Partner corner: A leadership conversation  looking to the future

The retirement industry is one that is driven by a passion. Many of the advisors who ended up in this space have a personal story or some reason why they want to work with an entire employee base. Retirement advisors have a drive to help bring about a secure retirement for millions of working Americans, and to build the best retirement plans that they can with their clients. Jeff Cullen is one such advisor, and I have had the pleasure of working with Jeff for many years now. Jeff was the first consultant to launch with our target date offering that includes an in-plan annuity, an offering that now has over $36B in AUM. We sat down to discuss his path through the industry, and where he sees the future of retirement planning heading.

A conversation between Jeff Cullen, CEO and Co-founder of Strategic Retirement Partners and Brendan McCarthy, Head of Retirement Investing, Nuveen

McCarthy: I got into this industry through a family connection, and I remember you mentioning that you had a similar start. I think it’s worth sharing because it says a lot about how you approach your advisory practice. So, can you start with how you got into retirement advisory?

Cullen: I grew up working in my family business, working for my dad from 8th grade. I was the fourth generation in that business, and I loved it. But after I finished college, I had a realization and saw the writing on the wall: there was an existential threat to the wholesaler business that we were in, as the big box retailers started buying up the wholesale companies to monopolize the supply chain. So, I worked with my dad and family to make the heartbreaking decision to help them sell the business. It was hard, but it was the right thing to do.

At that point, I had no idea what I was going to do next, but I was talking with my dad about his retirement, and he brought me all his financial statements. It turned out that he had less money in his retirement account in 1998 than what he’d put in 23 since 1976, which I found utterly shocking. It turned out that the trust department at his local bank had discretion over the account, and they had churned it to generate fees and commissions. My father, uncle and grandfather all ended up not having much money saved for their retirements. That’s when I got angry and found my purpose. I realized that the retirement industry was ripe for good actors to come in and shake things up. So, I spent the next few years getting into financial services, and I’ve been at it 23 years now.

McCarthy: One of the things that stands out meeting your colleagues is the culture — that pride all employees show in taking care of participants. What drives your firm’s philosophy?

Cullen: In financial services I still apply the lessons that my family taught me about running a small business. How to run a business, the importance of taking care of your employees — all those little tips and tricks that kept the business going for multiple generations. That’s how we run the firm, and that’s how we think about our clients, too.

I get paid to be in a business where I get to take care of people. 401(k) specialists get a kick out of helping people, and I love it. I feel good about knowing what business owners care about. The first client I signed, who is still a client, said something I carry to this day: “I don’t need someone to tell me what investments to be in, I need someone to meet with these guys on the floor, they don’t make a lot, they don’t trust financial services, and they need help.” That’s what business owners care about. We are here to help employers realize the value of their employees. And if employees feel valued, they’ll see their jobs as careers and want to stay for the long term.

For that first client, I was out on the floor the very next day conducting 1:1 meetings with employees, and that’s always been part of our core. I still love the participant side of the business; it’s the lifeblood.

McCarthy: We’ve both been in this industry for a long time, and we’ve seen a change in purpose among plan sponsors, their growing responsibility toward employees, clients and the environment. How do you see this shift?

Cullen: One of the biggest changes I’ve seen relates to how the buyer has evolved. In the early 2000s, I’d often walk out of meetings feeling discouraged because employers didn’t understand their fiduciary responsibilities. But the wave of litigation in the mid2000s forced employers to become educated about what their responsibilities were. They had to listen to advisors or be exposed to a lot of risk. Fast forward a few years, and those $15-$50 million plans where the owner’s golfing buddy was the advisor have all but disappeared. Now, we compete on merit. This shift to an educated buyer has ushered in a golden period for our industry. I know I can articulate our value proposition to those prospective clients, and they understand it — creating a much more level playing field where expertise and value truly matter.

Another exciting development has been the generational shift in leadership positions, from boomers to Gen X and now millennials. What’s great about this shift is that you almost never find a millennial who doesn’t share our passion for taking care of the participants. We’ve been doing 1:1 financial wellness for 25 years, and now we have an audience that’s as excited about it as we are.

McCarthy: We’ve had many conversations about the incoming wave of in-plan lifetime income solutions coming to market. And I view you as one of the leading pioneers driving the incorporation of retirement income into the QDIA. Why is that an important development, and how are you driving it?

Cullen: I’d be willing to make a wager that 2025 is the last year that traditional target date funds (TDFs) will have net inflows. After that, I think we’ll see TDFs that don’t include a lifetime income component lose ground to Qualified Default Investment Alternative (QDIA) solutions that have an income component built in. People wanted pensions, but we gave them 10-year cliff-vesting pensions where more than 50% didn’t qualify, and a lot of others didn’t get the full benefits they’d been promised. Then we went through a round of reform and gave them the 401(k). We made something people didn’t want and expected them to love it.

Now, people should love their 401(k) and 403(b) plans, but there will come a point when they near retirement, and they ask what they’re going to do with this balance. And we know that fear sets in, and people don’t spend down their balances in retirement. They’re scared to run out of money, and that fear drives them, instead of doing things with their families and communities and traveling. With in-plan lifetime income, we can give them that pension-like benefit back. We can have all the benefits of a 401(k) during accumulation — the flexibility and tax breaks — and then, during the decumulation phase, they get the benefits of what a pension could have been too. It cracks me up when people say that plan sponsors aren’t asking for this; they weren’t asking for auto enrollment either, but it was the right thing to do. It’s our job to educate and convince them, and when you do, people realize it is a no brainer.

McCarthy: It seems like we’re at a point where record keepers are trying to catch up to advisor demands with respect to open architecture. How important do you think this is?

Cullen: I believe that for in-plan income to truly break through, we need to return to truly open architecture. Through legislative changes in the 2000s, we got open architecture at every provider for mutual funds and CITs. Then we had SECURE 2.0, and managed accounts become a thing — but they emerged with only one choice for an algorithm or one choice for a lifetime income solution. We returned to closed architecture with limited choices. For advisors, being trapped like that feels like a fiduciary red flag. We want to be able to evaluate multiple options and pick the best for our participants. Our advisors are chomping at the bit to offer managed accounts as a QDIA with lifetime income, but we need that multitude of options.

McCarthy: This is a pivotal time with 401(k) plans shifting to provide pension-like income opportunity and the importance of the advisor is only growing. What advice would you give new entrants at this watershed moment?

Cullen: This is a really interesting inflection point. There has never been a better time for an employer that doesn’t have a plan to start one. I genuinely believe that startup plans are a great place to get to know this business and a great way to grow. We have many plans that are now in the tens of millions that were startup plans. There are estimates that we’ll see half a million new plans over the next five to 10 years, and that opportunity is gigantic. Secondly, the aggregators are buying up the small independent firms, and the matriarchs and patriarchs of those businesses are nearing their own retirements. There will be a vacuum, and we need way more advisors than we have, so the opportunity is huge. I can’t remember a better time to enter this industry; buyers are educated, they want you to take care of their people, and there’s going to be a lot of new business from that.

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