Open Windows Investing by TPFG

Janet Lee: Self-Directed Brokerage Account Window Opportunities

January 20, 2022 Julie Mochan Season 1 Episode 2
Open Windows Investing by TPFG
Janet Lee: Self-Directed Brokerage Account Window Opportunities
Show Notes Transcript

In this episode, host Julie Mochan welcomes  Janet Lee,  AIF®, BFA, Senior Vice President of Sales at The Pacific Financial Group, Inc.  Janet  will give you everything you want to know about the self-directed brokerage account (SDBA) marketplace, and how to navigate it.🚢
We discuss the lack of customized advice for participants of employer group retirement plans, and how to solve for the problem.  Learn from one of the best in the business about how utilizing self-directed brokerage account windows and professional management can help your clients and while expanding your advisory business.

🔦 📝 direction and instructions on how to make the opportunity of self-directed brokerage account (SDBA) management a part of their successful business plan

  •  🎯 acquire and help clients that need investment advice at the participant level in their employer's group retirement plan.  
  • 🎁 get SDBA best practices in 401(k), 403(b), and 457 plans throughout the United States.   
  • 🎬Enjoy compelling interviews with experts, strategists, advisors, CEOs, etc..

Host, Julie Mochan takes listeners through interviews with a "no nonsense |no need to rollover" approach to the many questions and possibilities of efficient frontiers....and beyond! 🚀
TPFG, our success depends upon your advisory business flourishing 🌳, by doing what is in the best interest of every customer.  Sharing In-Plan advice to those who need it most, no matter your zip code, status, or hairstyle.✨
Since 1984,
The Pacific Financial Group, Inc. (TPFG) has built a rich tradition of serving financial advisors and investors with best-in-class investment solutions and unrivalled customer service. The firm was founded on the single premise that everyone, regardless of their account size, should have access to high quality investment opportunities and independent expert advice.
Today, we are a dynamic Wealth-Tech firm that blends over three decades of traditional asset management experience with leading-edge financial technology know-how, to provide products and services that empower financial freedom for advisors and their clients.

Want to hear something on the podcast?   Make it Happen  - Contact 
Julie Mochan today.
Disclosure: This podcast recording has been prepared and made available by The Pacific Financial Group, Inc., also known as TPFG, a Regi

Important Disclosure: This podcast recording has been prepared and made available by The Pacific Financial Group, Inc., also known as TPFG, a Registered Investment Adviser (RIA) offering advisory services. Information in this podcast is to be used for informational purposes only. The information contained herein, including any expressions of opinion has been obtained from, or is based on sources believed to be reliable, but its accuracy or completeness is not guaranteed and is subject to change without notice. The information should not be construed or interpreted as an offer or solicitation to purchase or sell a financial instrument or service. Any expressions or opinions reflect the views of the speakers and are not necessarily those of TPFG or its affiliates. TPFG does not provide tax or legal advice. Investors should consult their financial, tax or legal professionals before investing. Past performance is not a guarantee of future results. All investments contain risks to include the total loss of invested principal. Diversification does not protect against the risk of loss.

Episode 2:  Open Windows Investing by TPFG  with Host: Julie Mochan and Guest: Janet Lee

[00:00:00] Julie Mochan: Hello podcast listeners in the land of podcasts.

[00:00:11] Hello, financial professional, looking for a podcast that can help you. Today's your lucky day. This is Open Windows. My name is Julie Mochan. Open Windows is a podcast created

[00:00:22] especially for financial professionals. 

[00:00:25] Looking for opportunity and information in a space that they may not have known existed or that they could work in before. I'm talking about self-directed brokerage account windows. 

[00:00:37] Julie: Welcome to Episode #2 brought to you by The Pacific Financial Group, Inc. So again, the podcast is for financial professionals looking to get help when it comes to managing assets within a self-directed brokerage account so a self-directed brokerage account window is what. It's a window that the plan sponsor/employer can “switch on” or have added to a group retirement plan that then the participant can either, self-direct their own investments. or they can choose to work with an advisor - which studies show is usually the way to go. 

