Charlie Nelson is a retirement plan industry leader who needs little introduction, given his long tenure in high-profile roles at some of the largest retirement plan service providers in the United States.
Currently, Nelson is the chief executive officer of the retirement plan business at Voya Financial, meaning he is at the helm of a recordkeeper overseeing in excess of $220 billion in client assets. From that vantage point, Nelson can clearly see the rapid pace of evolution in the retirement planning space, which he says is being driven both by shifting customer demands and the ambitious visions of advisers, recordkeepers and asset managers.
Following the recent announcement that Voya will sell its independent financial planning channel to Cetera, Nelson agreed to talk in detail about the move. He noted that through the transaction, approximately 900 independent financial professionals serving retail customers will become part of Cetera. The Voya Financial Advisors (VFA) legal entity and approximately 600 field- and phone-based financial professionals who support Voya’s retirement business and clients will remain with Voya.
Below are Nelson’s responses to various questions about the deal, as well as the broader industry landscape that has emerged during the coronavirus pandemic.
PLANADVISER: The industry’s consolidation and merger and acquisition (M&A) activity has been an important unfolding story for several years now. How do you view this deal with Cetera in the context of everything that has come before it?
- 1 PLANADVISER: The industry’s consolidation and merger and acquisition (M&A) activity has been an important unfolding story for several years now. How do you view this deal with Cetera in the context of everything that has come before it?
- 2 PA: It’s pretty interesting but also challenging to think about where we could end up in, say, five or 10 years, don’t you think?
- 3 PA: So we should understand that the 900 advisers going over to Cetera perhaps have had more of an individual and family wealth planning focus? Who is remaining behind, the true retirement plan advisers?
- 4 PA: We know your passion on the coverage issue and getting more Americans to benefit from the retirement planning tools the industry has developed. I’m sure you are excited about taking this direction.
- 5 PA: And can you tell us more about what it was like working with Cetera on this? I know you cannot speak for that firm, but it is a big deal to send your partnering advisers over to its platform. What does this decision say to the marketplace?
- 6 PA: So, what comes next, in 2021 and beyond?
- 7 PA: One last question for you. It’s almost hard to believe the resilience and tremendous growth our industry has shown in the face of COVID-19. What does it mean to you to see this unfolding?
Nelson: The industry has indeed been through a lot of evolution, and I anticipate it’s not over by any stretch of the imagination. There is a lot of further evolution that can and will occur in terms of how we all, as growing businesses, interact with each other and with our clients. So I think we have seen a lot of consolidation and evolution happen at this point, but I would also say there is even more coming in the years ahead.
PA: It’s pretty interesting but also challenging to think about where we could end up in, say, five or 10 years, don’t you think?
Nelson: I agree with that 100%. The COVID-19 experience, for a start, has already changed how we act and interact with one another in this industry and in our economy as a whole. Think about the statistic, which I just read, that 82% of Americans have now had at least one telemedicine experience. We have seen whole new parts of the delivery economy emerge, as well.
I think the COVID situation has shown that we have all grown more comfortable with digital-first experiences. But we’ve also seen reinforced the importance of the workplace and of your employer. The workplace is where the American people look for their health, wealth and financial wellness solutions, and that’s where this announcement with Cetera fits in. Voya is reaffirming that we are an organization that is focused on serving employers and their employees in the workplace—in person, on the phone and through digital pathways.
PA: So we should understand that the 900 advisers going over to Cetera perhaps have had more of an individual and family wealth planning focus? Who is remaining behind, the true retirement plan advisers?
Nelson: Yes, that’s pretty much right, but let me spell a few things out. First of all, let’s look at the independent financial planning channel and the advisers who are going to Cetera. These advisers largely generated their retail books of business from non-workplace interactions. They will continue to do this at Cetera.
