The Future of Retirement Income: A Q&A With Endeavor Retirement’s Bonnie Treichel

Bonnie Treichel

Bonnie Treichel is an ERISA attorney and the chief solutions officer of Endeavor Retirement. She is also serving as a subject-matter expert for the Retirement Income Consortium, helping to develop the curriculum for webinars on retirement income. PLANADVISER spoke with Treichel on trends she is seeing in getting retirement income into plans, the need for adviser education, and why she’s passionate about the subject.

PLANADVISER: What trends are you noticing in retirement income?

Treichel: The concept of in-plan retirement income is not new, but with the SECURE Act of 2019 and the new safe harbor that passed, we’re seeing a new birth to retirement income solutions in plans. Many insurers and asset managers are now focused on solving the retirement income problem.

We have a convergence of the retirement plan industry bringing solutions to the table, alongside the Department of Labor and other regulators and legislators wanting to focus on it.

PLANADVISER: Who will benefit most from the efforts in the industry?

Treichel: People are recognizing that those with a retirement account balance of $500,000, for example, need help solving for retirement income. Those with higher balances, let’s say $1.5M to 2M will most likely work with wealth managers. The industry is probably not going to be able to help those who are low on assets, like only $100,000 or $200,000 in savings.

There’s a big gap in the middle where people will not have enough with social security, relying solely on the market may be problematic, and they won’t have access to a wealth manager.

PLANADVISER:  What’s the main problem faced by people in that gap?

Treichel: Some folks will overspend in retirement, but others will underspend because they don’t have access to their own personal adviser. In both camps, it’s problematic. People might be living scared, thinking they can’t afford things, while others are going out and buying the boat.

PLANADVISER: What is the role of advisers in addressing this problem?

Treichel: From my perspective, those who are skeptical in this are advisers.

They’re saying, “Hey, wait a minute. These solutions are too complex. And they’re too expensive.” Advisers tend to equate the solutions with annuities, which have lots of headlines about being expensive.

If this is ever going to stick with plan sponsors, it’s going to be the advisers making that happen. I’ve spent a lot of time trying to educate them. In-plan solutions are much different than a retail annuity. And in-plan solutions are not taking clients away from wealth managers.

One of the criticisms is the complexity of the solutions. Some are guaranteed. Some not. Some are hybrids. Some are wrapped in CITs (collective investment trusts). All this has to be compared.

PLANADVISER: Where can advisers turn to learn more?

Treichel: We are definitely seeing a demand for training in retirement income. Advisers can take part in in-depth webinars on retirement income at the Retirement Income Consortium.

Whenever there’s something new in the industry, where you’re trying to impact change, we first have to coalesce around some common vocabulary and nomenclature. Then we need education to the advisor and consultant market. Right now, the education component has begun in larger plans. And later that will trickle down to smaller plans.

Then at some point, the focus will turn to not only getting these solutions into plan menus but making them the default choice. That will be the second wave of focus and education.

PLANADVISER: What is your personal motivation for your engagement?

Treichel: Change takes time and change is hard. I personally have passion around this topic. The thing about solving the retirement income gap is that it can impact so many people. With this concept, we can help create a more dignified retirement for the masses.

PLANADVISER: Do you have any numbers about implementation?

Treichel: From a webinar hosted by Broadridge and sponsored by The Standard and Fidelity Institutional Insights, we see that:

• 20% of plan sponsors began offering an in-plan annuity option over the past two years, and another 23% plan to do so this coming year
• 19% of plan sponsors began offering an income replacement fund the past two years, and another 23% plan to do so this coming year

This is based on a survey of 1,285 plan sponsors across multiple recordkeepers, not just Fidelity. 67% of the plans hold more than 50 million dollars in assets. The data was collected in early 2022.

I think this shows that the area is still immature, but that traction is growing and that it is a priority.