PLANSPONSOR - November/December 2017 - 13

Investment lineup construction is another area of focus
for plan sponsors. The panels discussed target-date funds
(TDFs), as that investment type has gathered sizeable retirement
plan assets. Gabe Vincezo, portfolio consultant for John
Hancock Investments, said one of the biggest trends seen
today in TDF construction is use of open architecture. " If
you think about the idea of building an investment portfolio,
that's clearly going to be advantageous, " he said.
Mike Stephens, also a portfolio consultant with John Hancock
Investments, agreed, noting that, as target-date funds
have become more complex, plan sponsors have many more
criteria to examine such as the original " to vs. through " discussion,
as well as one about active vs.
passive underlying funds
in the fund
suite. Plan sponsors should consider the
diversification of the underlying funds in
the TDF, he said. " There are many ways to
diversify. Look at the asset classes, from
plain vanilla to all 15 asset classes, and alternative
beta classes, although they may
add cost. "
Jonathan Wilkinson, vice president
retirement tier. In it, she said, " are investments and tools such
as a Social Security optimizer, a catch-up escalator and an annuity
marketplace; it can include guidance. A retirement tier
will give plan sponsors and participants a tool for retirement. "
Another hot topic addressed at the conference was financial
wellness. While this has become a set of buzzwords in the
industry, most people using the term fail to agree on how to
define it or what the deliverables are.
Jania Stout, practice leader, co-founder, Fiduciary Plan AdWhile
this has
and defined contributions investment
only (DCIO) sales consultant at T. Rowe
Price, noted how collective investment
trusts (CITs) are gaining more attention
due to a higher rate of transparency
among providers and plan sponsors.
Although the investment vehicle once
seemed more opaque than did mutual
funds-they are not governed by the SEC
or do not show daily values in the newspaper
or online finance sites-plan sponsors
are increasingly comfortable with
how CITs are governed and realize that
participants can access daily pricing via their retirement plan
accounts online. " It seems, a lot of the time, consultants are
interested to discuss collective investment trusts with their
clients to show that
there is another pricing model
they
would be able to choose, " he said. " We're seeing a new trend
toward collective investment trusts. "
Panelists discussed further trends influencing fund lineup
construction. Mary Beth Glotzbach, vice president, institutional
DCIO, at Franklin Templeton Investments, addressed
the topic of retirement income. Although there has been
limited adoption of retirement income products, Franklin
Templeton's Retirement Income Strategies and Expectations
(RISE) survey indicates that participants ages 40 through 50
worry about retirement. Therefore, Glotzbach said, this is a
good time for plan sponsors to consider, and offer, retirement
income products to help participants alleviate that concern.
As for how such concepts and investments fit into the retirement
plan lineup, Glotzbach proposed something called a
become a set of
buzzwords in the
industry, most
people using the
term fail to agree
on how to define
it or what the
deliverables are.
visors, said, " [Traditionally,] the plan sponsor's thinking was
that all participants' savings should go into their 401(k) and
their retirement plan should always be their No. 1 priority. "
But, she said, participants also need to be
financially prepared for emergencies, and
plan sponsors are realizing that employee
financial stress can have negative implications
for the company as a whole, which is
driving interest in helping participants understand
their broader financial picture.
According to Nathan Voris, managing
director, strategy, at Charles Schwab & Co.
Inc., the movement toward automation is
helping to increase awareness about financial
wellness, because it lets plan sponsors
and providers engage the participants in
more pressing financial topics, including
creating an emergency fund, saving for
college, managing student loan debt, saving
for a house and, in some more complicated
cases, planning wills and addressing
other estate issues.
Plan sponsors,
through their recordkeepers,
are able to leverage all sorts of
data, Voris noted. The recordkeeper has
not only the census data from the plan
sponsor, including gender, age, salary and marital status, but
also the data from the retirement plan, such as deferral rates,
and any interactions made with online tools or information. Leveraging
these points allows recordkeepers and plan sponsors
to intelligently set up communication and wellness resources.
For example, Voris said, " If you are 52 and you aren't maxing
out contributions in your plan, why should you receive a catchup
contribution reminder? It may make sense legally, but why
would you do that? " Any communications concerning broad
financial topics, such as loans, emergency savings, etc., can be
made more personal for different employee demographics.
For plan sponsors that want to use a third-party provider,
Barbara Delaney, principal, StoneStreet Advisor Group, cited
the growth of independent financial wellness providers in the
marketplace and the variety of solutions available through
them. Components can include individual assessments, webcasts
and online tools, all of which can be customized and
deployed to employees to meet individual needs. n
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