The Next Big Thing

Art by Jon Han

It has been more than a decade since passage of the Pension Protection Act of 2006 (PPA). While that legislation benefited retirement plans in many ways—most notably by its expansion of automatic enrollment and the creation of a qualified default investment alternative safe harbor for defined contribution (DC) plans—some experts think retirement plan industry advocates, academics and lobbyists may come to some agreement, possibly even this year, to pass another industry-shaking act.

“Big Ideas” examines some of these thoughts and the pertinent bills in Congress, including for expanding the potential for small businesses to join together to create multiple employer plans (MEPs) without requiring them to be in related industries, and potentially requiring higher deferral rates for auto-enrollment and automatic escalation. There is even talk of easing the fiduciary burden for offering in-plan lifetime income products.

The retirement plan market continues to grow in assets, with many thanks to the market, but for obvious reasons the plan segment that is growing the most is that of micro plans. The 2018 PLANADVISER Micro Plan Survey gives you an in-depth look at how those plans function and shows opportunities for improvement.

Live polling during the 2017 PLANADVISER National Conference (PANC) found that nearly half, 46%, of advisers think their plan sponsor clients fail to value their work as a fiduciary. Thus, this issue’s Servicing Strategies article, “Value Added,” explores ways that advisers can help their clients appreciate this critical and complex work they contribute. A good place to start is to stress to clients how you can troubleshoot regulatory and compliance requirements. Advisers also find that sponsors appreciate being briefed on regulatory developments. One advisory practice interviewed for the piece uses an online fiduciary compliance tool that can show clients the status of fiduciary documents on a user-friendly dashboard.

We introduce a new department in this issue, Marketing Mechanics, which will appear in every other issue. In the debut installment, “The Magic of Local Events,” we explore how, in 2015, Chepenik Financial launched the 4.01k Race for Financial Wellness and how it has raised $250,000 for financial literacy education for Junior Achievement. Last year, the race expanded to six cities, and Chepenik expects there will be nine this spring. Examining the needs of your local community could help you devise your own event to highlight other focus points in the industry such as retirement income or retirement readiness.

Although the 2018 PLANSPONSOR Defined Contribution Benchmarking Report found that less than half, 47.0%, of plan sponsors of all sizes offer a health savings account (HSA), this figure rises to as much as 75.8% of plans with over $1 billion in assets. “HSAs in Retirement Planning” (page 44) lays out the rationale for plan sponsors to offer these accounts to their participants.

“Warming to ESG” explains why environmental, social and governance (ESG) investing is beginning to take hold among DC plans—and how it could become a major factor for participants and sponsors alike.

We would love to know what you think of these features, how they help your practice and what additional topics you’d like us to cover. Happy 2018!