Looking Ahead

The beginning of a new year is a good time for looking back and ahead. For plan advisers, that might mean reviewing plan design ­elements, a fund’s lineup or participant education initiatives. PLANADVISER­ spoke with Elaine Sarsynski, executive vice president of ­MassMutual’s Retirement ­Services Division and chairman of MassMutual International, about what the industry took away from 2013, what plan advisers can look forward to in 2014, and how they can increase their value in light of that reflection and planning.

PA: Let’s begin by reflecting on 2013. What do you think the industry learned last year?

Sarsynski: Fee disclosure was something that we all focused on significantly over the last 16 to 18 months. What we learned in 2013 was that it was not nearly as disruptive to the industry as many had feared and, for the most part, sponsors really did not overreact.

I think it was almost a non-event for participants, which I believe indicates that the industry had been disclosing sufficiently.

The other thing that we’re seeing more is that sponsors are far more interested than they’ve ever been in retirement outcomes for their employees and participants, and they appreciate providers that can help them with the overall retirement readiness of their employees. We’ve seen repeatedly that sponsors want to know how many people are on track to retire with sufficient monthly replacement income.

Plan participants are becoming more aware of their retirement readiness, and they’ve been waking up to the fact that savings is important and that it’s critical to take action to improve their ability to save more and appropriately allocate in retirement.

PA: What trends in the retirement plan landscape do you anticipate as we look to 2014?

Sarsynski: We’re going to see increasing numbers of tools for the adviser, sponsor and participant coming out this year. Most of the tools will enhance the awareness of retirement readiness and plan health. For example, at MassMutual, we have powerful capabilities, aptly named Planalytics^SM, that leverage the recordkeeping data for a plan. Planalytics^SM essentially enables the adviser to deliver true evidence of successful outcomes to the plan sponsor, which we believe is a capability unique to MassMutual. We feel very confident in the analysis that our tools provide to sponsors and participants as to whether they have appropriate plan design, plan allocation and participant allocation across the funds in the plan.

We are very pleased with how our tools have been driving action at the participant level and how much advisers and sponsors value the tools, so we would expect to see more focus here. I also think that we’re going to see a significant focus on health care and health care exchanges and how that may impact an employer’s focus on retirement. We’re watching, as everybody else is, to see how the new health care programs are going to impact our industry.

On the investment side, about four years ago, we launched a custom-allocation modeling tool, and we’ve been making upgrades to the tool over the past several years. We have seen increased utilization of custom asset-allocation models, which can either be designed by the advisers with whom we work or by a third-party money management firm.

Essentially, what the modeling tool does is take various funds and allow the adviser and the provider to help the plan sponsor better customize a lifecycle fund based on the underlying demographics of the plan participants. We really think that’s a trend that’s going to continue for plan sponsors and participant needs going into the future.

From a broader market perspective, as the markets and interest rates are improving funding status for traditional defined benefit (DB) plans, there are now more alternatives for chief financial officers (CFOs) to think about decreasing that liability on their balance sheet. In 2014, we’re going to see an increase in terminal-funding opportunities. We were especially active in the terminal-funding market in the last six months of 2013.

Finally, in 2014 we expect the regulatory awareness in the defined contribution (DC) industry to increase as Washington and our regulators and legislators continue to review the defined contribution and defined benefit industry and hopefully support improving retirement readiness in this country.

Sarsynski: We will be expanding the capabilities of our custom-allocation modeling tool. MassMutual will be introducing the availability for a world-class money management firm to maintain the allocations of the lifecycle strategies within the custom-allocation models.

We’re already a leader in leveraging data to deliver customized touch points to increase positive participant actions. We do face-to-face meetings; we have a terrific call center, targeted-mail campaigns, email campaigns; and we are refining all of our marketing data personas and will continue to refine the experience at the participant level throughout the year.

Much of our work around personalizing the messaging to the participant is based on someone’s data and demographics. This is through the use of data that we have in our CRM system, and we really look at that data in order to target a participant so that he can take his next-best action step. We have dozens of personas that we use to target the messaging to make it most effective for any individual in a plan. We’ll continue to do more of that this year, and those are certainly trends that we’re preparing for as we speak.

We believe employees also want to understand their entire workplace benefits package. We are working to provide a way for an employee to holistically look at his worksite benefits, and we’re working on a variety of tools for plan sponsors to help them find an appropriately matched product to the demographic in the plan.

PA: How do retirement plan advisers evaluate these trends and use them to determine what practice goals to prioritize for the year?

Sarsynski: As advisers set their goals, much of that process is similar to what we tell plan sponsors to do: Make sure not to focus only on funds and fees and fiduciary responsibilities—all of which are important, and they are table stakes—but really be able to refine and reinforce your value proposition as an adviser to your clients. I think it’s really important to make sure that you do everything possible as an adviser to help sponsors ensure that participants retire successfully.

So, as an adviser, don’t be afraid to reach out to providers for help. At MassMutual, this is our mantra. We go well beyond funds and fees and fiduciary issues. We have all of that and industry-leading technology, too. Most importantly, we deliver what the customer really needs, and that is our Planalytics^SM resources, to help you prove that you’re making a difference for the plan and participants. In the plan overall, participants must be able to retire successfully. That helps the organization; it helps the individual; and it helps our society because we are enabling success.

Then I would suggest doing a gap analysis. Consider additional services that you, as an adviser, might be able to offer. Do a 360-degree evaluation on your customer’s plan and ensure that you’re bringing as much to the table as possible. If you’re doing all that, what other products and services might you become an expert on over the next year that could enhance your value proposition? You’re not just talking about retirement, as important as that is. You’re also talking about other products and services—such as life insurance or health insurance or disability insurance—and should be able to talk holistically about those additional employee benefits.

I can tell you that many plan sponsors we have been asking say, “How do I sign up for that?” We know that advisers who can articulate a holistic employee benefits portfolio will be able to differentiate themselves in 2014.

We anticipate, later this year, starting to launch products so that the adviser can have not only retirement to think about, but also life insurance, critical care insurance and other types of products to support the employee at the worksite—with, of course, the help of the plan sponsor in refining the needs of their employees.

RS: 33350-00