Retirement 2020: Maximize Participation,Boost Efficiency & Accelerate Outcomes
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There is a sea change underway in the retirement industry. New technologies are emerging to engage participants and streamline back-office operations. All the while, the regulatory environment continues to shift with new and proposed rules. This webinar will reveal new research on the saving habits of a new generation of investors, review the regulatory landscape, and reveal strategies that retirement plan professionals are using to streamline operations and leverage new technologies. Key Objectives: Our panel will take a deep dive into the trends driving the retirement industry foreword including: Behavioral finance strategies aimed at closing the retirement savings gap Regulatory trends such as Multiple Employer Plans and new State-sponsored Retirement plans that may present new opportunities for asset managers How firms are using AI, blockchain, the Cloud, and data science to save money and boost productivity
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Retirement 2020: Maximize Participation,Boost Efficiency & Accelerate Outcomes
- 1. www.nicsa.org | #WebinarWednesdays Thank you for attending our webinar today. We will begin momentarily.
- 2. www.nicsa.org | #WebinarWednesdays WELCOME This webinar and the slides contained herein do not constitute legal advice or recommendations for specific actions for your firm. March 25, 2019 Capitalizing on trends to maximize participation, boost efficiency and accelerate outcomes Retirement 2020
- 3. Panelists www.nicsa.org | #WebinarWednesdays Jim Young Vice President, Product Development Broadridge Financial Solutions Gracie Kollar Associate Account Executive, Retirement Solutions Broadridge Financial Solutions Tim Slavin Senior Vice President, Retirement Solutions Broadridge Financial Solutions
- 4. www.nicsa.org | #WebinarWednesdays BACKGROUND OPERATIONAL INNOVATIONS AND NEW TECHNOLOGIES LEGISLATIVE AND REGULATORY TRENDS DECODING THE INVESTOR MINDSET QUESTIONS AND ANSWERS
- 5. 5© 2018 | Gain a unique vantage point Broadridge sits at the nexus of financial services and communications with an extensive retirement industry purview www.nicsa.org | #WebinarWednesdays $4B+ 5 5B+ decades of experience in the financial services industry revenue as of FY18 customer communications processed annually One of a few select U.S. companies supporting the financial services industry that is ISO 27001 certified [NYSE:BR] part of the S&P 500® Index
- 6. 6© 2018 | The overall retirement plan opportunity is over $8 trillion Source: Broadridge Data and Analytics www.nicsa.org | #WebinarWednesdays BACKGROUND Plans Participants $5,691,099,055,841 $1,012,012,524,371 $736,403,230,456 $658,522,828,309 $136,003,478,963 $8,234,041,117,940 Plan Segment AUM 72,041,133 21,344,464 17,851,504 15,703,857 6,505,445 133,446,403 3,938 9,283 255,494 31,625 403,166 703,533 Mega Large Small Medium Micro Total ANNUAL DOL 5500 PLAN FILILINGS
- 7. 7© 2018 | Players in the retirement industry cross all market segments It’s important to devise messages that fit the plans you or your third-party advisor partners are targeting www.nicsa.org | #WebinarWednesdays BACKGROUND Defined Contribution Plan Type Distribution 401(k) $5,603,640 403(b) $1,104,345 457(b) $392,776 NQDC $160,784 ESOP/KSOP $119,597 Other $494,041 Defined Contribution Plan Size Distribution Micro (<$1M) $456,923 Small ($1-$25M) $1,310,302 Mid ($25-$100M) $1,231,956 Large ($100M-$1B) $1,454,258 Mega (>$1B) $3,421,745
- 8. 8© 2018 | No matter which types of plans you serve, there’s a sea change under way in the retirement industry BACKGROUND www.nicsa.org | #WebinarWednesdays DB plans: a long, slow demise Legislative and regulatory changes create new risk and opportunity DC plans: now a mature DC marketplace Five generations now participate in retirement plans: Gen Z, Millennials, Gen X, Boomers and Greatest Generation New technologies like SaaS and AI are transforming the way the retirement industry works
- 9. www.nicsa.org | #WebinarWednesdays BACKGROUND OPERATIONAL INNOVATIONS AND NEW TECHNOLOGIES LEGISLATIVE AND REGULATORY TRENDS DECODING THE INVESTOR MINDSET QUESTIONS AND ANSWERS
- 10. 10© 2018 | The character of today’s investor is changing When you understand how perceptions shape behavior, you can boost retirement readiness THE RESEARCH • In partnership with The Center for Generational Kinetics, Broadridge surveyed 1,003 U.S. respondents, aged 22 to 59 • Questions were designed to reveal: – How investors save for retirement – How expectations shape behavior • When we combine our survey results with outside sources, we have a very clear picture of what’s holding investors back from saving enough for retirement www.nicsa.org | #WebinarWednesdays INVESTOR MINDSET
- 11. 11© 2018 | The retirement savings gap exists—but why? www.nicsa.org | #WebinarWednesdays INVESTOR MINDSET Employees have conflicting priorities for their dollars. Student loan debt is a significant burden. When asked what would absolutely prompt you to start saving/investing, the clear winner was “Receiving an inheritance.” %
- 12. 12© 2018 | For the dollars they do choose to save, there are impediments www.nicsa.org | #WebinarWednesdays INVESTOR MINDSET Investors are skeptical and don’t always seek professional advice
- 13. 13© 2018 | For the dollars they do choose to save, there are impediments www.nicsa.org | #WebinarWednesdays INVESTOR MINDSET Investors don’t always use advantageous investment vehicles Millennials are more confident investing in a low-yield savings account than more traditional retirement investment options. HSAs are not well-known, nor availed by investors.
- 14. www.nicsa.org | #WebinarWednesdays BACKGROUND OPERATIONAL INNOVATIONS AND NEW TECHNOLOGIES LEGISLATIVE AND REGULATORY TRENDS DECODING THE INVESTOR MINDSET QUESTIONS AND ANSWERS
- 15. 15© 2018 | MEPs: An unprecedented opportunity An estimated 42 million Americans work for small businesses that do not currently offer an employer-sponsored retirement plan • MEP expansion will be one of the most impactful legislative changes for the industry • Key benefit: an MEP enables firms that do not meet the definition of “common control” to consolidate assets with a unified plan and trust, so that members may pool their buying power and achieve economies of scale – The “one bad apple” rule: Treasury reg. §1.413-2(a)(3)(iv) • State-level plans www.nicsa.org | #WebinarWednesdays TRENDS
- 16. 16© 2018 | MEPs will change the nature of your buyer and how they demand your services are delivered • The small plan advisors and dabblers are likely to give way to the MEP Aggregators, who will completely change the game • Use of Collective Investment Trusts (CITs) and Stable Value Funds/Synthetic Guaranteed Investment Contracts (GICs) will rise • Increase in use of plans with high-end ERISA 3(38) fiduciaries www.nicsa.org | #WebinarWednesdays TRENDS Growth of assets in Collective Investment Trusts, or CITs, is already outpacing mutual fund growth in defined contribution plans, with an increase from Sources: DST, BPAS $1.9 Trillion in 2015 $3.1 Trillion in 2018
- 17. 17© 2018 | Additional opportunities could emerge from H.R. 1439, the Increasing Access to a Secure Retirement Act’ • Opportunity to combine insurance products with retirement investment offerings for guaranteed income in DC plans – Muted success to date with extremely limited take-on – The lack of adoption of has been due to risk; no clear direction or safe harbor from the EBSA under the DOL • Legislation includes safe harbors to allow sponsors to add retirement income products www.nicsa.org | #WebinarWednesdays TRENDS What does this mean for asset managers? So far, a wait and see approach.
