pa|nc | PLANADVISER November/December 2016

2016 PLANADVISER National Conference

By Lee Barney, John Manganaro and Rebecca Moore | November/December 2016
Page 6 of 12View Full Article

2016 Top Trends
Executives from Voya Financial and MassMutual discussed 10 developments in the retirement planning industry.

First and foremost are new regulations and policies, led by the new fiduciary rule, said Charles Nelson, chief executive officer of retirement at Voya Financial. “Each company will approach it differently,” he said. “Some may utilize the best interest contract (BIC) exemption or retreat from offering certain services.”

Second, is the growing recognition of the cost of employees not being retirement ready. “Many years ago, companies sought to limit their liabilities by freezing their defined benefit plans,” said Tina Wilson, senior vice president, head of retirement solutions innovation at MassMutual. “But that liability still exists if employees don’t have sufficient funds to retire and are financially trapped.”

Third is the need to engineer a retirement plan for success. “401(k) plans were designed to be supplemental,” Nelson. Use automatic enrollment, automatic escalation and reenrollment, he said, paired with qualified default investment alternatives (QDIAs).

Fourth is the value of investments in driving outcomes. MassMutual has studied outcomes in detail and has learned for “savers early on, investments are irrelevant,” Wilson said. “Instead, it’s about how much you save. But at age 40, 45, investments become critical.” That’s why people at this age and older need to be invested in “target-date funds, managed accounts or custom portfolios,” she said.

Fifth, it is important to apply behavioral science to retirement innovation. Choose different platforms” for different enrollment touch points, Nelson said.

Sixth, are data-driven asset allocation solutions. By this, Wilson said, the industry needs to embrace smart data platforms where demographics are tailored to “individualized circumstances to select [a certain] glidepath or custom allocation.”

Seventh is weighing income replacement versus account balances. “Income is the new outcome,” Nelson said.

Eighth is finding solutions for income. “Income is also very personal,” Wilson said. “Solutions need to work for each individual. No one size fits all.”

Ninth is financial wellness that extends beyond the defined contribution plan. This means “holistic solutions to solve income stream needs,” Nelson said.

Finally, participants need help navigating healthcare costs and building true financial wellness, Wilson said.