Broadridge Launches Retirement Income, Stable Value Evaluator

Broadridge’s Fi360 is live with a retirement income and stable value product evaluation tool with the goal of providing plan advisers and sponsors a due diligence process for evaluating and selecting the plan offerings.

Fi360’s Retirement Product Evaluator, which launched last week, runs off a proprietary database of retirement income-related and stable-value-fund products through partnership with CANNEX, an annuity data provider. Pricing varies based on need, but the goal is for advisers, sponsors and home offices to be able to cater their analysis to plan and participant needs as they seek to help solve for retirement income security in particular.

“It allows [a user] to select from 60 criteria to decide what is important to the plan and rank them high, medium, low,” says John Faustino, head of retirement products, Broadridge. “It can be catered for an adviser’s specific areas for them to evaluate or bring the findings to plan sponsors clients.”

The product offering comes amid ongoing discussion in the retirement industry of how to set participants up with the appropriate amount of income in retirement to supplement Social Security. In a recent PIMCO defined contribution consulting survey, 90% of large institutional clients put retirement income solutions as their top priority for plan design—up from 74% from just one year ago.

Faustino says the retirement income portion of the evaluator can compare about eight in-plan annuity products, with the ability to compare 15 to 20 coming soon. The tool allows for the comparison of three or more solutions at once, with the user being able to manipulate their core needs from the product, including “explicit fees, implicit fees, how accumulation happens or how decumulation happens.”

Demand for Analysis

The data head believes the market for the product will be strong, as the retirement industry seeks to understand and eventually put into plans retirement income solutions to help, in particular, with the decumulation phase.

“With the negative connotation that a lot of people have around annuities, it’s important to have a third-party evaluation tool that can be personalized to their needs,” Faustino says.

While there has been a proliferation in recent years of retirement income products that include annuities, uptake has been relatively slow due in part to fiduciary concerns and the ability and willingness of recordkeepers to offer the products on their platforms. Only 6.7% of plan sponsors offer an in-plan annuity option, and another 26% offer them via a managed account, according to the 2024 PLANSPONSOR DC Benchmarking Survey. PLANSPONSOR is a sister publication of PLANADVISER.

Faustino says Fi360 has been interested in creating a retirement income evaluator since the Setting Every Community Up for Retirement Enhancement Act of 2019 advanced the use of annuities to create a pension-like setup for 401(k)s—they have been used for many years in 403(b) plans to create a defined benefit-like system.

First, Faustino says, the industry had to come up with a standardized way of evaluating the products, because insurers defined them all differently. That need partly drove Broadridge to create the Retirement Income Consortium, which pulled together insurers, recordkeepers and asset managers. In part from that group’s work, Broadridge published a “prudent practices” guide for evaluating retirement income solutions.

Now the retirement income evaluator brings a product into the field that Faustino says has been on his mind since his earlier days at Morningstar Inc., when he saw target-date funds burst on the scene. At that point, he says, there was clearly a need for benchmarking and evaluation tools for the promising investment product, but he was slow to push for the solutions.

“I wasn’t going to make that same mistake again,” says Faustino. “We knew [retirement income] was going to be big, and we wanted to do something to get people engaged.”

Education Needed

In April, Morningstar put out a research paper on TDF products that include an annuity option. The firm concluded that, while the products have potential, more education and communication is needed to see them widely adopted in plan design.

Other Fi360 evaluation tools for investments such as mutual funds and exchange-traded funds provide users a score for evaluation. With retirement income and stable value, however, the solutions are more nuanced and require a deeper dive by users.

“There are a lot of nuances with figuring out the best interests of the plan,” Faustino says. “It didn’t seem appropriate for us to do a calculated hard score for stable value and retirement income solutions.”

Insurance-backed stable value products have a longer history of use in retirement plans, and Fi360’s evaluator has roughly 300 share classes listed. The solution has taken a hit due to higher interest rates that make them less attractive, but Faustino notes that with interest rates slated to drop, there is an expectation of demand for the investment, and therefore the need to analyze it, increasing in the months ahead.

As of now, Faustino says the stable value evaluator has a large broker/dealer client. The retirement income evaluator, meanwhile, is already being used by a large insurer and a handful of plan advisers.