[00:01:07] And if you're an advisor and you want to help your clients and prospects who have assets in a group retirement plan account that allows for self-directed brokerage -

[00:01:15] Then you are going to want to listen further because today my guest is Janet Lee. Who is a really terrific Senior VP of Sales at The Pacific Financial Group. I've known her for about six or seven years. And she's a go-to for anyone who wants to know anything they could possibly ever want to know about self-directed brokerage account windows and managing assets within those accounts. 

[00:01:35] Today we're going to talk a little bit about, bigger picture plan design. Plan sponsor vs plan participant and, just exactly what The Pacific Financial Group can do for you to help in this space. 

[00:01:46] Julie: If you're not doing this for your clients, you may both be missing out.

[00:01:50] So welcome to open windows, Janet Lee. 

[00:01:54] Janet Lee: Thank you for having me.

[00:01:55] Julie: Janet. There's so much that we could talk about, obviously, and I will have you back on the podcast at a later date, but for today, I just want to know 

[00:02:04] what is really going on in the retirement plan industry, regulations aside. Where do you want to start?

[00:02:11] Janet Lee: Well, I think the best place to start is to just talk about the marketplace and what it looks like. Every advisor under the sun is competing for the rollover.

[00:02:21] This is an underserved marketplace with $7 trillion in assets up for grabs, so in terms of an advisor and why they would consider adding this to their practice, simply put it's a gigantic marketplace with very little competition…right now. And what I mean by that is that over time advisors are going to get involved because their clients want it and because their clients need it.

[00:02:46] With that being said, in terms of working with The Pacific Financial Group and why they would want to partner or consider partnering with The Pacific Financial Group, we've been doing this for a really long time.

[00:02:56] Julie, you, and I know that this business is not easy to navigate. We have custodial relationships pretty much with every single custodian in this space. There's a few that we can't work with because they limit advisor access, but we've got custodial relationships across the board.

[00:03:14] We've partnered with world-class managers, such as BlackRock Fidelity®, Invesco, Janus Henderson. Capital Group | American Funds being another one of them. And, for the advisor, 

[00:03:25] This is a way for them to simply  meet their client's needs. Your clients have been asking for help, they want the help, they need the help when they get it, they're a whole lot better off. So that should be the primary reason to get involved in this marketplace.

[00:03:40] But beyond that, there's also gigantic opportunity. This is a way for advisors to start getting compensated on work that they may have already been doing, which means they're taking on the liability and probably not being compensated for it. So this is a way to formalize that relationship and also to start getting compensation on the work that they're doing.

[00:04:02] Janet Lee: The other big, important piece about this is that when it does come time for rollover, they are not competing for it. They're simply re-papering it. They've been helping their clients along the way with these assets. And when it's time for rollover, it's. A few pieces of paper to just switch it over from the format of a 401k to an IRA.

[00:04:24] Julie: That was perfect. Explaining the marketplace and the opportunity that is out there for advisors and their clients. Let's now switch gears a little bit and talk briefly about the saver, the end investor. 

[00:04:36] It seems to me that there is a lot of research, whether it is government or private industry backed, on the retirement plan saver, the end investor. 

[00:04:47]  I think one of the most popular studies I've seen, is the Schwab study. I'll put it in the show notes. It was alarming because, their plan services research survey found that, someone retiring is going to possibly need, like  $1.7 million on average to retire, and they're not investing enough to reach their goal. Another piece of that study, and again, I have to look at the statistics again, but I feel it was over 

[00:05:09] 60% of plan participants surveyed said that they see themselves as savers, and not investors.

[00:05:14] Then add to that, that social security looks like it'll “run out” if nothing is done in Congress by approx. 2035, and people are still not talking about advice for plan participants. What do we do about that lack of advice to get people to where they need to be, because

[00:05:33] you can't rely on the government to save you, or regulations for plan sponsors. What do we do? 

[00:05:39] Janet Lee: I completely agree with you. I think what is stunning is that you're hearing retirement crisis, over and over again. And how do you address that? How do you solve for this retirement crisis?

[00:05:53] And you and I  have seen study after study, that suggests that when participants receive advice, they are so much better off than when they do it on their own. Arguably the 401k, that's going to be a retirees largest asset going into retirement, and yet they can't get personal advice on it.

