Provider Mobile Capabilities Slowly Improve

Mobile-optimized sites with transaction capabilities are slowly but surely entering the retirement planning picture, according to Corporate Insight research.

A new analysis from Corporate Insight, “Mobile App Alternative: Reviewing Mobile-Optimized Websites,” takes a look at mobile-optimized sites available to retirement plan participants.

Two main points emerge from the current research, according to Drew Way, senior analyst of the Retirement Plan Monitor at Corporate Insight. First, the industry is finally seeing the arrival of retirement plan account transaction capabilities via mobile sites. “When we first looked at the retirement space and mobile offerings, not a single firm offered real transaction activity via mobile,” he tells PLANADVISER. Today, four providers in Corporate Insight’s coverage group of 17 top retirement plan providers offer at least one type of transaction capability on their mobile site, with more providers expected to offer mobile transactions over the next year.

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Second, plan sponsors and recordkeepers are increasingly focused on the role of mobile and whether it can be an avenue to increase engagement, Way says, and plan sponsors generally feel this technology is a great opportunity for engagement.

Fidelity seems to emerge as the most noteworthy provider in the survey, Way says, with a great mobile website and a myriad of ways to engage participants. For example, a comparison tool on Fidelity’s mobile site allows participants to input their age, and recordkeeping data automatically pulls the contribution rate, balance, a rate of return, and a comparison to their peers across four regional averages. Participants are ranked by ZIP code, state, region and across the country, Way notes.

The comparison data adds an element of gameification—playing into the naturally competitive drive most people have—and makes them realize they’re either seriously lagging or beating their peers, or that they’re right on track. “A lot of the other firms we looked at offer some limited projections, but this is more robust,” Way says. “Adding the competitive element to the mobile site can really drive people to increase the contribution rate.”

Fidelity’s ready-or-not questionnaire is also noteworthy, Way says. This feature helps participants understand even what preparedness means at a basic level. An interactive graphic depicts how their peers answered important retirement readiness questions.

TIAA-CREF also distinguishes itself for great education content on the mobile site, as well as a savings tool that allows the participant to remove items from a daily budget, Way says, showing how much money can be saved in the long run.

On balance, Way feels, the larger providers are outperforming the smaller ones. “But our data on the smaller providers is limited, as all 17 firms we looked at are pretty much the biggest providers, so we’re really only looking at the big players,” he says.

As the firm has noted in previous reports, Way says, “it’s really clear that retirement providers are lagging behind other industries on their mobile website offerings. Even firms with really great desktop websites are lacking.”

T. Rowe Price, for example, has a loaded desktop website full of great tools and resources, Way notes, but their mobile website lacks transaction capabilities, although they do offer transactions on their phone apps. “So that’s an example of where firms have had to focus on either the app picture or the mobile website picture,” he says. “That in itself is a challenge for a firm, deciding where to invest in technology.”

Way cites industry scuttlebutt that says that T. Rowe Price is working on the mobile site right now, and he mentions that a number of other providers are dumping resources into this area. Before long, provider mobile sites will show significant improvement, he feels.

“I’m very eager to see what’s going to roll out in the next year, especially looking at the last year,” he says.  He also notes that mobile websites are not nearly as popular as apps right now among providers, and a few stats in the report support this.

“If you want to make an app, it has to be developed separately for each different operating system—one for the iPhone, one for Android, and so on,” Way points out. A well-designed mobile site, on the other hand, just needs one, which different mobile devices can access through the same site. That’s just not true for apps, he says, which is especially important in the retirement plan space, where providers need to catch up quickly.

According to a recent survey, Way notes that a full 4% of plan sponsors cited mobile technology as a major deciding factor in switching or seriously considering a change in retirement plan providers. “While 4% doesn’t sound like a lot, some of these firms have multibillion dollar defined contribution plans, so it’s a huge opportunity for those who are leading on mobile development,” Way says, “especially when you consider that the largest plans out there are going to get fairly similar fees and services offered from all the different providers. Mobile really can be a critical tiebreaker.”

Firm Offers Financial Wellness via Investment Menu

Now available on more than 20 retirement plan platforms, the Edge Collective Fund Series brings financial wellness services to plan participants directly through the investment menu.

