Road Test
A McKinsey & Company study released earlier this year says retirement income is the future of the defined contribution (DC) marketplace. Surely this represents a significant opportunity for those advisers looking to offer wealth management services to their clients’ plan participants.
Where can advisers turn for help as they provide guidance to plan participants who will soon be retiring? What makes some materials better than others? The editors of PLANADVISER sought to answer this question when judging materials for the DC Communications Awards, sponsored by PLANADVISER and the Retirement Income Industry Association (RIIA).*
Submissions for the awards were examined based on their usefulness, content, and design. For participant-directed materials, we did give significant weight to the presentation of the materials, determining that, if the information is not presented in a friendly format, participants will be reluctant to engage with it. On the other hand, when judging materials directed at retirement plan advisers, the design of the materials was deemed less important because advisers would, at least in theory, approach the materials with a higher knowledge base than participants. Ultimately, we looked for materials that helped advisers make sense of the array of retirement income strategies available so they would be better able to help clients choose option(s) that best meet their needs.
The winner of the adviser-focused award was the entry from OppenheimerFunds, which submitted two programs composed of presentations, workbooks, fact sheets, brochures, and white papers. The first, “Designing a Successful Retirement Income Plan Program,” part of OppenheimerFunds’ Client Connect Advisor Education series, a sales and training program for advisers, shows how to help clients develop a retirement income plan. The second focuses on the Retirement Income Manager and Withdrawal Strategies program, which helps advisers use the Retirement Income Manager income planning software.
The OppenheimerFunds options are all-inclusive, not only giving education to the adviser, through well-designed PowerPoint presentations, but also providing information to be distributed to participants, such as informational brochures, as well as a retirement readiness workbook that can be used with clients. The design was visually pleasing, but the most impressive aspect was how the programs spelled out the steps advisers should take in addressing the topic with clients. Also, the availability of a variety of communication products allows advisers to select the product(s) that work for their practice, or their own knowledge base.
The runner-up for the adviser-focused DC Communications Award was the Principal Financial Group’s white paper “Sustaining Income through Retirement: 4 Strategies for Retiring Clients.” The goal of the paper is to educate advisers about four retirement income options: mutual funds with automated income payments; variable annuities with guaranteed minimum withdrawal benefits (GMWB); income annuities; and combinations of mutual funds and income annuities. Although a white paper generally would not be considered the best medium with which to deliver such information to participants, for those at least somewhat familiar with the general idea of retirement income solutions, the paper’s approach is simple and accessible. The paper gives the pros and cons of each strategy, including aspects such as account balance access, market risk, the growth potential of their investments, income guarantees (or lack thereof), inflation risk, and income predictability. One particularly helpful aspect was the use of common assumptions among strategies (such as age, account balance, withdrawal rate, and annual inflation rate) as well as a chart summarizing comparison points among strategies within the paper.
As advisers ponder whether to offer such services, communications materials that help them learn about retirement income planning are going to be in high demand.
*In the fall of 2008, PLANADVISER and RIIA sponsored the DC Communications Awards to recognize the best in communication materials designed for teaching advisers and DC participants about retirement income. Submissions were reviewed by editors of PLANADVISER and judged according to how well the materials supported the engagement and involvement of retirement plan adviser and participants. A winner and runner-up were selected for each of two categories: materials given to advisers working with retirement plans, as well as materials directed at participants.
Illustration by Rob Viera