On the other hand, our advisers who we are retaining provide health, wealth and financial wellness planning solutions through the workplace. They have not had the same retail focus. As they have in the past, they will continue generating a lot of their leads in the workplace. To be clear, however, this group staying at Voya will continue to offer and support individual- and family-focused solutions, but this will be done through the workplace, rather than at home or in other places.
PA: We know your passion on the coverage issue and getting more Americans to benefit from the retirement planning tools the industry has developed. I’m sure you are excited about taking this direction.
Nelson: Totally. We know that Americans are largely undercovered and have undersaved, and from that perspective, they are underserved from an advisory and guidance perspective. After COVID-19, we need to be able to help individuals now more than ever—to help provide solutions that can protect and develop people’s wealth. We are very focused on being able to guide people through those decisions on where and how they should save and invest, looking across retirement plans, emergency savings and health savings.
We see a different focus emerging among employers and employees, as well. There is a growing desire to be able to see and consider peoples’ household outlook across multiple benefits programs. As a leader in workplace health and wealth plans, our vision is to help Americans make the best decisions for their whole wealth and health picture.
PA: And can you tell us more about what it was like working with Cetera on this? I know you cannot speak for that firm, but it is a big deal to send your partnering advisers over to its platform. What does this decision say to the marketplace?
Nelson: Well, we have a long history with Cetera, and a high degree of respect for the organization and its advisers. A number of the advisers going over there have been some of the leading distributors of Voya’s solutions, across investment management and retirement products. So we have a really good working relationship with them, and our goal together is driving advice and guidance into the marketplace. We expect we will continue to have a great relationship with these folks after they move over later this year.
For both organizations, this deal is a great illustration of how we are advancing key dimensions of our respective strategies. As I said, our strategy is to focus on field- and phone-based advisers serving people in the workplace and at institutions. On its part, Cetera is a leading retail advisory firm that will focus on delivering deeper advice and solutions for its clients as well. It’s very consistent.
PA: So, what comes next, in 2021 and beyond?
Nelson: I would break it down into the near term and the longer term. In the near term, we are coming off of a year for Voya that was incredible across our businesses. Our investment management organization had a very strong year, and our employee benefits organization had a very strong year, even with the headwind of COVID-19.
Our retirement business delivered $67 billion in sales last year, and $26 billion in defined contribution (DC) business net growth. That kind of organic momentum is something in the near term that we will fight to continue. I view our success in this environment as part of the flight to quality. Employers are looking to strong, stable brands that are committed to the financial health and well-being of their people. We see that continuing in the near term and we will leverage those opportunities.
Over the longer term, we plan to advance our technology infrastructure to facilitate our accelerated growth. It will be about leveraging investments in our data, digital and analytics capabilities, and our automation capabilities. It’s all in the spirit of driving improved outcomes and enhanced client solutions for individuals.
The last thing to mention is the prospect of acquisitions. I will tell you that I don’t believe that we need inorganic acquisition activity to meet our growth plans for 2021, but as we navigate the coming years, we will most definitely be looking for opportunities that can help us grow even faster. It’s not a prerequisite that we do this in the near term, but we will absolutely be looking out with this strategic view.
PA: One last question for you. It’s almost hard to believe the resilience and tremendous growth our industry has shown in the face of COVID-19. What does it mean to you to see this unfolding?
Nelson: The COVID-19 pandemic was and continues to be a very challenging time for Americans and for people around the world. We are growing cautiously optimistic about the vaccination program here in the U.S. and globally, and that is allowing people to again look forward. Having said that, as an industry, we need to step back and consolidate what we have accomplished. We need to keep pushing forward the emergency savings discussions and the voluntary benefits discussions.
If you look at the behavior of Americans with access to retirement plans during COVID-19, they largely continued saving during what was an incredibly challenging time, and that shows the strength of the system we have built. On the other hand, far too many people saw their emergency savings depleted and they have truly suffered from financial insecurity. We have to keep these lessons in mind as we move forward into a new normal.