[00:06:14] So there's a huge disparity out there. Where you take folks that are contributing, you know, biweekly and not really doing anything else. They're not getting the advice. What we do know is that when they get assistance that their contribution rates go up, that they stick with their plan and that they have a better chance of getting to their retirement goals. And I completely agree with you. Why aren't planned sponsors talking about this? This is the way that we help retirees or potential pre-retirees get to their retirement goals on time, with enough money. When I look at it objectively, I can't think of a better solve, at least in the interim to bridge that gap.

[00:06:58] Julie: I've literally seen in my practice in the past, 

[00:07:01] Very smart, educated professors with all of their money in the money market. Which, you know, 20 years ago when the money market was paying 6% and there wasn't inflation, that was not, uh a horrible thing, but today when inflation is 7% and the money market is not paying anything, you're obviously losing money. 

[00:07:22] Janet Lee: Yeah. and that's one of my favorite stories, which is something that's quite unfortunate, but I think speaks to this exactly. One of my advisors had called me a few years ago. And she said, “Hey, can you help me out with this IRA that I'm doing my clients rolling over?”

[00:07:41] And I said, “sure, send me over the  statement, I  would like to take a peek”.  Her client had $650,000 ready to roll over into an IRA and, case in point it was in a “stable value fund”. And I told this advisor, “this is exactly why you need to get involved early”, because the $650,000 account, could it have been a million dollar account -  we'll never know. And I think that's the unfortunate part. The $650,000 will it, you know, fingers crossed be enough to get her to where she needs to be. But if she had gotten that advice along the way, that account, would have been exponentially higher than what it was on the day that she was ready to roll it over.

[00:08:25] Julie: Yeah, that's sad, but let’s break that apart. You have the participant that can't get help, or they don't know how to get help; you have the plan sponsor/employer that, you know, they have a business to run. They're not there to run a retirement plan, so they have an advisor to the Plan, 

[00:08:43] but the advisor to the Plan is there to protect the Plan Sponsor, not necessarily the participant.

[00:08:52] Janet Lee: I think there have been some changes to plan design that have been helping. You've got auto-enrollment, you've got auto-escalation,

[00:08:59] features like that are fantastic. I think that is helping overall, but what we need to actually address is that every single person is different.

[00:09:12] They have different objectives, different needs, they have different goals. And so that advice needs to be personalized. So, on a plan design level, it's great that we have these vehicles to save for retirement. It's great that we offer these plan features that enhance the probability of getting to retirement, but what's missing is that critical piece, which is the personal advice.

[00:09:39] We've talked about target date funds, but those are built for the masses. You were born between 1975 and 1985? Boom, you get this target date fund, but if you look at that segment of the model, each person that is part of that segment has a different risk tolerance. So how do you account for that?

[00:10:01] How do you make sure that, that particular person in that gigantic demographic gets what they need? 

Without an advisor, you can't 

Yeah. And beyond that, you know, when we talk about the Dalbar study and why that is so important to the investment landscape it's because people make emotional decisions.

[00:10:22] And one of the biggest values that an advisor brings to the table is keeping the  participant, the client on track, “Hey client, we have a plan: markets go up, they go down, but this is our long-term goal.” And that is the part that I think is most critical in terms of making sure that the client, A. participate, B. maximize his contributions and employer match and C. stays the course.

[00:10:49] Julie: I think some people are staying the course because they've forgotten their username and password and can't get logged into their account. [laugh]

[00:10:57] Janet Lee: [laugh] Well, that is definitely part of it. But, going back to your original story of how someone has stable value fund, they elected that they didn't know that they were able to pick other things, they forgot their username and password, and they were in a stable value fund for 20 years.

[00:11:13] So staying the course, I think, um, can maybe not work in your favor, but certainly when you're working with an advisor, I think that it has a ton of benefits. 

[00:11:24] Julie: Janet, let's say I'm a new advisor in the business, or an advisor that doesn't know anything about this piece of the market. What's a great starting point?

[00:11:32] Janet Lee: So, from an advisor wanting to get started who doesn't know a lot about this space, the best place to start is to call our Sales Desk. We've got a great team who are very highly skilled, very well-educated that can walk them through what this opportunity means to them, what it means for the client,

[00:11:53] and while we can't work with all 401(k)s, 403(b)s, and 457, we can work with a good majority of them. And so really start by reaching out to your regional sales representative and they will get you everything that you need to get you started. 

[00:12:07] Julie: Well, now that seems super easy. Let's talk about where to look for the opportunity. This is something that I mentioned in the first Episode. Sort of like, homework for somebody to just look in your own book of business to start to find where the opportunity lies, because you want to be able to manage your client accounts holistically. Anyway. 

[00:12:27] Janet Lee: Yeah. We like to call it “file cabinet marketing”, which means you're not doing a stitch of marketing.

[00:12:33] You are going through your existing book of business. You're separating your clients into two piles. Those that are working, those that are not working, do they participate in their employer-sponsored retirement plan 401k 4 03(b), or 457, collect the statements, get the names of the employers, get them over to our sales desk and our sales desk can help identify which ones we can work with.

[00:12:56] And that's it. It’s super easy. Yep. Uh, we'd like to make it as easy as possible. As I had mentioned this, isn't an easy space to navigate, but we're going to make it easy for the advisor. 

[00:13:09] Julie: We're the guides. 

[00:13:10] Janet Lee: We're the guides. Yep. 

[00:13:11] Obviously we will provide all of the background on who we are, what we do, all of that stuff, but beyond that, we will also help to identify the opportunities. And then once it comes time to write the cases, we provide checklists for making sure that the paperwork and the processing and everything from beginning to end,

[00:13:33] that is all accounted for. And our sales team is here to help usher any advisers through those processes 

[00:13:40] Julie: and The Pacific Financial Group, does the paperwork? Or, 

[00:13:45] Janet Lee: Uh, the advisor does the paperwork with the client, but we provide, in most cases, all of the forms that the advisor and client will need to get signed up.

[00:13:55] Julie: Right. So it's not like an advisor has to figure out how to make it happen. you just provide… 

[00:14:00] Janet Lee: We try to provide every, single thing that the advisor and client will need to get set up. From opening up that brokerage window all the way to getting it funded. We provide a checklist, which is literally a step-by-step guide that walks you through. These are the forms that we need. This is how you submit it to us. And this is what happens afterwards. So again, we want to make it as easy as possible. And I really think that because we've been doing this for a long time, we've gotten pretty close to what a perfect process would look like.

[00:14:31] Yeah, we can use that term, you know it's not a traditional account opening. So with that understanding, we do want to make sure that we're outlining every single step and that the communication is there along the way.

[00:14:44] Julie: I'm so thankful that you did this with me.  As this podcast progresses, we'll start to get into  strategists because, obviously one of the big things for an advisor is once you have your client in a spot where you can actually help them manage the money, the way it should be managed to their goals and risk tolerance.

[00:15:02] Janet Lee: That’s absolutely right Julie. I'm glad you brought that up. We do offer access to world-class strategists on our multi-strategy, multi-style, platform that we call Strategy PLUS ™  Julie: “It’s Stratactical” [laugh] 

[00:15:16] Janet: We are strategic. We are tactical. We've got passive, we've got active. We've got combinations of all four, but, these really are literally name brand, household name managers that have decades of experience, easily recognizable names. I think that give clients and advisors a lot of comfort seeing what our investment lineup looks like and feeling comfortable choosing one based on their risk tolerance.

[00:15:41] Julie:  Thank you so much for today. I'm going to have everything in the show notes that someone would need to get in touch with the sales team. And, I would like to be able to put your information in there if you're cool with it. 

Janet:  Absolutely. 

Julie:  All right. I will. 

Janet:  Wonderful. I'm looking forward to hearing from everyone, including you, Julie!

[00:15:59] Julie:   All right. There you have it until the next episode, 

[00:16:03] remember you don't need to work harder, just work smarter by…. Opening a Window. 

[00:16:09] This is Julie Mochan with the TPFG Open Windows Investing Podcast signing off. 

Disclosures:  This podcast recording has been prepared and made available by The Pacific Financial Group, Inc., also known as TPFG, a Registered Investment Adviser (RIA) offering advisory services. Information in this podcast is to be used for informational purposes only. The information contained herein, including any expressions of opinion has been obtained from, or is based on sources believed to be reliable, but its accuracy or completeness is not guaranteed and is subject to change without notice. Any expressions or opinions reflect the views of the speakers and are not necessarily those of TPFG or its affiliates. TPFG does not provide tax or legal advice. Investors should consult their financial, tax ,or legal professionals before investing.