Employees Want Control of Retirement Assets, Expect Guidance

Posted on April 20, 2011. Filed under: Uncategorized |

The following is a terrific article for:

  • plan sponsors
  • advisors and consultants who provide these plans to sponsors
  • fiduciary consultants to the plan and/or participants
  • benefits firms serving in any of these capacities

The important take-away here is that despite all the accomplishments and capabilities of the retirement plan industry, there is still a gaping hole in saturating the plan participants with “effective” knowledge so they feel confident to meet their goals.

There really needs to be a partnering of expertise, in a trusted and un-conflicted environment to have a realistic chance of saturating the participant base with what they need.  For example, we have seen many plan advisors that consult the sponsor on the funds in the plan, provide the plan, provide education/guidance/advice (any combination) to the participants and say they have no conflicts and totally take care of their participant base.   Two important questions are: 1) If you provide everything in the equation, how can there be no conflicts from a technical point of view?  2) How can your firm meet one-on-one with all the participants in their plans especially considering when the sponsors are larger and have multiple locations?

1) Most of the advisors who provide all these services do a terrific job and truly don’t provide conflicted services, even though the potential is there if they’re not clearly just on one side of the fence (i.e. being a consultant to just the sponsor or just the participants etc.)  So how can they do this with a technical conflict?  To our understanding, there is a work-around in the Pension Protection Act of 2006 that allows one firm or person to do all of this.  Ok, but if being a fiduciary means doing the highest and best for the client, should a work-around equate to the highest and best solution you can deliver for your client?  Perhaps they can explore partnering with a trusted participant fiduciary advisor that cannot compete with them, but only compliment them and in the process raise the fiduciary standard above that of the PPA 2006’s work-around to that of the highest and best caliber for the sponsor and its pariticpants.

2) These same advisors say they meet with as many participants as meetings are requested even in multiple locations.  I’m sure that’s very true.  However, we all know that the meetings requested are not the only people interested in getting advice or the following article would not have been posted, and the entire industry scratches their head trying to find the solution to get through to everyone.  The way to get through to everyone is for the advisors to partner with a service that can automatically provide the advice online and service any questions with Certified Financial Planners®, and when product questions come up or meeting requests arise this service refers these issues back to the advisor so now the highest potential of servicing participants is reached.

These services are available and are not the bolt-on services that the product providers offer as they limit their services to just retirement and investments and don’t address the open world of any goals-based planning topics important to the participant, and Certified Financial Planners® are not part of the basic service.  Instead a significant asset management fee is incorporated in the participant’s account to bring on someone with this credential.

We hope these insights set the stage for a terrific article below.  Thanks as always for stopping by!

Workers want employers to provide guidance, advice on retirement planning

Advisor One | April 4, 2011 | By Danielle Andrus, AdvisorOne

ING Retirement Research Institute released a white paper Monday outlining employees’ retirement dilemma; namely that while employees want control of their assets, they’re not sure about how to invest them, and turn to their employers for guidance.

The paper, based on research conducted for ING by Boston Consulting Group between May 2010 and August 2010, found that almost half of employees don’t feel in control of their retirement plan. Employees want regular contact from their employers on advice and services, especially regarding asset allocation and how to calculate what they’ll need in retirement.

“We wondered why, with all the research out there, aren’t workers saving?” Ashley Agard, head of the ING Retirement Research Institute, told AdvisorOne. The reason, ING found, is that workers are confused and overwhelmed.

“Employers do a very good job with in-plan advice,” she said, “but workers are looking for broader, more holistic advice.”

The paper cites several roadblocks to employees’ retirement plan:

  • Too many choices. Too many investment options can be overwhelming.
  • Good old-fashioned procrastination. Workers know they need to save, they just don’t.
  • “Hyperbolic” discounting. Workers overestimate the sacrifices they’ll have to make to save.
  • They want it to be easier. Workers want to be in control, but they also want planning to be convenient.
  • They want to be told what to do. Workers want clear direction in what they need to do, and how much they need to save.

“Employers are very interested in helping workers retire,” Agard (left) said. “It’s the right thing to do, it’s a smart business decision. Consumers want to be empowered, yet they’re feeling very confused. Employers need help introducing tools and resources to give workers a roadmap.”

“For advisors, the biggest need is to help employers understand what participants need, how they’re feeling and what they want.” Agard reiterated workers’ interest in holistic advice adding that workers want to be in control but are looking for very prescriptive solutions for different periods of their lives.

“The study was enlightening for us,” Agard concluded. “The Institute’s basis is to understand the mindset, emotions and behavior behind why people do what they do. The products of the future will be built around advice.”

About the Author

Danielle Andrus, AdvisorOne

Danielle Andrus is managing editor of Investment Advisor magazine. She has a BA in economics from the University of California, Santa Cruz.

Make a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

  • Who We Are

    RJ20 was created by Certified Financial Planners™, passionate about helping every day people by bringing their services to those who most need it, without minimum requirements or product sales of any kind.
  • RJ20Online

    Error: Twitter did not respond. Please wait a few minutes and refresh this page.

Liked it here?
Why not try sites on the blogroll...

%d bloggers like this: