Rob Austin
Director of Retirement Research
Aon Hewitt
Based on Aon Hewitt’s survey data from companies, 2017 should be a tipping point for financial well-being programs. Nearly all employers say they plan on offering tools, services, and educational campaigns to their workers spanning a wide variety of topics from student loans to budgeting, to health care decisions and debt management. While financial well-being has been a hot topic for a few years now, 2017 appears to be the year that employers will start fleshing out their plans. Almost half of employers said they intend on creating a broad financial well-being strategy by the end of the year.
Harry Dalessio
Senior Vice President
Head of Sales & Strategic Relationships
Prudential
Fintech / digital engagement: There is significant momentum and dollars being invested in this space. Firms in all industries, including venture capital firms, are investing in this market. They’re finding new ways to connect the participant experience with a holistic view of benefits from debt management, emergency savings, tax planning and lifetime income to help address all components of an individual’s financial wellness needs.
Open Multiple Employer Plans (MEPs): With support in Washington to help close the coverage gap (nearly half of Americans are without access to an institutional retirement plan), there is a meaningful opportunity for consultants and advisors to help shape programs that are simple and harness some of the best practices from their current business model.
Income: With the shift from a traditional pension system to a consumer driven model (coupled with shifting demographics), the need for in-plan income solutions has continued to gain traction. There are talks in Washington regarding potential safe harbor provisions and new products entering the market. Advisors would be well-served to have competency in this area, as more clients will likely be asking about solutions in this space as they look to provide outcomes for their employees and to help manage their workforce to optimize productivity.
David Eikenberg
Head of Retirement, U.S. Intermediaries
T. Rowe Price
Advisor consolidation: Many larger advisor teams, who previously evaluated potential acquisitions, took action in 2016. The DOL Fiduciary Rule accelerated this trend, especially for those plan advisors close to retirement. We also saw an uptick in plan consultants merging or partnering with health care consulting teams, creating a strong referral source in which both sides can approach prospects jointly to offer “holistic benefit consulting.” It is vital for consultants to build an integrated benefit offering and understanding of how changes to one affect the other.
Increase in re-enrollment, especially among larger plans: In 2016, we saw plan advisors and sponsors proactively sweep participants back into QDIA’s (qualified default investment alternative) to ensure appropriate asset allocation. This move also helps potentially to reduce perceived liability stemming from new regulations and to assist participants in proper QDIA utilization.
David Hyman
U.S. Head of Wealth Management
Mercer
Advisors should spend time with their client’s other vendors to determine the impacts of the DOL rule on other parts of the plan—from the record keeper to the managed accounts provider to the plan sponsor’s own governance structure. As a trusted advisor, plan consultants need to ensure they are looking at things holistically. And, as always, consider the fees. While we believe a focus on fees alone is inappropriate, the consultant and plan sponsor should have a documented approach that rationalizes higher fee managers with the return and risk potential. Managers are also continually adding new share classes or collective investment trusts so having a process that reviews the plan for the most efficient fees on a consistent basis will be important. In addition to investment fees, plan sponsors must also review overall recordkeeping fees, ensuring that they are appropriate for the services received.
Matt Sicking
Senior Consultant
Willis Towers Watson
We’re starting to see more plan sponsors who might have been hesitant to do de-risking with a lot of their benefit plans showing increased interest in 2017, as it becomes apparent that rates are going to rise. There’s already been plenty of interest in it and people leveraging the opportunities, but I think as rates go up you’ll see even more action. Consequently, many employers and plan sponsors may be considering shifting a lot of the risk that they currently carry on their balance sheets to other entities—other financial intermediaries. Naturally, this action could have an impact on employees in the sense that they may no longer be getting their checks from their employers. The checks may, in fact, be coming from an insurance company or, perhaps, employees will be offered lump sum cash-outs, which carry all sorts of other implications.