of benefit.

Aaron: Yes, but to that point, if you can do it in a really scalable fashion where there’s not a lot of upfront work: you can get a proposal created and get a plan onboarded in a matter of minutes.

Josh: And there’s less risk to how much time you’ve invested.

Aaron: And you could build that. So couple quick areas of opportunity: there’s the private wealth practice client that include the doctor’s office, the lawyer’s office, the tech startup that has a business, that’s sustainable, that you’re managing the personal assets of that founder or group of founders. And they turn to you and say, “Hey Josh. I love what you do for me on the private wealth side. How about my company? I need a 401(k).” Right?

Josh: Right.

Aaron: Immediate opportunity right there to do it. And to do it at scale.

Josh: Or we have one and everyone hates it.

Aaron: Or you have one and everyone hates it.

Josh: Which we hear about. Everyone hears about it.

Aaron: I came up with this idea because I used a John Hancock plan and I was like absolutely not. I mean, they built a great business but it’s not great for a small business that’s trying to do what we do. So that’s opportunity number 1. Opportunity number 2 is the retirement plan consultant, who’s been focused upstream, that identifies that there’s 90% of these DC plans are down market—how do I do it? This is a great way for them to use their level of expertise to walk into that market segment and start to take that and shape that story in a small market opportunity but do it in a scalable way.

Josh: And that segment has not been picked over? Like they’re being ignored?

Aaron: They’re either ignored or they’re paying astronomical fees for a clunky product.

Josh: Right. Something they put in place in 1995 but nobody’s looked at since.

Aaron: Absolutely.

Josh: And that’s everywhere.

Aaron: And I lived through this. In my last life, we paid an enormous…over 300 basis points for a platform. And being a fintech provider and having a team of CFAs that I work with-

Josh: Imagine everyone else who doesn’t even know what’s going on.

Aaron: Absolutely. So that was the impetus to say, “Hey, we have to go build Vestwell.” Because there is a way you can service this segment of the market that drastically needs it that doesn’t know how to do this and do it the right way.