- 18. www.nicsa.org | #WebinarWednesdays BACKGROUND OPERATIONAL INNOVATIONS AND NEW TECHNOLOGIES LEGISLATIVE AND REGULATORY TRENDS DECODING THE INVESTOR MINDSET QUESTIONS AND ANSWERS
- 19. 19© 2018 | Going “digital” means more than one thing www.nicsa.org | #WebinarWednesdays INNOVATIONS/TECHNOLOGIES Trend toward digital reached new milestones in 2018:
- 20. 20© 2018 | Using innovations and technologies to transform retirement communications Data management www.nicsa.org | #WebinarWednesdays INNOVATIONS/TECHNOLOGIES Three pillars of a strategic, integrated approach: Customized content Omni-channel distribution
- 21. 21© 2018 | Integrating your asset management marketing tech stack to grow your retirement business • Advisor prospecting data and predictive analytics tool for precision targeting • Audience segmentation • Retirement-specific www.nicsa.org | #WebinarWednesdays INNOVATIONS/TECHNOLOGIES Data for Advisor Targeting CRM System (Salesforce.com) Content Management & Distribution • Multi-channel content distribution for digital and print • Personalized images and content • Sync with CRM and DAM systems to streamline operations Broadridge Opportunity Hunter for targeting Retirement Advisors Broadridge ContentHub for Asset ManagersMarketing, Internal and External Wholesalers Retirement Advisors
- 22. 22© 2018 | Key takeaways • The Retirement market is a huge opportunity for Asset Managers • There is a savings gap, but there are strategies that can help people save more • Consider generational preferences in your product and communications mix • Legislative and regulatory proposals could mean both opportunity and risk • Focus your digital dollars on tools that improve targeting, map the journey and increase your ability to engage and retain clients www.nicsa.org | #WebinarWednesdays
- 23. www.nicsa.org | #WebinarWednesdays BACKGROUND OPERATIONAL INNOVATIONS AND NEW TECHNOLOGIES LEGISLATIVE AND REGULATORY TRENDS DECODING THE INVESTOR MINDSET QUESTIONS AND ANSWERS
- 24. Gracie Kollar gracie.kollar@broadridge.com Questions and Answers www.nicsa.org | #WebinarWednesdays Jim Young jyoung@broadridge.com Tim Slavin timothy.slavin@broadridge.com
- 25. 25© 2018 | To download the report, Data and the Search for Deeper Relationships, visit broadridge.com/white-paper/data-and- the-search-for-deeper-relationships Thank you for joining us today www.nicsa.org | #WebinarWednesdays To download the report, Retirement 2020, visit broadridge.com/retirement2020 To download the report, Decoding the Millennial Mindset, visit broadridge.com/white-paper/decoding- the-millennial-mindset Visit our Retirement Insights Resource Center for a full library of content for Retirement professionals: https://www.broadridge.com/resource/retirement-insights
Editor's Notes
- Talking point: Due to our market leadership in the complex retirement marketplace, we learn and share strategies with C-suite and UX leaders from the most innovative retirement organizations.
- As an Asset Manager pursuing one or more niche, you need to know your buyer and use the right messaging. Differences abound across the plan types and by plan size. It’s important to make your messages resonate to the types of plans that you or your third party advisor partners target. Your strategy shouldn’t just go to the plan size level. Key decision makers for a 457 K-12 plan will have a very different set of investment needs than the vocal leaders of a 457 Hospital plan. Accurate targeted data will help you focus your distributed marketing content to be appropriate for the types of plans that your advisors target.
