'Viability' Pushes the Needle on Retirement Readiness Conversations

When Hugh O’Toole left MassMutual in 2014 and struck out on his own, he talked to chief investment officers and advisers and found the retirement industry is heavy on prescriptive solutions to retirement plan issues; for example, how to use plan designs and investment glide paths to offset risk aversion.

However, he found the industry was lacking tools that use retirement plan sponsors’ own data to help them understand whether their employee population is ready for retirement, and if not, what liability that poses to the company. Once employers understand the cost to the company of having employees not ready to retire, then prescriptive solutions can be used to improve employee retirement readiness.

O’Toole established Viability Advisory Group, which uses the approach he created to help advisers design effective benefits for plan sponsors and measure the effectiveness of benefits. Last November, MassMutual acquired O’Toole’s firm and he rejoined MassMutual as senior vice president, Viability, in MassMutual’s Retirement Services and Worksite Insurance Group, to run the Viability business. The solution is for advisers, who can then use it for any plan, whether it is a MassMutual client or not, O’Toole says.

Viability’s analysis program helps companies evaluate the financial costs that ensue from employees who are unprepared to retire as well as the loss of productivity attributable to workers’ financial insecurity. Calculations include the hard-dollar cost of inappropriate or under-utilization of retirement savings and other employee benefits programs, such as health care benefits.

The Viability solution uses a plan sponsor’s own data about employee contributions, and investments, as well as other measures, to produce a report that shows the current state of readiness of employees and measure the potential cost to employers of not having employees ready for retirement. O’Toole’s group at MassMutual then works with the plan’s adviser, asking what plan design, participant or investment techniques they would propose. Advisers are then shown how the report would change based on what techniques they want to employ, offering proof of what techniques would work.

MassMutual sees this as the next step to getting more focus on retirement readiness and plan outcomes. O’Toole tells PLANADVISER the focus on retirement readiness of employees hasn’t caught on more because employers haven’t been shown the effect on their company of participants not being able to retire. “If we don’t’ change the center of the discussion to the mitigation of employer liability, we won’t bring value back to the equation,” he says.

The solution assists advisers with showing plan sponsor clients the adviser’s consulting work not only helps employees retire on their own terms, but has a major impact on the long-term viability of the sponsor’s company.

O’Toole says the Viability solution is a dynamic model that can change over time to tie in not only with retirement readiness, but employee financial security, productivity and enthusiasm at work. “Every time I talk with someone, they give me another great idea to test out,” he says.