The new fund series is described by provider Edge 401k Funds as the only offering of its kind where financial wellness services are offered directly through the 401(k) plan investment menu and paid for by the funds’ expense ratios. The firm says the fund series can be added to an existing plan or included as part of a new 401(k) plan.

Edge 401k Funds is a trade name of RWM Asset Management. Edge 401k Funds’ founders Tom Ruggie and Michael Case Smith say they developed the concept in response to the large number of retirement investors who are “uninvolved 401(k) plan participants who have a great need for proactive financial assistance in many aspects of their lives, beyond the 401(k) and including budgeting, taxes, estate planning and more.”

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The series consists of three separate funds similar to asset allocation funds—conservative, moderate and growth—that are collective trusts managed through Alta Trust, Ruggie tells PLANADVISER. The company uses a questionnaire which puts participants in one of nine allocations that could be a blend of funds. According to Ruggie, the funds mimic Morningstar indexes for conservative, moderate and growth portfolios, with minor tactical tweaks. “For example, our conservative portfolio is adjusted to prepare for rising interest rate environment,” he says.

“As more businesses recognize the importance of wellness initiatives as part of a healthy workforce and overall employee productivity, we believe our innovative approach will help solve concerns and reduce hard costs related to financial-related stress,” Ruggie adds.  

Participants allocating to the Edge funds inside their 401(k) will be proactively contacted by qualified customer relationship managers from Edge 401k Funds three times a year, who will then schedule time for those participants to speak with a financial coach regarding their overall financial wellness needs.

Topics for discussion include overall budgeting, debt management, funding education, and overall savings plans. Participants will also be encouraged to reach out to Edge 401k Fund’s financial coaches with questions, the firm says.

According to Ruggie, when bringing in a new client, his firm will hold an onboarding session, during which it meets with new participants to explain the funds and financial wellness services. At that time, the firm will get contact information and ask participants what is their preferred method for being contacted. “We will contact them in the best way for them,” he notes.

The funds have already been made available on more than 20 platforms including many large insurance companies, the Charles Schwab Trust, Fidelity Trust, and TD Ameritrade and Trust. The related investment fee for the funds is similar to certain target-date funds and generally less than the typical actively-managed fund found in retirement plans, according to the firm. In addition to covering the cost of professional investment management, the related fees also cover the cost of the financial wellness services delivered. In many cases overall fees can be actually lowered, Ruggie and Case Smith contend.

“It’s an opt-in situation, so the rationale would be that participants are opting in to make the financial wellness services available to them,” Ruggie explains. “However, we realize there will be certain people that will not respond to our contact and utilize the financial wellness services, but we will keep contacting them.” He says the firm predicts it will really make a difference for participants at certain life events, such as the birth of a child, marriage, or even when they realize they really need to start getting serious about saving for retirement. For this reason, he says, the firm anticipates a higher percentage of participants using the financial wellness services will develop over time.

“While saving for retirement is often touted as the most important financial objective, it is far from the only financial concern many individuals struggle with,” says Case Smith, managing director of Edge 401k Funds. “Individuals may not have the expertise or desire to choose investments on their own, but they are concerned with gaining stronger financial footing.”

Ruggie, who is president of Edge 401k Funds, notes the biggest stress for employees is financial stress; having a coach will help them deal with that stress, so they will be healthier and better able to put money away for retirement. He compares it to a health wellness program, which statistics show reduces the cost of health care and improves employee productivity.

“One of the hurdles we get is employers are concerned that it’s a new fund,” Ruggie says. “But I explain that we replicate Morningstar indexes and our funds will be in the range of those.” He notes that statistics show participants’ behavioral patterns are more likely the reason for poor performance, not a lack of good investment choices. “People who have a financial coach tend to put more in retirement plans and tend to have better performance because they not making emotional decisions in good or bad markets.”

Ruggie also points out that, other than perhaps a small cost to add the funds to their plans, there is no additional cost to the employer for offering financial wellness services. “The response from existing and potential clients has been very strong,” he says.

More information is available at http://edge401kfunds.com.

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