- the DC marketplace realizes the true goals of plan participants… more access, lower cost, elimination of impediments, streamlined communications & channels, personalized guidance and a focus on achieving successful retirement outcomes. But we see these changes as opportunities for Asset Managers to turn today’s trends into building blocks for tomorrow’s successes
- Multi-generational discussion. [discuss in line with relevant research points in slides following]: As noted earlier, we’ll be sharing our thoughts about the themes that were consistent in the research, such as Student Loan Debt Saving/spending patterns Taking advantage of Tax Savings Programs HSA plans Use of credit cards Investment vehicles (for everyday and retirement saving) 401K, Roth IRA, Traditional IRA vs. Bank Savings Account Trust of the market Millennials saw their parents go through the 2008 Financial Crisis Appetite for risk Low Yield Savings Accounts – why do Millennials prefer these? Also mention that there will be a millennial-focused report based on this research, available for download at the end
- Talking point: Data within and from outside our study point to significant trends, and support the top reasons employees cite for low or no plan contributions. Talking point: Providers are creating new ways to motivate participants related to paying down student loan debt, such as auto-enrollment once debt is paid off, a student loan repayment program, consolidation offers, etc. https://www.pionline.com/article/20180709/PRINT/180709896/employers-target-student-loan-debt-to-boost-retirement Talking points: In our survey, when asked what would prompt you to absolutely start saving/investing, the clear winner was “Receiving an inheritance” Confirms that many don’t have disposable dollars now… A good sign for the $30T wealth transfer that’s on the horizon
- HSAs are a hot news topic lately, however; a recent Ignites article cited a large increase in HSA account assets from 2017-2018 (increase of 19% yoy) As more employers offer HSAs and high-deductible health plans, they could become more vital to the retirement plans of more investors.
- MEP expansion will lead to consolidation and a new focus on serving the new big fish, the MEP Aggregators.
- The rise of the MEPs will open the door for a drastic increase in use of Collective Investment Trusts & Stable Value Funds or Synthetic GICs to drastically lower costs and offer more opportunities to diversify product mix . For instance, CIT assets growth is already outpacing mutual fund growth in defined contribution, seeing an increase from $1.9 Trillion in 2015 to $3.1 Trillion in 2018. It will not be long before CIT assets exceed mutual fund assets in retirement plans – MEP safe harbors will only increase the disproportionate growth of CITs. In addition, MEPs will lead to an increase of plans with fiduciaries; specifically, a rise in high-end ERISA 3(38) Discretionary Fiduciaries. Your buyer is changing, and they will demand sophisticated management of investment policies and will hold you accountable.
- The products can help bridge the critical guaranteed retirement income gap What does it mean for asset managers? So far, a wait and see approach. Once safe harbors are enacted, opportunities for asset managers and insurance companies will depend on whether the guaranteed income products that ‘win’ will be based fixed, fixed index or variable investment performance. There is a likelihood that we see new lower cost instruments with investment profiles similar to the mix in annuities appear and proliferate
- Talking points: First, some trends in digital marketing to set the stage According to Gartner, 2018 was the first year that CMOs spent more on marketing technology (29% of budget) than staff (24%). Also in 2018, MarTech counts that there are 7,000 marketing technology providers. By contrast: In 2011, there were 150. And, Financial Services Digital Advertising spend surpassed $13 billion (over 12% of total Financial Services budget)
- In our conversations with providers and Asset Managers in the retirement industry, we see industry leaders focusing on three areas for an integrated approach: Data management, customized content and omni-channel distribution
- Data Data management platforms Prospecting and segmentation – Identify best targets and manage segments… using predictive analytics tools For example, Opportunity Hunter is used by many AMs to find the prospects to sell their funds Distribution Marketing automation – controlled journey utilizing primarily digital channels Channel Management Social Media – Both sales and marketing Search – Be found in a crowded industry Digital Advertising – Target and cost-effectively reach your audience… again, use of Data Management Platforms Content Email / Digital Content Distribution – ContentHub… one platform that seamlessly integrates targeting, content, CRM, DAM systems Targeted web content – Content based on data and behavior Online video – Website, social media, content syndication Measurement and Optimization
- Talking Points: Big Market Opportunity Retirement is the biggest pool of Retail assets and Institutional dollars Consider generational preferences in your product mix For instance, one-size target date funds don’t fit all How can asset managers help younger generations with conflicting priorities – pay down student loans or increase retirement savings? Ie. Maybe suggest a product where the investment gain/income is directly funneled to a student loan… Legislative, regulatory changes could mean both opportunity and risk MEPs and State Plans could equal both risk and opportunity for asset managers RESA safe harbor legislation could open the door for inclusion of insurance products in DC plans Focus your digital dollars on tools that improve targeting, map the journey and increase your ability to engage and retain clients