Client Service September 14, 2016

PANC 2016: Technology – Practical Solutions and Usage

If you had to guess, would you say that mobile applications or desktop web portals are top of mind for plan sponsor clients right now?
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According to audience members polled during a tech-focused session at the 2016 PLANADVISER National Conference in Orlando, Florida, the clear standout in terms of plan sponsors’ technology demands is “plan sponsor and participant websites.”

Moderator James Sampson, managing principal with Cornerstone Retirement Advisors, followed up with a second flash-poll: “What is the next technological advancement you are implementing or considering for your practice?”

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Again there was a clear standout, with the majority focused on financial wellness programs, as well as workflow and database management and mobile enrollment.

Peter Kapinos, vice president and head of client engagement for Empower Retirement, said he was a little surprised to see interest in new desktop websites outstrip mobile applications, “but in a way this actually makes sense.”

“What I mean is that even as we are building powerful desktop websites, we have to think about mobile-first design,” Kapinos suggested. “If we know the average individual is working off of their phone first, if we want them to take action, obviously considering the smart phone first is key.”

Steven Glasgow, senior vice president and financial adviser with Avondale Partners, agreed with that sentiment. He noted that plan sponsors want very in-depth and powerful websites that will bring customizable and flexible planning tools down to the participant level.

“Advisers will know that even the best websites will only see engagement from a segment of the population that truly is already engaged in retirement planning and cares about their account,” Glasgow said. “In that sense we often think of mobile technology as the gateway to the deeper relationship.”

Both suggested a sensible technology strategy, at a very high level, might be to have a simplified mobile application that will allow participants to do a select number of things related to setting up an account for the first time, along with perhaps a few basic maintenance functions. As Glasgow explained, until a participant is truly engaged, anything more than a few clicks or steps on the mobile app is going to turn them away.

NEXT: Technology support from partners 

Glasgow went on to suggest that “our increasing ability to draw data out of the recordkeeping websites and interfaces is a game changer. We can go into meetings today and talk about what’s relevant to the specific plan sponsor, drilling deep into clear demographic and financial information about their actual participants. All that stuff we used to have to guess at, we can now have the hard data very quickly.”

Kapinos echoed the thought, noting “what we can measure in our digital world is truly impressive. While paper forms and enrollment kits serve a purpose, the technological driven world makes things much more powerful and efficient.”

Following another polling question from Sampson, about half of the advisers in the audience indicated they are currently using iPads or other tablet technology in their employee meetings.

“Since moving from paper quarterly meetings about a year ago, every comment we have gotten from clients has been very positive,” Glasgow said. “You get to control what they’re looking at and what they’re focused on as you both lean in. And we kill less trees and use less ink. We have really viewed it as a win-win.”

Looking ahead to the next few years of industry development, both panelists said they hope to see more unification of industry technology.

“For example, we are working on a program that you could call a robo-app, which we want to be able to lay on top of any recordkeeping system,” Glasgow explained. “The goal is to eventually piggyback on the technology and other apps that already exist in the space, to allow us to really seamlessly leverage the data of other providers, and to share our own. I don’t know if we’ll get there any time soon, to be frank, but that’s where we want to go.”

Kapinos agreed, concluding that “the digital experience will not ever replace the true experience of sitting down with an adviser. Instead, it will be the hub around which we can build and maintain the client relationship, all the more efficiently and effectively.” 

Data & Research September 14, 2016

PANC 2016: Financial Stress Survey

Americans are overwhelmed by financial stress, according to John Hancock's Retirement Plan Services latest survey.
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The third annual John Hancock Retirement Plan Services (JHRPS) survey found Americans are overwhelmed by financial stress—and they are not taking any steps to alleviate this problem. It is incumbent on retirement plan advisers to help participants overcome this through automatic features—including automatically enrolling them into emergency savings accounts, along with engaging them and educating them, said Patrick Murphy, president of JPRPS, speaking at the 2016 PLANADVISER National Conference.

“Our business is about helping people retire—putting the individual participant at the forefront of everything you do,” Murphy said. “We launched this survey in 2013 because, instead of guessing why people were not taking action, we wanted to ask participants why they aren’t doing what they need to do, and now we have to do something with this information.”

While the situation overall isn’t positive, “there have been some signs of improvement on the road to retirement readiness,” he said. Seventy-nine percent said their financial stress has increased over the past three years—but 22% said it has decreased. “It is improving, but it is not gone,” Murphy said. “Retirement is still people’s number one priority. People need a nudge, through automatic enrollment and escalation, but we also need to provide advice for the big picture, either with robo advisers or in person.”

Fifty-four percent said their personal financial situation is better than two years ago. In 2014, 66% felt financial stress, and in 2016, that ticked down to 63%. In 2014, 69% said their financial stress was affecting them physically and/or psychologically, but this year, that’s declined to 59%, Murphy said.

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NEXT: Financial stress among various demographic groups

While 63% of people, on average, feel financial stress, for people who are divorced or widowed, as well as Millennials, that rises to 73%, Murphy said. Sixty-seven percent of women and single people feel financial stress. Seventy-three percent of lower-income feel this type of stress. “Only 55% of Baby Boomers feel financial stress—but their average retirement account balance is $140,000, so I would call them blindly happy,” Murphy said.

The potential elimination of Social Security is another financial worry people have. In 2014, 59% were troubled by this, and this year, it’s 75%. Asked what their most stressful financial decisions are, in 2014, people said budgeting; this year, that’s up to 51%. That is followed by choosing the right health care plan (31% in 2014 and 48% in 2016).

Asked what their financial priorities are, 95% said saving for retirement, followed by: saving for emergencies (92%), paying down debt (88%), preparing for health care expenses and long-term care in retirement (84%), and saving for a child’s education (84%).

Fifty-two percent said their savings are  behind, 39% expect to retire later than they had planned, Murphy noted.

The big question, he continued, is to help people allay these financial concerns—because while people are aware of what they should be doing, few take the actual steps. Eighty-two percent of people know they should save enough money to cover basic expenses in retirement, but only 16% actually do, he said. Seventy-four percent know they should set financial goals, but only 22% do; 70% would like to pay down debt, but only 17% are doing this; and 64% think they should learn to live on less, but only 17% are trying to do this.

It is the critical job of retirement plan advisers to “close the execution gap through plan design—through automatic enrollment, automatic enrollment into the age 50+ catch up provision, automatically sweeping existing employees not in the plan into the plan, automatically enrolling them into Roth 401(k)s, automatically enrolling them into an emergency fund, and using a ‘mega back door into the Roth,’ i.e. putting in after-tax month into the plan and converting it to a Roth at the end of the year,” Murphy said.

Consider this, he said: Ninety-two percent of Americans know they need emergency savings—but 62% have less than $1,000 in savings, and 49% have no savings at all. The work of an adviser to improve all of these variables has never been as important as it is today, Murphy said.

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