Recordkeepers: We’re Investing to Reach Participants ‘At Scale’

According to a recent panel discussion among retirement plan recordkeeper leaders, the firms all share a common focus area and a common challenge: boosting personalization for tens of millions of participants.

Whether leveraging artificial intelligence, using alerts to try and prompt engagement or offering managed account solutions, recordkeepers are seeking ways to give participants more personalized in-plan options and advice, according to a panel held by LeafHouse in Austin, Texas.

“For us as a recordkeeper, the challenge with personalization is: ‘How do we deliver it at scale?’” Patrick Duffy, head of core market sales at Fidelity Investments, told the audience of plan advisers. “There’s 42 million participants on the platform. How do you personalize something for a crowd of 42 million people? It’s a really unique challenge.”

One key area Duffy pointed to was leveraging technology, specifically artificial intelligence, to “drive personalization engines.” He noted two things at Fidelity that drove meaningful results with participants.

“One would be our digital platforms and the way AI is driving personalization there,” he said. “A second would be the live channel support, via our phone contact center. That level of personalization can really help your participants.”

In terms of technology, Duffy noted that the organization’s website and phone app have “evolved to be very dynamic, where depending on the participant and over 1 billion data points across the universe of participants that we service, it modifies the experience for that participant.”

When it comes to calls, he notes that “the machines can use what the [individual participants] have done on the web properties or the apps or previous phone calls and service that to the representative.”

At Voya Financial Inc., the firm is working on personalization to connect a participant’s various benefits with a full picture of advice and guidance, said Allison Dirksen, Voya’s head of wealth solutions sales.

“When we think of the evolution of what personalization is, it’s taking these independent decisions between what you decide to do for your retirement and what you decide to do for every other workplace benefit and realizing that that is a completely interconnected decisionmaking process,” Dirksen said. “What we make today for our health decisions grossly impacts our wealth in the future.”

The firm has created myVoyage, a digital financial guidance experience that is “hyper-personalized” to allow a participant to see all of their workplace benefits and savings, inclusive of external accounts such as banking, in one place. That can help guide participants into how much they should be saving for retirement, deciding upon health benefits selections, or other programs such as saving toward an emergency fund that will help them make progress toward their financial goals.

Personal Manager

Jason Crane, head of retirement distribution at Ascensus, said that the firm has found success in partnering with financial wellness solution providers to provide personalized advice for participants. But when it comes to innovating in personalization, another key area of focus for the firm is open architecture managed account solutions to meet plan sponsor needs.

Crane said developments in the accounts have made more personalized advice possible, with adviser-managed accounts also providing new opportunities for plan advisers to work more closely with participants, both in-plan and out if and when they choose to leave it.

“What I’m really interested to see over the course of the next couple of years is, not only how you all [plan advisers] use adviser-managed accounts to personalize your solutions to provide curated advice and to monetize the assets in the plan,” Crane said, “but also [how you use managed accounts] to build the bridge to wealth so that the same technology you’re using in-plan can be ported over into an IRA environment or into wealth management services to enable you to build your practices.”

Crane noted that Ascensus has managed account solutions with NextCapital Group, Morningstar Inc. and Stadion Money Management LLC, which is owned by Smart LLC.

Hutch Schafer, vice president of product development at Nationwide Financial, agreed that a key to personalization is connecting participants across all of their assets and said the firm has been investing in its financial planning tools and mobile apps toward that end. A key focus of that effort, however, is trying to increase engagement with these tools.

“How do you have targeted messaging to them so that these messages are really top of mind, increasing their engagement to put more outside asset information in? As we can gather more information from those participants, we can better help guide and educate those participants,” Schafer said.

The Nationwide vice president also said that the industry should watch closely the Securities and Exchange Commission’s focus on conflicts of interest in the use of artificial and predictive analytic tools.

“We all know we need to invest in [AI and predictive tools] to help participants with better outcomes,” he said. “But I think as an industry, we need to be aware and make sure that we’re participating in our industry associations or sending comment letters from our respective companies to make sure that we’re helping these regulatory bodies do what’s right for the participants.”

Pensions Return

Schafer also brought to the discussion providing participants with retirement income options, as driven by annuities, to ensure a guaranteed paycheck in retirement.

“We’ve made a significant strategic investment in in-plan guaranteed income solutions,” Schafer said, noting that the firm started bringing in options 11 years ago, at that time in the “mega-plan” market.

More recently, he said Nationwide wanted a suite of solutions that, in partnership with asset managers and even other insurance companies, could “make sure that we can have a suite of solutions that will appeal to various plan sponsors and various advisers across the retirement marketplace.”

The recordkeeper and insurer began launching its suite back in 2020 and has since improved the offerings and expanded their reach. One of its in-plan partnership solutions, Income America, is available through a collective investment trust investment vehicle to make it a simple and cost-effective solution for plan advisers, fiduciaries and, ultimately, plan sponsors, Schafer said. Today, that option is used by more than 1,700 plans and has $275 million in assets.

Some of the other panelists agreed, noting that as in-plan income options develop, they can provide a safety net for participants in search of a “pension-like” option.

“Ultimately though, if offered by their employer, it’s the participant’s choice” as to whether they participate in an in-plan annuity, Fidelity’s Duffy noted. But he said the recordkeeper is seeing demand from plan sponsors to have good in-plan options.

“We’re seeing huge demand from plan sponsors,” he said. “Plan sponsors are asking for in-plans solutions, and they’re seeing a benefit to providing these types of solutions because it offers them pricing power, in part because it keeps assets in plan.”

Duffy noted the swing in the industry to a place where employers are being looked to for a pension-like option to supplement Social Security.

He noted that, while there are some advantages to staying in-plan, depending on the participants, there are also positive results to rolling funds out into an individual retirement account. That can include more personalized investment advice and services by working with a financial adviser in conjunction with the IRA. But overall, he said, participants should be educated on their options to make the choice that works for them.